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January 1984

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January 1984 Vol. 18, No.1





Dennis L. Shackleford, President William R. Wilson, Jr., Pres-Elect Annabelle Clinton, Sec-Treasurer James H. McKenzie, Council Chairman EXECUTIVE COUNCil

Norwood Phillips W. Kelvin Wyrick Gary Nutter Robert M. Cearley Kaye S. Oberlag Tom Overbey Marcia Mcivor Robert Hornberger Joe Reed Tommy Womack Julian Fogleman James A. Mclarty EX-OFFICIO

Dennis L. Shackleford William R. Wilson, Jr. J. L. Shaver, Jr. Annabelle Clinton Carl A. Crow, Jr. James H. McKenzie EDITOR

Admiralty Jurisdiction James A. George IOlTA James A. Holcomb The Attorney in General Practice and the Patent-Related Case Marc Sandy Block Avoiding legal Malpractice Claims Duke Nordlinger Stern Contingent-Fee Agreements Cover Story . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

31 34 39

Separation of Powers


William French Smith

4 14 24

REGULAR FEATURES President's Report Executive Council Notes

.Dennis L. Shackleford Annabelle Clinton

2 3

In Memoriam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7 AIClE News Claibourne W. Patty, Jr. 10 Law School News. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 20 Arkansas Bar Foundation Report . Cyril Hollingsworth 22 Addenda William A. Martin 23 Legal Economics Kline D. Strong 30 Code of Professional Responsibility. . . . . . . . . . . . . . . . . . .. 34 AEGiS 38 Young Lawyers' Update .........โ€ข.....Carl A. Crow, Jr. 43 Service Directory IBC


Ruth Williams

The Arkansas Lawyer (USPS 546-040) is published quarterly by the Arkansas Bar Association, 400 West Markham, Uttle Rock, Arkansas 72201. Second class

postage paid at Uttle 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 at the above address.

January 1984/Arkansas lawyer/1

PRESIDENT'S REPORT by Dennis L. Shackleford

This is a year of issues of strong interest to the general public as well as to the legal profession-Congress proposing to regulate the profession through intervention by the Federal Trade Commission and the Arkansas Supreme Court considering the Association's petition for new rules on Bar discipline to name only two of them. Although the Association involves itself in a wide range of activities, public policy issues dominate the current scene. Among the key issues presently being addressed by the Association are: 1. ABA Model Rules of Professional Conduct. On August 2, 1983, the House of Delegates of the American Bar Association adopted Model Rules intended to serve as a national model of the reguiatory law governing the practice of law. The Model Rules replaced the ABA Model Code adopted in 1969. These Rules will be printed in the November, 1983, issue of the American Bar Association Journal. A Special Committee chaired by Herschel Friday has been appointed to study and review the Model Rules. The ultimate task of the Committee is to recommend whether the Association should petition the Arkansas Supreme Court to adopt the Model Rules. The Committee members are Philip Anderson, John F. Stroud, Jr., H. William AlIen, Howard W. Brill, Judge John A. Fogleman, J. C. Deacon, and John P. Gill. This able group will guide the Association in addressing the issue of professional conduct. 2. Mandatory Continuing legal Education. The Arkansas Bar Association has implemented a strong planning process built around the report of the Special Planning Committee. Pursuing one of the goals-lawyer competence-a Committee to study mandatory continuing legal education has been appointed. The Chairman is W. Russell Meeks. Committee members are Tim Boe, Paul E. Lindsey, Richard F. Hatfield, Thomas M. Carpenter, 2/Arkansas lawyer/January 1984

Dean lawrence H. Averill, and Dean J. W. looney. In his initial letter to the Committee, Russ Meeks stressed the importance of their work: " ...the effects of the ultimate plan of mandatory continuing legal education to be established, as a result of the assignment to our Committee, is in my opinion, one of the most significant matters to touch attorneys in the practice of law during this decade ..." While the question of mandatory continuing legal education often produces quick and definite responses from lawyers, both for and against, we are reminded of Henry L. Menchkins's great line, "For every complex problem there is an answer that is simple, direct, and wrong." The Association's Committee to study this problem is endowed with able lawyers who will give the subject thorough study and expert analysis. 3. Interest on lawyers' Trust Accounts. Herman L. Hamilton, Jr., is continuing to press for this program. The Committee working on the matter includes Richard F. Hatfield, Richard L. Ramsey, Garvin Fitton, Michael F. Pritchard, Steve Jordan, and Cyril Hollingsworth. At latest count, 15 states have adopted 10lTA programs. The Arkansas Supreme Court's per curiam opinion filed April 11 , 1983, rejected the Association's petition because it lacked notice and approval from clients whose funds are used by the program. The Court reiterated its support of 10lTA. The barrier to the Court's approval of the plan is the concern for the client's approval which presents tax consequences to the client. The plan provides that clients need not be notified that their funds are being used. Nor can they decline to allow the escrow funds to be used in the program. The IRS has ruled that interest generated from trust accounts would be taxable to the clients whose funds were used unless the decision whether to participate in the program was removed from them. The key to the problem, and the factor that must al-

ways be borne in mind, is that the plan proposed only involves funds "nominal in amount" or "held for a short period of lime." These are deposits which should not generate sufficient interest income to be meaningful to any individual client and if received by him would be taxable to him. The fund does not contemplate that substantial amounts of money, or money to be heid for a lengthy period, would go into the program and those funds could be deposited for the production of interest income for the individual client. I find no conflict with the principle of careful stewardship of clients' monies entrusted to lawyers where a iawyer participates in an authorized 10lTA program. The Model Code (Canon 8) says " ...[aJ lawyer should assist in improving the legal system ..." This standard of conduct is advanced when a lawyer participates in a program which puts idle funds to law-related public uses. 4. Joint Committee of Arkansas Judicial Council/Arkansas Bar Association. Action has been taken that moves the Bench and Bar together to better communicate and understand each other. The 1983 long Range Planning Conference recommended a Joint Committee to undertake two specific goals: (1) to study and formulate an appropriate constitutional amendment and/or statutory enactment creating an Arkansas Judicial Compensation Commission; and (2) to study various plans of discipline and removal of judges, and recommend appropriate legislation to implement such a plan. The Association's Judiciary Committee chaired by Kelvin Wyrick will represent the Association in the Joint Committee along with Judge Henry Britt, Charles Carpenter, Frank Elcan, II, and JUdge John A. Fogleman. The judiciary representatives on the Joint Committee include: Judges Eugene Harris, Cecil Tedder, Gerald Pearson, and Bernice Kizer (Judicial Compensation Commission); and continued on page 3

EXECUTIVE COUNCIL NOTES By Annabelle Clinton Secretary-T reasu rer


MINUTES OF THE SPECIAL MEETING OF THE HOUSE OF DELEGATES The House of Delegates of the Arkansas Bar Association met at 1:30 p.m. in the Fayetteville Hilton in Fayetteville on September 9, 1983. President Dennis Shackleford presided. Dennis Shackleford gave his president's report which included a review of the following matters: Legal Services Corporation; FTC; paralegals; IOLTA; bar discipiine petition; specialization; bar group insurance; and Executive Council meeting on December 3, 1983. The House of Delegates accepted the minutes of the last Executive Council Meeting; the membership report; and the financial report. David Solomon was certified as a representative from the Northeastern Bar District. Tommy Womack, chairman of the Long Range Planning Conference, presented a brief history of the Arkansas Bar Association's Long Range Planning conferences. The last conference in March, 1983 focused on action plans to implement goals set in 1982. Executive Council members have been charged with the responsibility of assigning the long range goals approved by the House of Delegates to the appropriate committee/section and then to follow up on implementation of those goals. The long range planning process is a continuing process which involves a review of Association goals


President's Report continued from page 2 Judges John Goodson, Bruce Bullion, Robert W. McCorkindale, and John Linberger (Judicial Discipline). The matter of jUdicial compensation and benefits is of concern to the Bench and Bar alike. If a community is to continue to call forth from the Trial Bar its leading practitioners, with the assurance that elevation to the Bench will not become an economic tribulation, adequate

and action plans; evaluation of progress toward those goals; and the modification or addition of goals. Herschel Friday, delegate to the American Bar Association, reported on the 1983 annual meeting of the American Bar Association. The ABA House of Delegates approved the format of the proposed Model Rules of Professional Conduct. Other matters considered by the ABA House of Delegates included: prohibition of discrimination by private clubs that derive a substantial income from business sources (passed); prohibition of discrimination on the basis of sexual orientation (failed); opposition to all legislation providing for the Federal Trade Commission to preempt the regulation of the practice of law by state supreme courts (passed); opposition to tax credits for non-public schools (failed); prohibition of judiciary membership in organizations which practice invidious discrimination (deferred); bankruptcy judges should not have Article III status (passed). William Allen of the law firm of Lester, Cabe & Allen, is chairman of the ABA's standing committee on Ethics and Professional Responsibility. Dean Looney of the University of Arkansas School of Law at Fayetteville reported that the Agri-Law System will be presented at the 1984 Fall Legal

Institute. Contributors to the preparation of the system will be speakers at the fall meeting. The 1983 annual meeting of the House of Delegates voted to adopt several amendments to the Association's Bylaws regarding legislative procedures. The Legislation Committee chaired by Glen Vasser will review the amendments to the Bylaws in order to determine whether any additional amendments should be considered. Jack A. McNulty of the Jurisprudence and Law Reform Committee reported on Act 345 of 1983. The House of Delegates voted in favor of repealing Act 345 and reinstating prior guardianship laws. The Executive Council at its meeting on November 9, 1983 referred the matter back to the Probate Section for the preparation of a comprehensive proposal on guardianship legislation. Charles Carpenter reported that there is a movement underway to impose a sales tax on professional services. President Dennis Shackleford reported to the House of Delegates that Colonel William A. Martin has been employed as the Association's new executive director. Mr. Martin will assume his responsibilities on October ~ 17, 1983. The meeting was adjourned. 4",

compensation is required. In this litigious society emotional issues are raised. Trial judges become the targets of intemperate statements. The Model Code recognizes that judges, not being wholly free to defend themselves, are entitled to receive the support of the Bar against unjust criticism (EC8-B). Where criticism of the judiciary results from a lack of understanding of the system-the reason for a decision, for a sentence, for a courtroom action-

such criticism should be answered. The suggestion of a Joint Committee of the Bench and Bar provides the beginning of a mechanism that promotes public and professional understanding of the judiciary. 5. The Lawyer "Explosion." An issue of great importance that should be addressed by the Association is the seeming problem of too many lawyers. It is estimated the lawyer population in continued on page 37 January 1984/Arkansas Lawyer/3


I. INTRODUCTION Within the last ten years, the United States Supreme Court has decided two very significant cases defining the scope of maritime tort jurisdiction. ' This paper will address developments in the field of maritime tort jurisdiction since the Court's 1972 decision in Executive Jet Aviation v. City of Cleveland' and consider the potential ramifications of the Court's most recent pronouncement on maritime tort jurisdiction, Foremost Insurance Company v. Richardson,' as well as the impact of several significant recent decisions of the United States Court of Appeal for the Fifth Circuit.' For many years before the decision in Executive Jet, the requirements for admiralty jurisdiction were the subject of extensive litigation. In 1914, the United States Supreme Court encountered, but did not decide, the issue of whether the location of a tort was the sole test for admiralty jurisdiction.' Some lower courts which reached the issue in subsequent years, adopted a jurisdictional test in which locality was not the dispositive factor.' In Peytavin v. Government EmEditor's Note: The original version of this article appeared in the Louisiana Bar Journal, Vol. 3D, NO.4. Permission was obtained to reprint the article. Mr. George has updated the article to bring same current. He is a member of George and George, Ltd., a Professional Corporation in Baton Rouge, Louisiana. Mr. George is a member of the Maritime Law Association of the United States and the Southeastern Admiralty Law Institute. Mr. George has been a regular contributor of fine articles on maritime law for The Arkansas Lawyer. 4/Arkansas Lawyer/January 1984

ployees Insurance Company,' the plaintiff was parked on a floating pontoon at a ferry landing when his car was struck from the rear by another car. The District Court dismissed the complaint, holding that the tort did not occur on navigable waters. The District Court concluded that the pontoon, connected to the shore by two cables, was an extension of land. The Fifth Circuit found that the accident did occur on navigable water, but held that such a finding was not dispositive of the jurisdictional issue. Application of a pure "locality" test for determining jurisdiction was criticized by the Court, as such a test was said to be only as precise as a court's ability to determine the location of the tort.' The Court also criticized the approach taken by other courts employing a "locality plus" test and concluded the "locality plus" lest combined the uncertainty inherent in determining the locality of the tort with the problem of determining what constituted a sufficient relationship to maritime activity.' As an alternative to these approaches, the Court adopted the rule that a tort was within federal maritime jurisdiction if there existed a "substantial connection with maritime activity or interest"" and, finding no such connection, denied admiralty jurisdiction. However, not all lower courts were willing to abandon the "locality" test. Despite the grOWing move to eliminate the strict "locality" rule, Weinstein v. Eastern Airlines" held that the crash of a land-based airplane into navigable waters on an intracontinental flight was within federal maritime jurisdiction, on the basis that the situs of the tort was over navigable waters. The Court also found the facts analogous to cases where suits were maintained under the Death on the High Seas Act" when airplanes crashed beyond a marine

league from any state. U Until Executive Jet, most courts followed Weinstein and held that suits arising from airplane crashes into navigable waters were within the court's admiralty jurisdiction." II. EXECUTIVE JET AND ITS PROGENY In Executive Jet, a small jet aircraft struck a flock of seagulls a short distance from the airport. As a result, the plane lost power and crashed into Lake Erie. Plaintiffs alleged that the city was negligent in not keeping the runway free from birds and in not warning the plaintiffs about their presence. They argued that the action could be brought in admiralty because the plane crashed in navigable waters. The District Court, in an unpublished opinion, dismissed the action for lack of jurisdiction. It applied a "locality plus" test and concluded that the first prong of the test, the location of the tort in navigable waters, was not satisfied. The Court stated that the alleged negligence became operable upon the jet while it was over land; where the jet happened to fall was merely fortuitous. Alternatively, the District Court concluded that the wrong bore no relationship to maritime service, navigation or commerce. The Sixth Circuit affirmed the dismissal, concluding that "the alleged tort in this case occurred on land before the aircraft reached Lake Erie."" Accordingly, the Court did not find it necessary to consider the second prong of the "locality plus" test." The Supreme Court granted certiorari" to "consider a seemingly important question affecting the jurisdiction of the federal courts"." Initially, the Supreme Court pointed out that "admiralty jurisdiction of the federal courts has traditionally depended

upon the locality of the wrong"." It also pointed out that the "locality" test was established at a time when it was difficult to conceive of a tortious occurrence on navigable waters unless a waterborne vessel was involved." and that. despite broad language in some of its earlier opinions. it had never expressly held that "a maritime locality is the sole test of admiralty tort jurisdiction"." The Court then went on to reject the "locality" test in aviation tort cases. Two reasons for the rejection of that test were discussed by the Court. The "locality" test was characterized as "deficient"" and difficult to apply to torts involving airplane crashes." The difficulty in determining the location of an aviation tort results from the fact that aircraft are capable of traveling over both land and navigable water." In view of the position it took in Executive Jet. the Supreme Court did not have to reach the difficult issue of whether the tort occurred on navigable waters oron land." The Court held that an aviation tort must bear a significant relationship to traditional maritime activity in order to fall within the ambit of maritime jurisdiction and concluded no such relationship existed in a case involving "aviation tort claims arising from flights by land-based aircraft between points within the continental United States."" Accordingly. the court did not determine the locality of this particular tort. or reach the issue of whether locality. in addition to connexity. is required to establish admiralty jurisdiction. The Court expressly left open the question of whether any aviation tort claims (Le .• those occurring during the course of a transoceanic crossing) could be within admiralty jurisdiction." From this. some lower courts concluded that some aviation torts fall within the ambit of the maritime jurisdiction of the federal courts. An example is Ledoux v. Petroleum Helicopters. Inc." A helicopter pilot was killed when his helicopter crashed into the Gulf of Mexico. His survivors brought a wrongful death action alleging admiralty jurisdiction. The helicopter had been used "in place of a vessel to ferry personnel and supplies to and from offshore drilling structures."" The District Court dismissed the case for lack of subject matter jurisdiction but the Fifth Circuit concluded that the accident bore "the type of significant relationship to traditional maritime activity which is necessary to invoke admiralty

jurisdiction."" and reversed the District Court's decision. However. when requested to extend this rationale and hold that the pilot of such a helicopter was a Jones Act seaman. the Fifth Circuit refused to do so. In Barger v. Petroleum Helicopters, Inc.•" the Court held that the exclusive remedy of the survivors of the pilot of a helicopter used to ferry personnel and equipment to and from offshore drilling sites was under the Longshoremen's and Harbor Workers' Compensation Act. It concluded that since the helicopter was not a vessel. the pilot could not be a seaman. Executive Jet has not been limited to aviation torts. Although the Court limited its conclusions to the specific facts of that case. commentators reasoned that the rationale of Executive Jet was applicable to all cases brought in admiralty." Even before Foremost Insurance Company v. Richardson," it appeared certain that these commentators were correct." In fact. Kelly v. Smith," one of the most widely recognized decisions following Executive Jet. did not involve an aviation tort. The plaintiffs in that case were poaching on a private hunting reserve and attempted to flee the area via the Mississippi River in a fifteen (15) foot boat with an outboard engine when discovered in their allegedly nefarious activity. Gunfire. initiated from the shore. was exchanged between the poachers and defenders of the property. As a result. the pilot of the boat was wounded. The court concluded that the fact the plaintiffs were in a boat on navigable waters was not dispositive of the jurisdictional issue. However. a challenge to the Court's jurisdiction was overruled because the Court held that "[r]ifle fire directed at a vessel. albeit a small one. on a major commercial artery. and injuring the pilot. presents sufficient danger to maritime commerce for the federal courts of admiralty to assume jurisdiction."" In doing so. the Court adopted a four-point test which considered "the functions and roles of the parties; the types of vehicles and instrumentalities involved. the causation and the type of injury; and the traditional concepts of the role of admiralty law."31 III. "LOCALITY-PLUSH-THE FIFTH CIRCUIT POSITION Some language in the Executive Jet decision would indicate that even without locality. a significant relationship to traditional maritime activity would be

sufficient to invoke admiralty jurisdiction." However. most of the ianguage in the decision would tend to indicate that the Court intended to adopt a "locality plus" test." The lower courts have divided on this point. with the majority adopting the position that "locality plus" is the appropriate test for jurisdiction. 40

The First Circuit is at odds with the majority view. In Carroll v. Protection Marine Insurance Company, Ltd .... the plaintiffs alleged that because they had previously filed personal injury claims the defendant insurer was blacklisting them. According to the plaintiffs, the defendant charged shipowners who hired the plaintiffs an unreasonably high premium rate. and in some cases refused coverage. in an effort to prevent the plaintiffs from obtaining employment. None of the actions by the defendant were committed on navigable waters. The Court concluded that there was admiralty jurisdiction in the case because the insurer was allegedly interfering with contracts between seamen and shipowners. which contracts are at the heart of maritime relationships." It held that Executive Jet recognized an exception to the "locality" rule when a tort is so interwoven with present or potential maritime contractual relations so as to make maritime jurisdiction proper." The position taken by the Fifth Circuit in its recent decision in Smith v. Pan Air Corporation" is an example of the majority view. There. the decedent "regularly engaged in transporting workers and equipment from the Louisiana mainland to and between drilling rigs. and platforms located in the Gulf of Mexico."" Using an airplane equipped to land and takeoff in water. the decedent and two passengers departed for a Shell Oil Company mineral operation located near the mouth of the Mississippi River. Since it was not practicable to reach the site by land. the decedent landed in a canal adjacent to Shell's facilities." Upon takeoff. he encountered difficulties and crashed into the land. The Court interpreted Executive Jet as mandating a "locality plus" test for maritime jurisdiction. Accordingly. it held that "because the Smith claim arose from the crash of an aircraft in an inland Louisiana marsh. the District Court properly dismissed it for want of maritime jurisdiction."" The Fifth Circuit's position in Smith v. Pan Air is directly contrary to its earlier decision in Peytavin." It is this January 1984/Arkansas Lawyer/5

writer's opinion that Carroll and Peytavin are more logical and well reasoned decisions than those which require both maritime locality and a nexus to maritime activity. If a tort bears a "substantial connection with maritime activity or interest," there is no reason to preclude federal jurisdiction simply because the tort was not committed on navigable waters." Unfortunately, the Supreme Court declined to resolve this issue when it had the opportunity to do SO.50 IV. FOREMOST INSURANCE COMPANY v. RICHARDSON Prior to Executive Jet, the Supreme Court assumed, without discussion, jurisdiction in three cases involving pleasure boats." However, Executive Jet's criticism of cases applying a strict locality test" led to speculation about the propriety of extending jurisdiction to cases involving pleasure boats." The Supreme Court granted certiorari in Foremost Insurance Company v. Richardson" to resolve the confusion in the lower courts respecting the impact of Executive Jet on the "traditional rules for determining federal admiralty jurisdiction."" The Supreme Court criticized a lower court ruling that jurisdiction claims of an injured skier fell within Admiralty Jurisdiction." The lower courts responded by denying jurisdiction in cases involving injured skiers," but had less difficulty finding admiralty jurisdiction where cases involved injury to a passenger or pilot of pleasure craft when injury was caused by the negligent operation of such vessels. In Richardson v. Foremost Insurance Company," two pleasure boats collided on the Amite River in Louisiana. One was an eighteen foot boat being used to pull a skier and the other was a sixteen foot "bass boat." The District Court assumed that the Amite River was navigable to the point of collision, and therefore defined the dispositive jurisdictional issue as whether or not there was a "sufficient relationship to traditional maritime activity."" Although neither boat was being used or had ever been used for commercial purposes," the Court concluded that since the injury occurred on navigable waters the requirement of a "traditional maritime connection" becomes less stringent." However, even applying the less stringent standard, the Court held that it lacked jurisdiction. The Court's rationale was that there was not even the "slightest scintilla of 'commercial' or 'traditional' activity."" 6/Arkansas Lawyer/January 1984

The Court of Appeals for the Fifth Circuit reversed the District Court." While conceding strong policy reasons for denying jurisdiction could be argued, the Court concluded that although "the place where the accident occurred is seldom, if ever, used for commercial activity,"" the benefits to be derived from a uniform rule that all accidents occurring between surface vessels on navigable waters are within admiralty jurisdictions overrode any policy considerations to the contrary." Accordingly, the Court held "that two boats, regardless of their intended use, purpose, size, and activity, are engaged in traditional maritime activity when a collision between them occurs on navigable water."" In a five (5) to four (4) decision, the Supreme Court upheld the Fifth Circuit decision. In doing so, the Court also put an end to any speculation that its holding in Executive Jet was limited to aviation torts." The Court stated that although Executive Jet addressed "the unique problems associated with extending admiralty jurisdiction to aviation torts, much of the Court's rationale in rejecting a strict locality rule also applies to the maritime context."" In addition, the Court concluded that the activity need not be a commercial one." Recognizing that the "primary focus of admiralty jurisdiction is unquestionably the protection of maritime commerce,"'路 the Court reasoned that the only way this interest could be fully vindicated would be if all operators of vessels on navigable waters are subject to uniform rules of conduct. The alleged cause of the collision in Richardson, the Court noted, was a breach of the "rules of the road" and it observed that "admiralty law has traditionally been concerned with rules that govern the manner and direction"" vessels travel on the water. The Court found it of no moment that the collision occurred in a body of water which, although navigable, was seldom, if ever, used for commercial purposes. It considered the potential impactthat such a collision might have on a major commercial artery. This potential disruptive impact coupled with the traditional concern that admiralty law holds for navigational rules compelled the court to conclude that a collision between two pleasure boats on navigable waters was within the District Court's admiralty jurisdiction." V. CONCLUSION It is now well settled that a "substantial relationship to traditional maritime

activities" is necessary to invoke admiralty jurisdiction. With few exceptions, it is also the general consensus that such a relationship must be coupled with a maritime locality. However, the Supreme Court has not expressly ruled on that point and will probably not do so until the issue has been thoroughly filtered through the lower courts. In the author's opinion, a proper analysis calling for locality to be only one of the factors considered would be far more consistent with the general principles of admiralty law than one mandating a slavish adherence to locality as a necessary prerequisite to a finding of admiralty jurisdiction. ~ FOOTNOTES

1. This article will be limited 10 a discussion of jurisdiction and will not contain a discussion of remedies available under maritime law, for more complete coverage of those areas. See George, Personal Injury and Wrongful Death-Application of Maritime Law Principles to Inland Waterways and Offshore Drilling Operations-A Review of Jurisdiction Status Problems, and Remedies, 15 Tulsa L. J. 9 (1979). 2. 409 U.S. 249 (1972). 3. 102 S. Gt. 2654 (1982). 4. Smith v. Pan Air Corp., 684 F. 2d 1102 (5th Cir., 1982); Ward v. Director, Office of Workers' Comp., 684 F. 2d 1114 (5th Cir., 1982); Barger v. PHI, Inc., 692 F. 2d 339 (51h Gir. 1982). 5. Atlantic Transport Company of West Virginia v. Imbrovek, 234 U.S. 52 (1914). 6. See, e.g.. Peytavin v. Gov. Employees Ins. Co., 453 F. 2d 1121 (51h Gir. 1972); Chapman v. City of Grosse Pointe Farms. 385 F. 2d 962 (6th Gir. 1972). 7. Ibid 8. Id. at 1126. 9. Id. 10. Id. at 1127. 11. 316 F.2d 758 (3rd Gir. 1963). 12. 46 U.S.G. !761 et. seq. 13. 316 F.2d al 765. 14. Leising. Admiralty Tort Claims-Relationship to Traditional Maritime Activity Required for Admiralty Jurisdiction, 47 Tul. L. Rev. 1143 (1973). 15. 448 F.2d 151, 154 16. Id. 17. 405 U.S. 915 (1972). 18. 409 U.S. at 252. 19. Id. at 253. 20. Id. at 254. 21. Id. al 250. 22. Id. at 259路261. 23. Although the Court alluded to the problem when it stated that "a literal application of the locality test invokes not only the jurisdiction of the federal courts, but the full panoply of the substantive admiralty law," 409 U.S. at 255, in cases where the extension of admiralty was not justified, it did not express what this writer feels was another compelling reason for the rejection of the strict "locality" test. That reason centers around the federalism problems inherent in the grant of federal maritime jurisdiction. Unlike in the

continued on page 8

1In Jlemoriam He that keepeth the law, happy ;s he. Proverbs 29: 18

J. Frank Holt Arkansas Supreme Court Associate Justice J. Frank Holt, aged 73, died Sunday, October 30, 1983, in Little Rock. Justice Holt, a member of one of Arkansas' most politically active families, began his career nearly 30 years ago, beginning in 1954 when he was elected prosecuting attomey for Pulaski and Perry counties. He was elected to three tenns in that office and in 1960 was elected attomey general. In 1962, he was elected to the Supreme Court to complete the tenn of his cousin, the late J. Seabom Holt. In 1964 he was elected to a full eight-year tenn. He finished second in a field of seven candidates vying for the 1966 Democratic nomination for govemor. That race was the only one he ever lost. For two years following his defeat he entered private law practice. In 1968 he retumed to the Supreme Court, winning the seat of Associate Justice Paul Ward, who retired. He was re-elected in 1976 to an eight-year tenn which would have expired at the end of 1984. Justice Holt was bom in Harrison, the ninth of 11 children, as Joseph Frank Holt. He attended Harrison High SChool, where he was student body president, editor of the school newspaper, captain of the basketball team and was elected most outstanding student. In 1929, he entered the University of Arkansas at Fayetteville and graduated president of Pi Kappa Alpha fratemity and a member of Blue Key, the national honorary society. He received his law degree from the University of Arkansas at FayetteVille SChool of Law in 1937. Also that year he received a scholarship to attend the Institute of International Studies in Geneva, where he studied for a year. In 1939, he moved to Little Rock and practiced law until he entered the Army in 1942. He served as a member of the intelligence branch and was released from the Anny on a medical discharge in 1944.

J. Frank Holt He became deputy prosecuting attorney for Pulaski and Perry counties in 1948, serving until he ran for prosecuting attorney. It's been reported that Justice Holt was an avid student of genealogy and a member of one of Arkansas' pioneer families. He had traced the Holt lineage to the Revolutionary War. His grandfather moved from Kentucky to near . Harrison in 1849. Justice Holt was a member of Immanuel Baptist Church, the Arkansas Bar Association, Pulaski County Bar Association, and American Bar Association. He was licensed to practice before the United States Supreme Court. He was former president of the Arkansas Prosecuting Attorneys Association, chairman of the Arkansas Committee on Special Services for Juveniles, director of the National Association of Prosecuting Attorneys and was a delegate to the 1960 White House Conference on Children and Youth. He was also former chairman of the Pulaski County Red Cross Chapter, former co-chairman of the state multiple sclerosis campaign, former chair-

man of the Committee on Americanism for the Arkansas Department of the American Legion and fonner state fund chainnan for Radio Free Europe. He is survived by his wife, Mary Phillips Holt; two daughters, Lyda Frances Samuel of Little Rock and Melissa JeO'l Vandiver of Charlotte, N.C.; five brothers, Claude Holt and J. B. Holl of Harrison, and Judge Jack Holt, Sr., Harlan Holt and Dr. Ernest E. Holt of Little Rock; a sister, Mrs. B. G. Alexander of Pine Bluff, and four grandchildren. James Neal Null James Neal Nutt, aged 33, of Texarkana, died Tuesday. September 27, 1983, near Ida, Louisiana. Nutt, a lawyer with the firm of Smith, Stroud, McClerkin, Dunn, and Nutter, graduated in 1976 from the University of Arkansas at Fayetteville School of Law with high honors as a member of Phi Beta Kappa, a scholastic honor society. He was also a member of Phi Alpha Delta. He served on the Board of the Arkansas Law Review from 19751976 and was admitted to the Arkansas and Texas bars in 1976. He was a member of the Arkansas Bar Association for seven years, serving several terms as a member of the Legislative and Public Information Committees. He also served as treasurer of the Texarkana Bar Association and was a member of the Southwest Arkansas Bar Association, Northeast Texas Bar Association, and American Bar Association. An Army veteran, Nutt was Judge Advocate and 2nd Vice-Commander in the American Legion Post No. 25-58. He was a member of the Lions Club, the Jaycees, and the United Way Cabinet. For the past six years he was co-host of the Annual Temple Memorial Treatment Center's Easter Seals Telethon. He was a Methodist. Survivors are his wife, Cynthia James Nutt; a son, James Neal Nutt Jr., of Texarkana; his mother, Marie Nutt of Mineral Springs; a sister, Neita Buck of Kansas; and, his grandmother, Addie Schooley of Mineral Springs. January 1964/Arkansas Lawyer/7

.. .Admiralty Jurisdiction continued from page 6 case of a grant In JUrisdictIOn due 10 diverSlly of Cl!lzenshlp. when a court assumes JunsdlcHon on the admIralty side, it takes away from the slale In which the cause arose. the power to prescribe the substantive laws to govern the cause. Compare, Erie Railroad v. Thompkins. 304 U.S. 64 (1938) and Southern Pacific v. Jensen. 244 U.S. 205 (1916). 24. 409 U.S. al 266. 25. Id. al 267 26. Id. al 274. (footnote omitted) 27. Id. al 271. 28. 609 F.2d 824 (51h Cir. 1980). 29. Id. 30. Id. Cf. Higginbotham v. Mobil Oil Co., 357 F. Supp. 1164 (D.C. W.o. La. 1973). aH'd in part rev'd in part, 545 F.2d 422. 424 N. I, rev'd on other grounds. 436 U.S. 618. 31. 692 F.2d 337 (51h Cir. 1982). 32. Dickinson, Admiralty JuriSdiction-The Airplane Crash-A Further Exception to the Strict Locality Rule, 25 Mercer L. Rev. 927 (1974); Connolly and Neal. Admiralty Jurisdiction: Executive Jet in Historical Perspective, 34 Ohio SI. L.J. 355 (1973). 33. 102 S.C!. 2654 (1982). 34. Holland v. Sea-Land Services, Inc., 655 F 2d 556 (4th Cir. 1981); Union Oil CO. V. Oppen, 501 F.2d 558 (91h Cir. 1974); Kelly v. Smilh, 485 F.2d 520 (51h Cif. 1973). BUI cf. Watson v. DIS AIS Idaho, 359 F.Supp. 496 (D.C. ED. Pa. 1973); Maryland Dep!. of Natural Resources v. Amerada Hess Corp., 356 F.Supp. 975 (D.C. D.Mo. 1973). 35. 485 F.2d 520 (51h Cir. 1973). Courts which adopted the reasoning of Kelly or found It persuasive include: T. J. Falgout Boats, Inc. v. U.S., 508 F.2d 855 (91h Cir. 1974); S!. Hilaire Moye v. Henderson, 496 F.2d 973 (8th Cir. 1974): Gilmore v. Witschorek, 411 F.Supp. 491 (D.C. ED. IIi. 1976); Clinton Bd. of Park Com'rs v. Claussen, 410 F.Supp. 320 (D.C. SD. Iowa 1976) For other cases sustaining jurisdiction in cases involving pleasure craft see McCormick v. U.S., 608 F.2d 345 (51h Cir. 1982): Hartman v. U.S., 522 F.Supp. 114 (D.C. D. S.C. 1981); 0110 v. Alper, 489 F.Supp. 953 (D.C. D. Del. 1980): Gilmore V. Witschorek, 411 F.Supp. 491 (D.C. E.D. III. 1976). 36. Id. al 526. 37. Id. al 525. 38. .. Reliance on the relationship of the wrong to traditional maritime activity is often more consonant with the purpose of maritime law than is a purely mechanical application of the locality test." 409 U.S. at 267. 39. "It is far more consistent with the history and purpose of admiralty to require also that the tort bear a significant relationship to traditional maritime activity." ld. at 268. See Executive Jet generally for other such language. 40. Compare White v. Johns-Manville Corp., 662 F.2d 234 (41h Cir. 1981); Holland v. Sea-Land Services, Inc., 655 F.2d 556 (4th Cir. 1981):T. J. Falgout Boats, Inc. v. U.S., 508 F.2d 855 (91h Cir. 1974); Petrou v. U.S., 529 F.Supp. 295 (D.C. D. Md. 1981):Jorsch v. LeBeau, 449 F.Supp. 485 (D.C. N.D. III. 1978); Kayfetz v. Walker, 404 F.Supp. 75 (D.C. D. Conn. 1975) with Pino v. Protection Maritime Ins. Co., Ltd., 599 F.2d 10

8/Arkansas Lawyer/January 1984

(1st Cir. 1979); Carroll v. Protection Maritime Ins. Co., Ltd., 512 F.2d 4 (1st Cir. 1974). 41. 512 F.2d 4 (151 C,f. 1974). 42. Id. al 6. 43. Id. at 8. Alternatively, the Court concluded that locality of the tort was on navigable waters. Since the alleged Ions had an effect on vessels upon navigable walers (I.e., the vessels sailed without the blacklisted seamen) maritime locality was found. 44. 684 F.2d 1102 (51h Cir. 1982). 45. Id. at 5 46. Id. at 1. 47 Id. at 17. 48. See discussion of footnote 27, supra. But cf. Ledoux V. Petroleum Helicopters, Inc.. 609 F.2d 824 (51h C,f. 1980). (where Ihe court stated that both locality and nexus to maritime activity were required to invoke admiralty jurisdiction). 49. Support for abrogation of the "locality plus" lesl can be found in the follOWing: Connolly and Neal. Admiralty Jurisdiction: Executive Jet in Historical Perspective. 34 Ohio SI. L.J. 355 (1973); Aviation Tort Claims Arising From Flights Between Points Within Continental United States Not Cognizable In Admiralty. 4 J. Mar. L. and Com. 637 (1973). 50. Since II concluded thai there was no "significant relationship to traditional maritime activity," the Supreme Court in Executive Jet did not reach the issue whether locality on navigable walers was necessary in order to Invoke admiralty Jurisdiction 51. Levinson v. Deupree. 345 U.S. 648 (1953): Coryell v. Phipp. 317 U.S. 406 (1943); Just v. Chambers. 312 U.S. 383 (1941). 52. 409 U.S. al 256. N. 5. 53. George. Personal Injury and Wrongful Death-Application of Maritime Law Principles to Inland Waterways and Offshore Drilling Operations-A Review of Jurisdiction Status Problems and Re路 medies, 15 Tulsa L.J. (1980). 54. 102 S.C!. 88 (1981). 55 102 S.C!. al 2656. 56. 409 U.S. at 256. N, 5. The Court criticized King v. Testerman. 214 F.Supp. 1335 (D.C. E.D. Tenn. 1963) as a mechanIcal adherence to ..the stnct locality rule ...despite the lack of any connection between the wrong and traditional forms 01 maritime commerce and navigation." Id. (footnote omilled.) 57. Crosson v. Vance. 484 F.2d 840 (4th Cir. 1973) (skIer inured by negligent operation of pUlling boat): Jorsch v. LeBeau. 449 F.Supp. 485 (D.C.ND til. 1978) (skier in路 Jured while in the water) Both cases relied upon Executive Jet. 58. 470 F.Supp. 699 (D.C.MD. La. 1979) 59. Id. al 700. 60.ld. 61. Id. al 703. 62. Id. al 704. 63. Richardson v. Foremost Insurance Co.. 641 F.2d 314. (51h C,f. 1981). 64. Id. at 316 (emphasis added). 65. Id. at 315. 66. Id. at 316. 67. 102 S.C!. 2654 (1982). 68. Id. al 2658. 69. 102 S.C!. 2654 (1982). 70. Id. at 2658. 71. Id. al 2659. 72. Id.

In JMemortam He that keepeth the law, happy is he. ProverbS 29: 18

Louis Edward Hurley Louis Edward Hurley, aged 76, died Wednesday, July 13, 1983, in EI Dorado. He was chairman emeritus of the Exchange Bank and Trust Co. of EI Dorado and a charter member of the Arkansas Industrial Development Commission. He served as president of the Exchange Bank for 27 years, until 1969 when he was elected chairman of the Board. He began his banking career at the American Exchange Bank in Little Rock in 1925. A native of Wynne, Hurley received a law degree from the University of Arkansas Law School, was a member of the first graduating class of qtonier Graduate School of Banking at Rutgers University and received an honorary doctor of laws degree from the University of Arkansas. He was a senior member of the Arkansas Bar Association with more than 50 years of service. Hurley has served as president of the Arkansas Bankers Association, treasurer of the American Bankers Association and as a director of the Federal Reserve Bank at St. Louis. He was a board member of the Great Lakes Chemical Corporation, a fonmer board member of the Winrock Corporation, and a former member of the state Banking Commission. Hurtey was a trustee for the Arkansas Presbyterian Foundation, Warner Brown Hospital and First Presbyterian Church in EI Dorado. He was a 32nd degree Mason, a Shriner, a member of Scottish Rite, York Rite, University of Arkansas Century Club, Alton Ochsner Medical Foundation Society and Highlander Association of Arkansas College. Survivors are his wife, Mrs. Marguerite Denham Hurley; three sons, L. E. Hurley Jr. of EI Dorado, Robert Denham Hurley of Hong Kong and George Douglas Hurley of Denver, Colorado; a brother, Harry H. Hurley of Kirkwood, Missouri; 10 grandchildren, and a great-grandchild.



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AICLE NEWS by Claibourne W. Patty, Jr. Executive Director Arkansas Institute of ContinUing Legal Education

FALL CLE ACTIVITIES STARTED EARLY IN 1983 Normally the fall CLE calendar starts with the Fall Legal Institute which is followed within 30 days by the annual practice skills seminar with most of the CLE activity reserved for the spring portion of the Bar year. This year in the 45 day period between August 26 and October 9 there have been five CLE programs presented in which AICLE was an active participant. A sixth program, the third Agricultural Law Institute of which AICLE is a cosponsor, will be held in Little Rock on October 13 & 14. In the past seven years there has not been this much CLE activity in the fall, but perhaps this will set a precedent for future years. A MEDICAL TORTS SEMINAR JOINS THE CLE L1NE路UP A Medical Torts Seminar was presented August 26, 1983 at the Excelsior Hotel in Little Rock. The program, jointly sponsored with the Health Law Committee of the Arkansas Bar Association, chaired by Michael W. Mitchell, was enthusiastically received by 70 lawyers, most of whom were either of the plaintiff or defense trial bar. Anne Owings Wilson presided over the morning session during which the following topics were presented: Summary of Facts-Relevant Substantive Law by Professor Robert B. Leflar and Physician, Hospital and Midwife LiabilityNeurological Issues presented by a panel consisting of Stevenson Flannigan, MD; Niel Fick, Esq. of Baltimore, Maryland; Hugh Hardin, Esq. of Fort Smith; Prof. Robert B. Leflar of Fayetteville; and Phillip H. McMath, Esq. of Little Rock. The luncheon address was by Bernard P. Whetstone, Esq. of Little Rock speaking of the Professional and Practical Experience in Medical Tort Case Evaluation. The afternoon session presided over by Prof. Robert B. Leflar covered the following topics: Physician and Hospital Liability-Obstetrical Issues, Medical 10/Arkansas Lawyer/January 1984

Products Liability by Niel Fick, Esq.; Franklin C. Miller, MD of Little Rock; Hugh Hardin, Esq.; and the topic of Evaluation of the Plaintift's Medical Tort Case by Robert R. Claar, Esq. of Fort Smith. The Health Law Committee was prompted to cosponsor this program in order to assist not only those attorneys new in the field of Medical Torts litigation to acquire skills to try such cases but also to allow established practitioners an opportunity to discuss current legal issues as well as problem-solving techniques. This program certainly achieved these goals, and it is contemplated that the Health Law Committee will consider cosponsoring a follow-up program, if not on an annual basis at least on a 18 month or twoyear cycle. HUD MULTI-FAMILY REGULATORY AGREEMENT SEMINAR HUD Multi-Family Regulatory Agreement Seminar-frequent violations and structuring a sale of a HUD apartment project-was presented August 31, 1983 at the Riverfront Hilton in North Little Rock. This program, jointly sponsored with the U.S. Department of Housing and Urban Development and the Arkansas Mortgage Bankers Association was a first in what I hope will become a series of jointly sponsored CLE programs with appropriate governmental agencies. Even though the program was conducted on a somewhat technical level, it was attended by approximately 70 persons, equally divided among attorneys, CPA's, mortgage bankers, realtors and property owners. The program was planned and chaired by Irene W. Deneau, Area Counsel, Little Rock area office of HUD and the following topics were presented: Regulatory Agreement-Recurring Problems by Joe Madden, Acting Chief, Loan Management Branch, Little Rock HUD Office; Financial Requirements of the Regulatory Agreement by Robert L.

Lanford, CPA; Originating, Packaging, Syndicating and Managing HUD Projects by Roger C. Thurmond, President, Universal Properties, Inc.; HUD Remedies for Violations of Regulatory Agreement by Joe Brinkley, Deputy Director of Housing Management, Little Rock HUD Office; Introduction and Background explaining reasons for recent increase in the number of transfer of physical assets (sales), by John L. Munday, attorney-advisor, Little Rock area HUD office; Legal Aspects of Transfers from the Seller's and Buyer's Point of View, Tom A. Buford, Esq., Little Rock; Financial Aspects of Transfers from a Seller's and Buyer's Point of View, Tonie B. Dixon, CPA and attorney, Executive Vice-President, TJR Development Company, Inc., Little Rock; and What Does HUD Look For in a Transfer Package by Joe Madden and John L. Munday. Needless to say if a program committee and AICLE were to set out and create such a program from scratch and attempt to contact the appropriate governmental departments for input and participation, such a program would never get off a drawing board. In this case the appropriate governmental agency was anxious to present such a program and needed a nongovernmental unit as a cosponsor, therefore the program came in to being in a relatively short period of time with total involvement by the appropriate governmental agency. CREDITORS'/DEBTORS' RIGHTS LAW AND SYSTEM Up路DATE TOPIC OF FALL LEGAL INSTITUTE The 1983 Fall Legal Institute, devoted to an up-date of creditor' /debtors' rights law and system was held at the University of Arkansas Conference Center in downtown FayetteVille with a luncheon and reception at the Fayetteville Hilton adjoining the Conference Center on September 8 & 9. The program was co-chaired by Professor D. Fenton Adams of UALR School of Law

who is the immediate past chairman of the Creditor's Rights Committee of the Arkansas Bar Association and the Honorable Charles W. Baker, US Bankruptcy Judge. Professor Adams presided over the Thursday morning session which consisted of the following presentation: Federal Legislation and Administrative Developments in Debtor-Creditor Relations Law, by James Dendy, Esq. of Little Rock; Federal Decisional Law Developments and Debtor-Creditor Relations by Prof. Robert Laurence of the University of Arkansas at Fayetteville School of Law; and Arkansas Decisional Law Developments and Debtor-Creditor Relations by Prof. Glenn E. Pasvogel, Jr. of UALR School of Law. The afternoon session presided over by Thomas S. Streetman, Esq. of Crossett and present chairman of the Creditor's Rights Committee consisted of the following presentations: Arkansas Statutory Developments and DebtorCreditor Relations Law by Donald H. Henry, Esq. of Little Rock; Current Legislative Developments in Bankruptcy Law by Judge Charles W. Baker; Good Faith in Chapter XIII (US vs. Estus) by Jack Sims, Esq. of Little Rock; and Operating Under General Order Number XXIV by Robert J. Brown, Esq. of Little Rock. Prof. Adams and Thomas Streetman presided over the Friday morning session consisting of the following presentations: Preferences by Charles Darwin Davidson, Esq. of lillie Rock; Automatic Stays by Profs. Don F. Hamilton, Esq. and Donald H. Henry, Esq. of Little Rock; and Why Creditors Like Bankruptcy by Isaac A. Scott, Esq. of Little Rock. Prof. Pasvogel also made a short explanation of the program pertaining to debtors-creditors relations at the outset and the supplement to the Arkansas Creditors'lDebtors' Rights System which he authored. This program was well received by approximately 150 registrants and guests who attended the sessions. There were Arkansas Bar Committee and Section meetings held during the registration period Friday morning and the House of Delegates of the Arkansas Bar met on Friday afternoon. BOB WILKINS OF SOUTH CAROLINA RETURNS TO ARKANSAS Robert P. Wilkins of South Carolina, who has spoken to Arkansas lawyers previously on several occasions concerning the system approach to law practice and the drafting of wills and

trusts, returned to Little Rock on September 16, 1983 to conduct a one day seminar on Drafting Wills and Trust Agreements: A System Approach which followed the 1980 edition of the book authored by him of the same name with an Arkansas supplement prepared by Richard A. Williams, Esq. of Little Rock. This program was jointly sponsored with the Institute of Continuing Legal Education of Michigan, which has been sponsoring these one day seminars by Bob Wilkins at several locations in the United States. The following topics were presented by Mr. Wilkins to the approximately 90 attorneys in attendance: Using Check Lists in Estate Pianning, Drafting the Hypothetical Plan, Creating the Marital and NonMarital Share, the Marital Deduction Trusts, the Non Marital Trust, the Pour Over Will and Simple Will, Plans for Gifts and Techniques on How to Help Children Build an Estate, General Drafting Implications and Planning the Estate, and Word Processing, Computers and Billing in Estate Planning. TWENTY FOURTH ANNUAL PRACTICE SKILLS COURSE HELD IN NORTH LITTLE ROCK The annual Practice Skills Course, jointly sponsored by the Young Lawyers Section of the Arkansas Bar Association of AICLE, is one of the longest running continuous annual programs in the history of Arkansas Continuing Legal Education. lis seniority is tied with the annual Mineral Law Institute, and exceeded only by the annual Fall Legal Institute. The approximately 75 registrants consisted mostly of recent admitees to the Arkansas Bar with some lawyers returning for a refresher course plus some other lawyers who only recently have become active in the practice of law and needed more than just a "fresher." The main part of the two day program, held at the Riverfront Hilton in North Little Rock on October 6 & 7, 1983, provided basic and practical instruction by experienced lawyers along with handout materials, including checklists and current forms, used by these lawyers in their prospective areas of expertise. Typical subjects covered in this course from a practice oriented rather than the substantive law presentation included: Ethics and Avoidance of Malpractice; Real Property; Estate Planning and Probate; Criminal Practice; Workers' Compensation; Domestic Relations; Representation of Creditors and Debtors and Civil Litigation.

An optional session, which was an innovation for the annual practice skills course, cosponsored by the Section of the Economics of Law Practice of the Arkansas Bar, was devoted entirely to the problems of opening a law office with specific reference to LocationWhere to Practice, Setting Up Shop-How To Get Started, and Operations-How to Maintain Practice. This particular session, which was directed to those attorneys who are self employed or are starting as a partner in a two or three person law firm, was conducted in one of the UALR School of Law classrooms at the Arkansas Law Center. It has been observed in the past that approXimately half of the registrants at a practice skills course are not employed by established law firms, corporations or governmental units and have been in desperate need of nuts and bolts advice on starting up and maintaining their own law practices. The problem in the past has been that the session on law office management was considered redundant by those who were employed by others and inadequate by those who were self employed. It is hoped that this sort of session will become a permanent feature of the annual practice skills course. THIRD ANNUAL AGRICULTURAL LAW INSTITUTE HELD IN LITTLE ROCK By the time you read this news article the Third Annual Agricultural Law Institute, jointly sponsored the Agricultural Law Committee of the Arkansas Bar Association and the University of Arkansas School of Law at Fayetteville, will have been held on October 13 to 14, 1983 at the Excelsior Hotel in Little Rock. In addition to the institute itself, as a first, the Fourth Annual Meeting and Educational Conference of the American Agricultural Law Association was held. Dean Jake Looney of the University

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of Arkansas at Fayetteville School of Law is the president-elect of the American Agricultural Law Association, and he presided at the American Agricultural Law Association Business Meeting, a portion which included welcoming remarks by Steve Clark, Attorney General of Arkansas, and a keynote address by Harold Breimyer, Prof., University of Missouri, Dept. of Agricultural Economics, on the subject of"Agriculture at the Crossroads: Agricultural Policy Issues Beyond the Eighties." The CLE portion of the institute consisted of the following topics: Water Resource Issues in the Future of Irrigated Agriculture; Ground and Water Control Measures: The Critical Issues and Developing Problems; Legal and Institutional Barriers to Market Transfers and Reallocation of Water Resources; Tax Ramifications of the Ownership of Natural Resources by Farmers; an Overview of Current Legal Issues Facing USDA; Representing Farmers in Administrative and Court Proceedings Involving USDA; Farmers Appeal Rights to Local USDA Administrative Proceedings; Representing Farmers in Bankruptcy Proceedings; Protecting the Lenders' Rights When Farmers File for Bankruptcy; Problems Arising From the Sale of Mortgaged Farm Products; Proposals for Improvement in Agricultural Marketing Transactions; Corporate, Foreign and

Other Investments in U.S. Farm Lands; and Domestic and Non-Resident Alien Investment in Agriculture: Investment Structuring Techniques for Off-Farm Investors. PROGRAMS IN PROGRESS:

ARKANSAS-FEDERAL TAX INSTITUTE RETURNS TO LITTLE ROCK The Arkansas Federal Tax Institute, jointly sponsored with the Arkansas Society of CPA's, will be held at the Little Rock Excelsior Hotel on December 1 & 2, 1983. The faculty, made up jointly of lawyers and CPA's, will discuss current topics and mutual interests of lawyers and CPA's concerning state and federal tax issues. The brochure more fully describing topics will be mailed to the Bar membership within the next 30 days. REGIONAL VIDEO REPLAYS OF THE FALL LEGAL INSTITUTE Since the topic of the Fall Legallnstitute concerning Creditors' /Debtors' Rights Law and System Update is of such broad interest, regional video replays of this program will be conducted in Jonesboro, Monticello, Magnolia and Little Rock during November and in early December; and a brochure will be sent to the Bar membership giving the exact dates, locations and specific topics to be presented on a one day

format. Professor Glenn Pasvogel of the UALR School of Law, who authored the original creditors'/debtors' rights system and the most recent supplement, will make a live presentation on recent decisions in the area and explain the supplement itself. MID-YEAR DEVOTED TO RECENT DEVELOPMENTS IN THE LAW The annual mid-year meeting of the Arkansas Bar Association will be held at the Camelot Hotei on January 20, 1984, and the CLE portion this year will be devoted to an intensive one day review of recent developments in the law, which will include but not be limited to Constitutional Law decisions, a Tax Law update for the general practitioner, an update on DWI Law in Arkansas, Civil Procedure, Economics of Law Practice, and other selected topics. The program planners are anxious to see what reception this new intensive one day format will receive by the Bar membership, and it might very well set the standard for future mid-year Bar meetings. There will of course be the usual activities involving the Arkansas Bar Foundation and meetings of sections and committees of the Arkansas Bar, as well as the semi-annual meeting of the House of Delegates on Saturday, January 21.

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Rodney P. Durkee 9 Johnnycake Lane Little Rock, AR 72211 Phone: (res) 501/225-3652 Little Rock 501/378-4676 Springfield 417/887-3093

January 1984/Arkansas Lawyer/13

By lames A. Holcomb President, Indiana Bar Foundation

IOlTA. IOlTA. What in heaven's name is IOLTA? Is it I ndiana Older ladies Tennis Association? o! Is it E.T.'s telephone exchange in outer space? o! o! No! It is none of these things. IOLTA is "interest on lawyer trust accounts," which may be the most revolutionary concept to fund law related public interest activities that has ever been conceived. lawyers have traditionally deposited clients' funds which were nominal in amount or to be held for a short period of time in trust in non-interest bearing accounts.

Wait a minute. That can't be done because interest earned on a client's

money belongs to the client and doesn't belong to the lawyer. The lawyer has no right to use interest earned for law related public

interest activities. This is a taking of client property without just compensation in violation of the Fifth Amendment, which is applicable to the states tf1rough the Fourteenth Amendment and parallel provisions in State Con-

stitutions. Well, it appears that may not be the case. The Supreme Court of Florida recently addressed that issue in the case of In Re Interest on Trust Ac-

The time is 'Now'

Occasionally there are individual sums held by a lawyer which are likely to generate significant interest and by the canons of ethics and the normal practice of the profession those funds are deposited in interest-bearing accounts for the benefit of the client.

counts, 402 Southern 2nd, 389, Florida (1981).

The vast majority of sums, however, are placed in non-interest bearing trust accounts for it is impractical to establish separate interest-bearing accounts for a client, or to attempt to compute the interest commingled in a single account.

Justice England in speaking for the Cou rt said," 0 client is compelled to part with property (by reason of a state directive), since the program creates income where there had been none before, and the income thus generated would never benefit the

The IOlTA concept is quite simple. Client funds that are in a lawyer's pos-

session which are nominal in amount or to be held for a short period of time, can be pooled in a trust egotiable Order of Withdrawal ( OW) account and the interest generated by this account is allocated to law related public interest activities through a non-for-profit corporation such as the Indiana Bar Foundation. 14{Arkansas lawyer/January 1984

not receiving notice of the interest earned and its disposition.

In addition, the Judge indicated that the program was voluntary from the prospective of attorneys, and no attorney or firm would participate in the program in the face of a strenuous objection from its clients. While each state will need to review the Constitutional issues, the reasoning of the Florida decision appears to be logical and compelling. In the American Bar Association Report to the Board of Governors by their task force and advisory board on JOLTA, is the following: Therefore, as more states consider an IOl TA program, the taking issue will, until the U.S. Supreme Court perhaps resolves the matter, require solution by each state. It would seem that (1) the more practicably unobtainable the interest is from

the clients who own the funds, (2) the

client under any set of circumstances."

Notice would not be necessary to the client because if the client has no substantial protectable property right in the income earned by his funds invested in the program, there is no requirement of notice. If a client does not have a constitutional right to reach the funds and protect them, it would appear that the client does not lose anything by

more direoly benefits can be traced to society in general including fund'owners in particular and (3) the more tailored the vehicle within the state for insuring delivery of that benefit to specific intended beneficiaries, the better chances are of an IOl TA plan surviving a Constitutional

challenge. Why have such a program? Some people would say the money is probably going to be used to help lawyers and they have enough money already. That's wrong! The money doesn't belong to lawyers. It must be used for public purposes. The majority of the money raised in Florida, namely, 80 percent, and all of the money raised in two other programs in California and Maryland is being used for legal aid to the poor. With the cut back in federal fund-

ing for legal services to the poor and needy of this country, it is imperative that the legal profession itself take steps to find funds to insure representation of the poor within our legal system. An IOlTA program in Indiana would surely strive for this result.

History The background of this program begins with the experiences of foreign jurisdictions. Foreign bar entities have put interest income to work for public service projects since the 1960s. British Columbia appears to be the first province which used the program and its 4,600 lawyers raised $8,345,999 in the fiscal year ended December, 1981. This averages out to $1,957 per lawyer. The Province of Ontario with 10,687 lawyers raised a total of $15,899,812. All of the Canadian Provincial IOl TA programs raised a total for public service projects of $34,498,327. These are impressive numbers, but there are two features of the Canadian programs that were put into effect which distort what can be expected from a program in an Ameri-

institutions no less frequently than quarterly. Payment is made directly to the Florida Bar Foundation which is a notfor-profit 501 (cI(3) Foundation. Florida then filed for an Internal Revenue Ruling on whether there was an assignment of income, and

whether the Internal Revenue Service would want income tax paid by the client on the funds that were earned. After a long series of meetings and conferences, the Internal Revenue Service issued Revenue Ruling 81-209, 1981-35I.R.B. 5, and said in that ruling that based upon the facts set forth, interest earned on clients' nominal and short-term advances deposited in a lawyer's trust account and paid to a Section 501(c)(3) Bar Foundation pursuant to a program established by a State Supreme Court is not includable in the clients' gross income.

(1) to provide legal aid to the poor; (2) to provide student loans; (3) to improve the administration of justice; and (4) for such other programs for the benefit of the public as are specifically approved from time to time by the Florida Supreme Court lor exclusively public purposes. (Emphasis added) In addition, another problem was solved when the chief counsel of the Federal Reserve Board opined that the Florida Bar Foundation program conformed to the regulations of the board. With the Internal Revenue Service and banking problems out of the way and some corrections in the Court decision that had been previously approved by the Supreme Court, Florida embarked on its IOlTA program. This was in December of 1981. There are approximately 28,788 lawyers in Florida and as of August of 1982,7 percent of them had signed up in the IOlTA program, which amounts to some 2,015 lawyers.

can state.

First, participation in the programs by Canadian attorneys is mandatory and since there are no title insurance companies in the provinces, attorney

trust funds include proceeds of real estate transactions, which is not believed to be a prevailing practice in all states of the United States. In 1976 the governing boards of the Florida Bar and Florida Bar Foundation adopted the concept of pooling c1ien! funds that are nominal in amount or to be held for a short period of time for the purpose of generating interest for public service projects related to the law. The Supreme Court was then approached to change the rules on lawyers' trust fu nds. In March of 1978, the Supreme Court of Florida issued its initial decision authorizing establishment of the voluntary program through which interest is paid by financial

Florida Pioneered IOLTA in America

In the opinion of the tax counsel of the Florida Bar Foundation, the ruling eliminated the assignment of

The IOlTA program with 7 percent of the lawyers signed up in August of 1982, had raised $358,000 for the Florida Bar Foundation. According to spokesmen for the Florida Bar Foundation, it is anticipated that if the 7 percent of the lawyers remain involved for a full year, the program would raise approximately $1 million. Subsequent to the Florida experience, the states of Massachusetts and California have also embarked on IOlTA programs.

interest income issue irrespective of

whether it was a large, short-term deposit or a nominal advance because either one cannot produce income for the benefit of the client and consequently, if no income is produced, no income can be assigned. The Revenue Ruling also approved the use of the funds for four specific purposes:

Editor's Note: We are indebted to the Honorable James A. Holcomb for permission to reprint his "IOLTA" article, which first appeared in Res Gestae, the Bar Journal of the Indiana Bar Association. His article was selected to assist in the briefing of the Arkansas Bench and Bar, as to the Interest on Lawyers' Trust Accounts program and its many related benefits. January 1984/Arkansas Lawyer/15

California had their legislature pass an IOlTA plan because in California the code of professional responsibility is a law passed by the legislature. In Florida as in many other states, the rules of conduct of the legal profession are the exclusive province of the Supreme Court. The California Statute will be mandatory for some 40,000 accounts, and will cover accounts in Banks and in Savings Associations. California uses the rule of reason in determining what is nominal or short-term, and lawyers under the law make the decision as to whether or not it is practical to segregate the funds. A similar legislative program is in place in Maryland. Maryland in expanding on the IOlTA concept has created a legal service corporation to administer the funds and provide legal services to the poor. All of Maryland's funds less administrative expenses are used for these purposes. In determining what is nominal or short-term, Maryland has established a $50 standard. The $50 benchmark or standard is not the amount of the money on deposit but the interest earned. Maryland lawyers in studying their program determined that $50 was what they called a "benchmark" or "safe harbor" figure at which interest must accrue to offset administrative

or additional overhead costs. It was determined that administration costs would eat up all interest on accounts unless the account could generate at least $50. Maryland uses the $50 and allows lawyers there to calculate a larger figure if it can be justified by higher administrative costs. Guidelines are set out in the Maryland Statute to help the lawyer in making the decision.

The following table, for example, was constructed in Maryland. Principal deposit

No. of days required to generate $50 of interest at 5!h% compounded daily

500 654 1,000 335 2,000 169 5,000 69 10,000 34 20,000 17 30,000 12" l6/Arkansas lawyer/January 1984 $

The state of Idaho has recently implemented its IOlTA program, and in a report to its Foundation on February 15, 1982, the special committee on funding sources set out the amendatory program for changing the disciplinary rules in Idaho. Similar programs were developed in amending rules governing lawyers in other states implementing programs. Disciplinary Rule 9-102 of the Code of Professional Responsibility in Indiana is the Court rule which would be changed to allow a lawyer to elect to create and maintain an interestbearing account for clients' funds which are nominal in amount or to be held for short periods of time. Provisions are made in the rule that no earnings would ever be made available to lawyers or law firms. The accounts would be set up in a bank or savings and loan association insured by the Federal Deposit Insurance Corporation, and interest rates paid would be the same as paid to regular non-lawyer depositors.

requirements of Disciplinary Rule 9102(B) are met. These requirements require notice to a client, identifying of the properties, maintaining a complete record of the funds, and prompt payment to clients.

The opinion in this discussing these requirements states: In addition to expenses created by the notification, record keeping and account-

ing requirements of DR 9-102(8), lawyers may incur other costs in anempting to place clients' funds at interest. Income tax filings may be necessary to permit the client to report the interest earned on the funds, and the bank handling fees may further reduce the potential return. It is evident, therefore, that in many - if not most - instances, the accounting and administrative costs, plus any bank charges, will more than offset the potential gains to the client.

Payments of interest would be made on a quarterly basis and there would be no impairment of the right to withdraw or transfer principal immediately.

Thus, while no ethical rule prescribes placing client funds at interest for the benefit of an individual client, administrative costs and practical considerations often will make it self-defeating for the lawyer to attempt to obtain interest on small sums or even on large sums of clients' funds held for short periods of time.

The lawyer or law firm under the program merely instructs the facility

Because of the problems of investing funds, there is no disciplinary rule

holding the trust savings account to

that says a lawyer has a duty to invest

remit the interest or dividends at least quarterly to the applicable Bar Foundation with records to the foundation and the lawyer or law firm showing the payments that have been made.

clients' nominal or short-term funds that are entrusted to his custody. The opinion traces trust law, and the lawyer's duty not to use interest earned on clients' funds to defray the law-

Ethical questions

yer1s own operating expenses, but

Irrespective of the solving of Constitutional and tax questions, some

may question the legal ethics of lawyers participation in an IOlTA program. This question was posed to th0 Standing Committee on Ethics and Professional Responsibility of the American Bar Association, and on

July 23, 1982, Formal Opinion 348 was issued reviewing the history and potential problems of these accounts. The opinion noted that there is nothing currently in the model code of ethics that prohibits a lawyer from placing clients' funds in interestbearing accounts so long as the other

then states that the IOlTA program is much different and concludes as follows: In the opinion of the commiltee, however, the rationale for the ethical acceptability of these programs is the same as the premise for acceptability in constitutional law and tax law. The client has no right under the cir路 cumstances to require the payment of any interest on the funds to himself or herself because the amount of interest which the funds would earn is likely to be less than the appropriate charges for administering the earnings. The practical effect of implementing these programs is to shift a part of the economic benefit from deposilOry insti-

tutions to tax-exempt organizations. There is no economic injury to any client. The program creates income where there was none before. For these reasons, the interest is not client funds in the ethical sense any more than the interest is client property in the constitutional sense or client income in the tax law sense. Therefore, assuming that either a court or a legislature has authorized a program with the attributes described aboved and thus, either implicitly or explicitly has made a determination thai the interest earned is not the clients' property, participation in the program by lawyers is ethical.

Conclusion -

the need for action

The activities of the states implemenling IOlTA programs appear to indicate that they are both legal, equitable and practical. Steps, therefore, should be taken in Indiana to immediately develop the plan and forms to implement the concept, proposed ru Ie changes, and tax and other rulings if determined to be needed. Once the Foundation and the Bar Association are ready 10 lake lheir program to the "public," banking interests should be contacted to work out final details and to elicit their support. While banking interests may be somewhat less than enthusiastic on the prospect of paying interest on funds which have been normally deposited with them without accruing interesl, it is believed from the experiences in Florida and other states that the banks will be willing to pay reasonable rales of interest in order to attract deposits. Participating in a program for the public good is certainly good publicity for the banking industry.

In addition to contact with the banks, other states have determined and found that attorney education is quite important because of initial skepticism and misunderstanding concerning the program. Implementation programs in other states have included magazine articles, mailings, and even an honor roll of participating lawyers and financial institutions. Florida, Idaho and other states implementing IOlTA have indicated that they are making efforts to keep

Who will care for the poor and needy? the burden on practicing attorneys and law firms to a minimum.

Think of this and the ramifications in Indiana! There are over 9,300 lawyers in Indiana. Florida statistics show that each lawyer involved in their program is producing $177.67 in the time that it existed, which was about one-half a year. If that rate keeps up, it would amount to approximately $355 per lawyer. If this figure were applicable in Indiana and only 50 percent of the 9,300 members joined in an Indiana IOlTA Program, it would amount to approximately $1,650,000 in a year's time. Financial institution computer capabilities on sub-accounting may change so that there is general availability of sub-accounting路in the future, which might well invalidate the justification for an IOlTA program or at least diminish the pool of funds for which it is lruly impractical to allocate.

Finally, they are preparing and delivering explanatory statements to news media in their states and to other significant newsmakers such as key legislators in order to obtain public support for their program.

With the dollars involved in this program, it is imperative that Indiana move ahead to explore and implement lhe concept. Using a "play on words" by the account by the same name, the time is "NOW!"

The initial spade work has been done and the ground has been broken by states like Florida, Maryland, California and Idaho. The IOlTA concept is now in place and in operation in the United States.

Recently Newsweek Magazine in discussing the reduced federal and state spending for social programs posed the question: "Who will care for the poor and the needy?" Indiana lawyers and judges in implementing IOlTA can certainly improve legal services and proudly answer that aspect of the question - We will!

The Virginia Bar News published in July of 1982, estimates that there are 437,000 lawyers in the United States and that they have an average balance of $4,000 in their nominal trust accounts. This would raise some $100 million nationwide for law-related programs.

路American Bar Association Report to the Board of Governors Task Force and Advisory Board on Interest on Lawyers Trust Accounts, July 26, 1982.






January 1984/Arkansas lawyer/1?

A Brief Review Of Estate Valuation Handbook

jTL In its first publication of a "Wiley Tax Library" title, John Wiley & Sons has just recently published the Estate Valuation Handbook by Lawrence H. Averill, Jr., Dean of the University of Arkansas at Little Rock Law School. The Estate Valuation Handbook is undoubtedly the most comprehensive treatment of the subject of estate valuation available under one cover. In excess of 400 pages, the book discusses the valuation of all types of assets, both for transfer tax and other purposes, and is an invaluable resource for any attorney engaged in estate planning or estate administration. Arkansas lawyers should take particular pride in the fact that this important publication, which is very likely to become a standard reference, was authored by one of our own. The Estate Valuation Handbook is

divided into three parts. Part One discusses the "why and when" of valuation, including the impact of tax considerations and property transfer considerations on the valuation process. Part Two describes in detail the methods for valuing all types of assets. Part Three reviews estate planning techniques that heip resolve potential valuation problems. The Estate Valuation Handbook has a very comprehensive table of contents and index, as well as extensive appendices and bibliography of reference materials, which make it very easy to find information on a particular point of interest. The volume contains numerous worksheets, checklists, tables, and practical examples. The book would be especially helpful in the preparation of U.S. Estate Tax Returns involving hard-to-value assets, such as closely-held business interests. As most of you know, Dean Averill is relatively new to the State of Arkansas, but has had more than 17 years of ex-

perience in teaching estate planning, decedents' estates, and related areas, as a Professor of Law at the University of Wyoming. He is current chairman of the Committee on Significant Current Literature of the Probate and Trust Division of the Section of Real Property, Probate and Trust Law of the American Bar Association, and is also an Academic Fellow of the American College of Probate Counsel. He has written and spoken frequently on subjects relating to estate planning and administration. He received his J.D. Degree from the American University and LL.M. Degree from George Washington University. It is contemplated that the Estate Valuation Handbook will be updated periodically, as the need arises. It is available from the Publisher (Wiley Tax Library, John Wiley & Sons, 605 Third Avenue, New York, New York 10157) at a cost of $65. William D. Haught, Chairman Economics of Law Practice Committee



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Comprehensive Vocational Evaluations for. Divorce Cases, Social Security Disability Cases, Long Term Disability Cases, Auto No-Fault Cases

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,. -







P fi •







Unlike most programs, the Arkansas Bar Association-sponsored Lawyers Professional and Business Liability Program from CNA Insurance offers an occurrence policy. That's important. Because under occurrence coverage, you are protected for events which occur during the policy period, whenever they are reported-even after you retire. With claimsmade policies, you are covered only for claims reported during the policy period, and the only way to extend your protection is to purchase an extended reporting endorsement-a costly and not altogether ideal alternative. • Extended reporting coverage may not always be available to you when you leave your present firm or retire. • Extended reporting coverage is expensive-any savings you may realize on the purchase of a claims-made policy may be lost when you purchase the extended reponing coverage in one large lump sum. • An extended reporting endorsement provides coverage only up to the limit you


e. purchased on your last policy. Yet, this limit must be adequate to cover the claims which may be made from all prior years of practice. With the Arkansas Bar-sponsored occurrence program, you don't have these problems because you are purchasing a set of limits for each year of practice-giving you complete protection. That's just one reason why your association has sponsored the Lawyers Professional and Business Liability Program for the past 20 years. For more information on what occurrence coverage can mean for you, contact the program administrator. Arkansas Bar Association Administrator Rather, Beyer & Harper 362 Prospect Building Little Rock, Arkansas 72207 (SOl) 664-8791 The Arkansas Bar Associalion-sponsored Lawyers Professional and Business Liability Insurance Progmm is underwriuen by Contincmal Casualty Company and Valley Forge Insurance Company.


of the

CNA Insurance Companies.

January 1984/Arkansas Lawyer/19

LAW SCHOOL NEWS Dean J. W. Looney Associate Dean John M. Sheffey

SCHOOL OF LAW, UNIVERSITY OF ARKANSAS AT LITTLE ROCK Faculty Notes Professor O. Fred Harris, Jr.'s book, Wrongful Death in Arkansas, has been published by the Harrison Publishing Company. Professor Harris is on leave for the current academic year and is serving as visiting professor at the University of Cincinnati College of Law. Professor Harris is a recipient of a 1983 Outstanding Young Men of America Award from the United States Jaycees. Professor Morell Eugene Mullins' article, "The Creeping Eruption of Mt. Healthy," which examines the influence on labor law of the recent U.S. Supreme Court decision in Mt. Healthy City School District Board of Education vs. Doyle, was declared the winner of the Detroit College of Law Review Annual Labor Law Writing Competition. The article will appear in an upcoming edition of that Law Review. Professor Mullins has also been appointed Circuit Faculty Coordinator for the American Bar Association's National Conference of Administrative Law Judges. A book by Professor Jason G. Reynolds, Arkansas Uniform Rules of Evidence, has been published and is available from the Harrison Publishing Company. Professor Ellen B. Brantley has also written a book, Probate and Administration: The Law in Arkansas, which she co-authored with William D. Haught. A new member of our faculty, Professor John M.A. DiPippa, joined us in the fall semester. Professor DiPippa is a graduate of West Chester University and Washington and Lee University School of Law, where he was a member of the Order of the Coif and a contributor to the Washington and Lee Law Review. He has also served as 20/Arkansas Lawyer/January 1984

managing attorney for the Legal Aid Society of Roanoke Valley, Virginia. Professor DiPippa teaches courses in constitutional law, criminal law and criminal procedure. Professor Murl A. Larkin will join our faculty for the spring, 1984 semester as a visiting distinguished professor of law. Professor Larkin, on leave from Texas Tech University School of Law, has written several books on evidence and military law and will be teaching courses in evidence while at UALR. An article by Professor Arthur G. Murphey, Jr., entitled "Acceptance and Dishonor: 'Payable through' Drafts and Personal Money Orders," appeared in a recent edition of the UALR Law Journal. Professor D. Fenton Adams served as program co-chairman of the Arkansas Bar Association's Fall Legal Institute. The subject of the institute was creditors' /debtors' relations and one of the presentations was made by Professor Glenn E. Pasvogel, Jr., who spoke on Arkansas case law developments. Professor Fred W. Peel, Jr., testified on sales tax and other means of raising revenue before the Arkansas Legislature's Joint Interim Committee on Revenue and Taxation. Professor Peel's testimony was offered in preparation for the special legislative session called to consider funding for education. Assistant Dean Claibourne W. Patty, Jr., spoke to business law classes at McClellan High School about law and the legal profession. He also spoke about continuing legal education at an orientation program for newly admitted attorneys. Donaghey Distinguished Professor Robert R. Wright delivered a lecture at an American Bar Association General Practice Section Regional Institute on developments in condominium law and

practice. He discussed the background and historical development of condominium law in the United States. Professor Wrig ht also chaired the joint American Bar Association-Association of American Law Schools team that inspected Texas Tech University School of Law. Associate Dean John M. Sheffey has been appointed to the American Bar Association's Federal Regulation of Securities Committee and its Subcommittee on Annual Review of Securities Regulation. Dean Sheffey is a regular participant in the PreBusiness Workshops sponsored by the Small Business Development Center. He speaks on the choice of business form. Professor Philip D. Oliver's article, "Investment Tax Credit: The Illusory Incentive," was published in the Virginia Tax Review. Professor Oliver addressed a luncheon meeting of the Pulaski Tax Counsel regarding recent proposals of the academics on marital status as a factor in federal income taxation. Professor Oliver also conducted an eight-hour short course for practicing attorneys on basic income tax. The course was sponsored by the Pulaski County Bar Association.

Rockefeller Scholars The third year of the Winthrop Rockefeller Foundation's grant to the Law School brought three more scholars to the UALR School of Law. Deborah Davis, a graduate of the University of Arkansas at Pine Bluff, and Joyce Biddle and Austin Porter, graduates of the University of Arkansas at Little Rock, enrolled in law school this fall as Rockefeller Scholars. Each of the scholars, who were selected by a board of black Arkansas

attorneys, received a full tuition scholarship and a generous stipend in each of their three years of law school, provided they maintain a minimum grade point average. The three 198384 scholars join five others who enrolled in the Law School under this program in earlier years. The goal of the Winthrop Rockefeller Scholars Program is to increase the number of talented and committed black law students in Arkansas who will, after graduation, remain in Arkansas and serve as bar, community and governmental leaders and role models for the young. Justice Rehnquist Delivers Altheimer Lecture Associate Justice William H. Rehnquist of the Supreme Court of the

United States delivered the Ninth Ben J. Altheimer Lecture at UALR on September 23rd. Justice Rehnquist spoke to a standing room only audience at the UALR Fine Arts Concert Hall. The title of his address was "JUdge Isaac Parker, Bill Sykes and the Rule of Law." In the lecture Justice Rehnquist spoke of the need to strike a balance between protecting the rights of criminal defendants and society's legitimate interest in retribution for serious crimes. The reception which followed was co-sponsored by the Arkansas Bar Association and the Pulaski County Bar Association. For those who may have missed it, Justice Rehnquist's address will be published in an upcoming edition of the UALR Law Journal. Justice Rehnquist spent two days in

Little Rock during which he followed a busy schedule in addition to the Altheimer Lecture. Upon arrival in Little Rock he held a press conference with the local news media and attended a reception at which he was able to meet and talk with many members of the Federal Judiciary in Arkansas and the Arkansas Supreme Court, as well as the leaders of the state's legal community. The following morning Justice Rehnquist met with UALR law students and answered their wide-ranging questions on constitution law, the Supreme Court, and other matters. The Justice then spent an informal hour with the law faCUlty responding to their questions and exchanging views. Dean Averill then conducted an interview for television with the Justice.

SCHOOL OF LAW, UNIVERSITY OF ARKANSAS, FAYETTEVILLE Class of 1986 The 1983 first year class of 146 consists of students from 19 states and 43 Arkansas counties. This class represents the smallest entering class in over ten years and results from the adoption of a more restrictive admissions program in 1980. Attorney General Steve Clark was the principal speaker at the orientation program for the new students. Law Review Apprentices Selected Fourteen apprentices have been selected for the staff of the Arkansas Law Review for the year. To be considered for full membership the apprentices must submit a casenote by midwinter. Those selected are: Lee Brown Little Rock Mike Cessna Rogers Shirley Guntharp Jonesboro Micki Harrington Hendersonville, NC Richard Hutto Blytheville Gary Jones Belton Tom Mars Dover, DE George Oleson Chesapeake, VA David Ozbirn Searcy Skip Smith Jonesboro Ft. Smith Susan Speaker Ralph Waddell Jonesboro Steve Williams Batesville Todd Williams Jonesboro Student Trial Lawyer Association Formed A new student organization, the Students Trial Lawyers Association, af-

filiated with the American and Arkansas Trial Lawyers Association, was organized during the fall under the guidance of Joe Reed, Supervising Attorney of the Legal Clinic. The purpose of the organization is to assist students in acquiring courtroom skills and to provide information on trial practice. Pending future elections the following persons have been appointed to office: Kilty Gay, Docket Reporter; Bill Parker, Local Programs; Greg Stephens, Special Programs; Butch Hale, Membership and Finance. Court of Appeals Visit The Arkansas Court of Appeals heard oral arguments at the Law School in October. This event was held in conjunction with the fall semester course in Appellate Advocacy. Faculty Activities Professors Rodney Smolla and Linda Malone have an article in the DePaul Law Review entitled "The Future of Defamation in Illinois After Colson v. Steig and Chapski v. The Copley Press, Inc." Professor Howard BriWs article "The Citizen's Relief Against Inactive Federal Officials: Case Studies in Mundamus, Action 'In the Nature of Mundamus' and Mandatory Injunctions" appeared in the Akron Law Review. Professor Linda Malone has received an honorarium from the Association of Arab-American University Graduates, Inc. to prepare a legal study of the Kahan Report-the Israeli

investigation of the refugee camp massacres in Lebanon. Professor Robert Laurence spoke at the Fall Legal Institute on federal court rulings in the area of creditor's remedies. Professor Howard Brill is serving as visiting professor for the fall semester at the University of South Carolina School of Law. Professor Don Pedersen, Director of the Agricultural Law Program, has prepared a chapter supplement on farm labor law for Agricultural Law published by Shepards/McGraw Hill. Professor David Newbern spoke at Benton County and Clark County Bar Association meetings on the revised rules of civil procedure in Arkansas. Professor Rob Leflar was one of the organizers of the Medical Torts seminar held during the early fall sponsored by the Health Law Committee of the Arkansas Bar Association and developed the hypothetical situation which was the focus of the discussion. Professor AI Witte developed a continuing legal education program for the staff of the Attorney General's officethe first mandatory program of its kind. Placement Activities During the fall semester several out-of-state law firms from Oklahoma City, Dallas, Tulsa, Memphis, Houston, Austin and San Antonio, along with Arkansas firms from Little Rock, Pine Bluff, Hot Springs and Fort Smith, conducted interviews at the law school. Assistant Dean Jim Miller coordinated the visits.


January 1984/Arkansas Lawyer/21

ARKANSAS BAR fOUNDA r'ON by: Cyril Hollingsworth

The work of the Arkansas Bar Foundation takes many forms. Two of the basic, ongoing programs of the Foundation are scholarships for law students and awards recognizing outstanding service to the legal profession and to the public. Scholarships Through The Foundation. The Foundation manages and provides income from funds which have been contributed for scholarships to students at both the University of Arkansas School of Law and the University of Arkansas at Little Rock School of Law. The Foundation provides some scholarships in its own name from general funds contributed to the Foundation. However, most of the scholarship funds are the result of specific scholarships in memory or recognition of individuals or firms. The following is a list of the current scholarships: Arkansas Bar Foundation Scholarships for FY 1983-84 School of Law-University of Arkansas at Little Rock Scholarships Amount Friday, Eldredge & Clark. . . . . . . . . . $ 350 (Jerry T. Light $150-Boyce R. Love $200) Sharp-Bogle $ 250 $ 200 Harry P. Warner Cecil R. Warner $ 200 Rather, Beyer & Harper ..........•.•...•......$ 250 Edward Lester $ 200 Judge Henry Woods .........•.....•...•......$ 200 R. A. Eilbott, Jr $ 300 E. Charles Eichenbaum $ 1,500 Arkansas Bar Foundation ............•.•......$ 400 Arkansas Bar Foundation Second year students $ 400 Rose Law Firm . $ 2,250 Rose Law Firm $1,500 U. M. Rose $ 750 Thomas Clark Trimble $ 700 (Awarded on alternate years) $ 375 Bud & Bernard Whetstone Scholarship Colonel C. E. Ransick Scholarship $ 200 Editorial Board Scholarships (both Law Schools) . . . . . . . . . . . . . $ 2 500 Total $10,275 University of Arkansas School of Law Fayetteville Scholarships Friday, Eldredge & Clark (Jerry T. Light $150-Boyce R. Love $200) Sharp-Bogle. . . . . . . . . . . . Harry P. Warner 22/Arkansas Lawyer/January 1984

Amount $ 350 $ 250 $ 200

C. R. Warner ..............•.•.•.•.•..........$ 200 Rather, Beyer & Harper ..........•.•.•...•.....$ 250 Edward Lester .... . ......•.............•.....$ 200 JUdge Henry Woods $ 200 R. A. Eilbott, Jr....................•...........$ 300 Arkansas Bar Foundation ........•.............$ 400 Arkansas Bar Foundation Second year students $ 400 $ 450 Judge John E. Miller Bud & Bernard Whetstone $ 375 $ 500 Joe C. Barrett Commercial Law Award $ 900 Joe C. Barrett Scholarship Judge John Fogleman ....•...... ~ (Awarded on alternate years) ., Colonel C. E. Ransick Scholarship $ 200 Editorial Board Scholarship $2,500 (both Law Schools) Total $8,125 The Foundation encourages contributions to scholarship funds as a meaningful way to support legal education and the legal profession. The Scholarships and Memorials Committee for this Foundation year is chaired by Ted Skokos and includes Keith Arman, Randy Coleman, Mark Lester, and Alan Wooten as members of the Committee. Time to Consider Awards. Now is the time for each local .bar association to be aware of the recognition given by the Arkansas Bar Foundation each year to the work and programs of local bar associations. The Foundation encourages each bar association to submit an entry for such awards. which are given each year at the annual meeting of the Arkansas Bar Association. The Foundation also considers awards for the outstanding lawyer and the outstanding lawyer citizen, and also honors from time to time lawyers who have rendered special meritorious service to the public. Recommendations or inquiries concerning these awards can be directed to the Arkansas Bar Foundation, 400 West Markham, Little Rock, Arkansas 72201, with attention to the Awards Committee. The Foundation encourages the publication of articles in The Arkansas Lawyer by giving an award each year for the best article in a legal category and the best article in a general category. The winners in the legal category last year were Chris Barrier for the article entitled "Usury In Arkansas: Update and Countdown" and Larry Yancey for the article entitled "Charitable Giving-Philanthropy-Can Generate Tax Benefits." The award in the general category was made to the Attorney General of the United States, William French Smith, for his article entitled "Growing Public Discontent With A Civil and Criminal Justice System." The Writing Awards Committee is chaired by Neva B. Talley.


ADDENDA by William A. Martin Executive Director

In my first two weeks on the job I am very very impressed with the friendliness of everyone and with the willingness of so many members of the Arkansas Bar to give large amounts of their time to bar projects and even more impressed with the enormous talents they bring to their jobs. It is no wonder we have one of the best bar associations anywhere. I know their volunteer work must detract from their law practice but watching members such as Association President Dennis Shackleford since July, I get the idea he gives almost all his time to the Association and yet somehow he manages to carry on his practice. The staff at the Bar Center is outstanding in its ability and in its attitude of being helpful to our members and to the people of Arkansas who call us. Our Lawyer Referral Service gets many calls and we need more attomeys participating, especially in those counties without referral service members. The folks who call lawyer referral are often frustrated because we are not able to refer them to a specialist in the field of law where they think they have a problem. Eventually the new rules on specialization should help in the cities, but probably not in small towns. Colonel Ransick left the Association in excellent shape and my challenge in following him will be to continue to build on the foundation he constructed. I have never made immediate, drastic changes on coming into a new job and, while I must gradually adapt what I do as executive director to a style with which I am comfortable, any change will be evolutionary. Your comments and ideas are always welcome. I hope many of our Association members will come by the Bar Center and get acquainted when they are in Little Rock. I want to know how the things we do affect you and how you think we can serve you better. Nothing has to stay the same if there is a good reason to change. In this connection we are thinking of conducting a survey on THE ARKANSAS LAWYER so you can tell us what you like and what you do not like about this magazine. The survey will appear in the NEWS BULLETIN. We have a number of programs coming up which should be emphasized. Our mid-year meeting will be a one-day program on Friday, January 20, 1984, at the Camelot Hotel in Little Rock. Committees and Sections will meet at 8:00 a.m. and the program will start at 9:00 a.m. A variety of topics will be addressed and something of interest to everyone is included. No Association activities are planned Friday evening. The House of Delegates will meet Saturday morning at 9:00 a.m. While we do not have an educational program scheduled for Thursday, the 19th, the traditional law school trial advocacy competition will take place that morning. Other Association events you will want to remember include the Natural Resources Law Institute at the Arlington Hotel, Hot Springs, from Thursday, February 23, through Saturday, February 25,1984, and the Worker's Compensa-

tion Institute on Friday, April 6, at the Camelot Hotel. In the" I never realized how long it takes" category is the lead time for an Association or AICLE program. When you agree to be a speaker and to provide a title and description of your presentation for a program many months away you may question the need for so distant a commitment. Experience has shown us it takes many months to develop a program, line up the right speakers, arrange for a meeting place, get the program printed and get it mailed early enough so lawyers who want to attend can block the appropriate time on their calendars. So you will know our timetable, here is the schedule which the AICLE Board has approved for program development: Seminar Program Schedule Action on Seminar

Time to Seminar

(1 ) (2) (3) (4) (5)

months months months

(6) (7) (8) (9) (10)

Date of Institute/Seminar 2 Printed Program in Hands of Lawyers 2V2 Printed Program Mailed Program Copy to Executive Director 3 . Meeting of Seminar Committee .4 to Finalize Program Second Meeting of Seminar Committee .................â&#x20AC;˘.......5 Initial Meeting of Seminar Committee 7-9 Appointment of Seminar Committee .10-12 1 Approval of Seminar SUbject 1V2-2 Projection of Seminar SUbject

months months months months year years

The American Bar Association Model Rules of Professional Conduct are printed in the November 1983 issue of the American Bar Association Journal starting after page 1670. A committee chaired by former Association President Herschel H. Friday will be stUdying the Model Rules and making recommendations to the Executive Committee and House of Delegates on whether the Association should petition the Arkansas Supreme Court to adopt the Model Rules. There are many matters of concern to the bar which we have been addressing in THE ARKANSAS LAWYER or the NEWS BULLETIN. I hope you are keeping up with developments on subjects such as the Federal Trade Commission's efforts to regulate the practice of law, the efforts to get an Interest on Lawyers' Trust Accounts (IOLTA) program approved in Arkansas as it has been in a number of other states, and various proposals to impose sales or use taxes on services in addition to sales of tangible property. We will attempt to pass on information on these subjects and others which may affect your practice.


January 1984/Arkansas Lawyer/23

THE ATTORNEY IN GENERAL PRACTICE AND THE PATENT-RELATED CASE1 by Marc Sandy Block I. Introduction At various times during his or her general practice of law, an attorney may be confronted with a question regarding patents or patent law. The most obvious situation arises when a client asks how to proceed in protecting an invention which he believes has great commercial and technological value. In addition, however, the subject of patent or patent law may be encountered in numerous other contexts. For instance, a client may seek counsel before entering into a government contract which includes a "patent clause." In another contract context, counsel may be retained by an employer to prepare an employment agreement which, among other provisions, is intended to vest in the employer rights to inventions made by his employees. When dealing with federal or state agencies, the issue as to whether inventions submitted to the Government are subject to disclosure under the Freedom of Information Act may arise.'

as to whether a transferor has a protected interest in patent rights transferred to the debtor or whether such rights are assumable and assignable by the trustee in bankruptcy.' Still further, since the Supreme Court approved treble damages for an antitrust claim based on a fraudulently procured patent,' an attorney may find himself or herself in the busy intersection between patent law and antitrust law. Even in a personal injury case, counsel for either side might rely on publically available patents as evidence in determining whether defendant did, or did not, comply with state-of-the-art standards of safety or in showing that plaintiff did, or did not, use a product in a manner prescribed by the prOducer.'

In bankruptcy, questions may arise

The general practitioner, in facing such patent-related matters, should be aware not only of certain basic facts regarding patents and the patent laws and how such facts may be used to affect or benefit his or her client but also specific aspects of the attorney-client

MARC A. SANDY BLOCK is a member of the Law Firm of Hall, Myers & Rose in Potomac, Maryland near Washington, D.C. Mr. Block is a member of the Maryland and Virignia Bars and is admitted to practice before the U.S. Patent and Trademark Office and the U.S. Court of Customs and Patent Appeals (Court of Appeals Federal Circuit). Mr. Block is a graduate of Lehigh University (B.S.E.E.) and the George

Washington University National Law Center. He is a member of the American and Maryland Patent Law Associations. Other publications include: ADEQUATE DISCLOSURE OF COMPUTERS AND PROGRAMS FOR COMPUTERS IN PATENT SPECIFICATIONS (with Kenneth Dobyns), Journal of the Patent Office Society, September 1974, volume 56, number 9.

24/Arkansas Lawyer/January 1984

relationship which may arise in such cases. II. Basics Relating to the Attorney-Client Relationship in Patent Related Matters Perhaps the initial question in a patent-related case should be: what bounds are placed on the services a non-patent attorney can render in a patent-related matter? The general rule is that an attorney can represent a client in any case involving a patent in any court to which he or she is admitted. Of course, as when providing counsel in any specialty area of law, the attorney is bound by the governing Code of Professional Responsibility (CPR) which, generally like the ABA Code, provides that "a lawyer shall not handle a legal matter that he is not competent to handle.'" In addition, however, 35 U.S.C. ยง 33 makes it illegal for anyone-regardless of membership in a state bar- to hold himself out as qualified to represent a patent applicant before the U.S. Patent and Trademark Office (also referred to as the PTO) when the representative is not registered to practice before the PTO. A violation of the statute carries with it a fine of $1,000 for each offense.

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In this regard, it is notable that the limitation of section 33 applies to only patent matters before the U.S. Patent and Trademark Office, and does not extend to copyright or trademark matters before the respective federal agencies. Hence, the requirement of referral to a practitioner listed on the PTO Roster is limited to the representation of patent applicants and then only in matters before the PTO, although a patent attorney may be consulted to expand the perspective of a patent-related case. In referring to or associating with a patent attorney, the general practitioner is reminded of the unrevised CPR rules which specify that the division of attorneys fees is, inter alia, to be made "in proportion to the services performed and responsibility assumed by each attorney.'" Under these rules, the services which must have been rendered by the patent attorney and those services which are appropriately allocated to and provided by the general practitioner should be considered in determining an appropriate splitting of fees.


A proposed change to CPR's in various jurisdictions includes deleting Disciplinary Rule DR 2-107 and modifying DR 2-106 to permit division of fees among attorneys who "expressly assume responsibility to the client" The previous requirement of proportioning services and responsibility is eliminated. In view of section 33, however, where a non-patent attorney shares responsibility in a patent-related case under the proposed rules, it would appear prudent to clearly limit such responsibility to matters not before the PTO or to inform the client that assuming responsibility in the case does not suggest or include representation of the client before the PTO. If it is determined that referral to or association with a patent attorney is appropriate, several factors should be considered. First, patent attorneys generally come in three varietieschemical, electrical, and mechanical-with cross-breeds being fairly common. In addition, patent attorneys may concentrate their practices in patent application preparation and prosecution (Le. obtaining a patent), patent licensing, patent litigation, foreign practice, or other defined areas of patent law, or a combination thereof. To save time and money and to best serve the client, the selection of a pa-

tent attorney should reflect an assessment of both technical and legal background. III. The Patent and Patent-Related Cases The patent has a complicated personality. In one respect, the patent is a federal grant (or, more pejoratively, a legal monopoly) for a fixed period of years, in general seventeen years, during which a patentee may seek to exclude others from making, using, or selling the patented invention.' In another respect, the patent represents a contract between the patentee and the U.S. Government (on behalf of the public) whereby the inventor acquires the right to exclude others from practicing his invention for a limited period (the quid) while the public receives a full, enabling description of the best mode of a previously unknown invention which may be made, used, or sold when the period expires (the quo).' Further, the patent is defined as having the attributes of personal property"rendering patents and applications therefor transferable." How a patent is characterized in a given controversy may have a bearing on how the cause of action may be viewed and decided. For example, the plaintiff in an antitrust or unfair trade suit may attack the "patent monopoly,"

while the defendant may argue in support of his "property rights." Similarly, in a bankruptcy, whether the transfer of rights represents an "executory contract" or a completed "property transfer" may have a bearing on the transferor's position. Of particular significance, the patent is federal in nature being defined by laws based on the Patent Clause of the Constitution." State laws which conflict with either the constitutional provision of federally legislated patent laws are generally preempted." However, as transferable property, the patent may be granted, sold, devised, or otherwise disposed of. Hence, a federal aspect of a patentsuch as its ownership or validity-may be intertwined with a contract, trust or estate, or other legal matter normally controlled by state law. A threshold question in such a case is whether a state or federal court is the proper forum. Under 28 U.S.C. §1338, the federal courts have original and exclusive jurisdiction .....of any action arising under any Act of Congress relating to patents ..." Case law interpreting section 1338 distinguishes actions which include "questions arising under the


January 1984/Arkansas Lawyer/25

patent laws" and can be heard by a state court from those "cases which arise under the patent laws" and must be brought in a proper federal court." Notwithstanding this stated distinction, the determination of whether the patent aspect of an action represents the dog or the tail is not always a straightforward one. A jurisdictional challenge, it should thus be recognized, may represent a potential, early means of escape from an unfriendly forum to a friendlier one. Another point worth noting relates to the "application" for patent. In applying for a patent, an inventor provides to the Patent Office for examination a full description of the invention, ending with "claims" that legally define the metes and bounds of the invention. The Patent Office and the applicant may argue over the scope of the claims for some time before a patent may be granted (if one is to be granted). During the interim between the filing for a patent and the granting of a patent (if one is to be granted). the patent application-except in rare circumstances-is held in secret by the Patent Office." If otherwise maintained in secrecy by the inventor (and his transferee), material in the patent application may be subject to a Protective Order, as under the Federal Rules of Civil Procedure Rule 26(c) (7)." Such a Protective Order, while based on trade secret protection, may have the effect of preventing prejudicial evidence contained in a patent application-such as product improvements made subsequent to an accident-from being discovered in a judicial setting. In an administrative law context, the sUbject matter of a patent application may be sought through a Freedom of Information Act (FOIA) request sent to an agency (other than the PTO) privy to such information pursuant to, for example, a research and development contract. Such information may be exempt as a "trade secret" from public disclosure (e.g. disclosure to an opposing counsel) under Exemption 4 of the federal FOIA" (and similar provisions in state acts). In this regard, the strongly pro-disclosure policy of the current federal FOIA should be considered when either submitting an invention description to a federal agency or relying on the fourth exemption to prevent public dissemination. As one might expect, U.S. patent rights generally extend only to the 26/Arkansas Lawyer/January 1984

sovereign borders of the U.S.-a U.S. patent does not preclude the making, selling, or using of the claimed invention abroad. When goods covered by a U.S. patent are impcrted, however, an infringement action" or an action under the Tariff Act of 1930" may be instituted. In an infringement action, whether related to an imported or a domestic item, the patent laws provide for injunctive relief" as well as damages which, when deemed appropriate, may be trebled by the court." A client, before entering into a contract for goods especially of a technically sophisticated nature, would be well advised to determine, through a patent search, if the goods are covered by unexpired patents owned by others.

IV. The Client Inventor The United States has, basically, a first-to-invent patent system. That is, subject to various qualifications, the first inventor to "conceive"-or fUlly conceptualize-a patentable invention

is the one entitled to a patent. Accordingly, it is important for an inventor to be able to prove his date of first conception. To protect himself against another who also claims to be the first inventor, an inventor should have at minimum a written, complete description of his invention. The written description should be signed, witnessed, and understood by at least two trustworthy corroborating witnesses, neither of which isone of the inventors. Alternatively, the inventor may participate in the Patent Office Disclosure Document Program which achieves a similar, if not more persuasive, evidentiary effect." These steps may be taken before the inventor meets with a patent attorney and may prove invaluable when dates of conception are separated by only days. Another critical aspect of patent law relates to the date an inventor files a patent application. Under U.S. law, the inventor has one year in which to file for a U.S. patent following a sale (or offer for sale), public use, or publication concerning his invention." Failure to

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file within the statutory time limit results in loss of right to a patent. In some foreign countries, loss of right follows immediately after various "public" acts, such as publication or sale. Case law has defined certain instances in which the time limits are not applicable-such as when a "use" is experimental or a "publication" is limited in nature. However, a prudent general practitioner might best serve the interests of his or her client by suggesting that the client find out if his potential right to a patent-in this country or abroad-may be in jeopardy due to any apparently public act.


As in other areas of law which permit pro se representation, the inventor filing for a patent can represent himself before the Patent Office. However, before doing so, the inventor should be aware of several points. First, as noted by the Supreme Court in Topliff v. Topliff, 145 U.S. 156, 171 (1892), the patent application "constitute[s) one of the most difficult legal instruments to draw with accuracy." And, second, certain defects in a patent applicationsuch as not adequately describing the invention-may, in effect, vitiate the filing. If the inventor begins to promote his invention after filing his application, it is likely that the Patent Office will not inform him of any such fatal defect in the application until long after one year has expired from the date of his first public promotion. By this lime, the inventor may have lost his right to a patent. The resourceful, self-reliant inventor would be well-advised to have his pro se patent application reviewed by a patent practitioner before it is filed. Finally, a client indicating that he intends to retain an invention broker or invention developer should be cautioned. The Federal Trade Commission (FTC)-as well as certain individual states-have successfully attacked various organizations on fraud grounds. In particular, companies requiring a substantial upfront payment should be evaluated with special scrutiny." V. Conclusion The general practitioner may encounter a patent-related matter in any of various contexts. The attorney familiar with certain basic facts concerning patents and patent law should be in a better position to understand his or her client's patent-related problems and to provide assistance in resolving them.


FOOTNOTES 1. The present article discusses some aspects of palents and patent law which may be of interest to attorneys who normally practice in other fields and is, it is noted, not intended as a primer on patents, patent law or inventor's rights. These subjects are well treated by various authors as well as the Patent Office: How to Protect and Benefit from Your Inventions. American Patent Law Association, Suite 203, 2001 Jefferson Davis Highway, Arlington, Virginia 22202; Guide to Patents-Employed Engineers: Who Owns Their Inventions? Prepared by Howard Rose on behalf at the Task Force on Patents, U.S. Activities Board of the IEEE. IEEE Catalog No. UHO 147·9. For information regarding various available pamphlets. write to: Commissioner of Patent and Trademarks, Washington. DC 20231. 2. 5 U.S.C. 552 3. The language of 11 U.S.C. 1 365(e), 154 (c) suggests that Ipso facto bankruptcy clauses in patent assignments or licenseswhereby a license terminates or rights revert automatically upon bankruptcy of the transferee-are ineffective. Note that the Bank· ruplcy Reform Act of 1978 strictly limits the steps a tranferor may take in protecting his interests against an insolvent transferee. 4. Walker Process Equipment Company v. Food Machinery Corporation, 382 U.S. 172 (1965) 5. 16 Am Jur. Proof of Facts 9, 143 6. ABA Code of Professional Responsibility, DR 6-101 (A) (1) 7. ABA Code of Professional Responsibility, DR 2·107 (A)

9. Catanzaro v. Masco Corporation, 432 F.Supp. 415 (D.C. Del. 1976), affirmed 575 F.2d 1085 (3rd Cire., 1978), eert. denied. 10. 35 U.S.C. 1261 11 . To be valid against a subsequent purchaser or mortgagee for a valuable consideration, without notice, an assignment, grant, or conveyance must be recorded in the U.S. Patent and Trademark Office. 12. U.S. Constitution, Article I, SecHon 8, Clause

8 13. See Sperry v. State of Florida. 378 U.S.



16. 17. 18. 19. 20. 21. 22. 23.


8. 35 U.S.C. 1154

379 (1963), wherein the Court held that a state could not enjoin a non-lawyer from practicing before the Patent Office when ra-grstered by the Patent Office even though such activity represented the "practice of law" within the state. See also Sears Roebuck & Co. v. Stiffel, 376 U.S. 225 (1964), and Compeo Corporation v. DayBrite Lighting Company, 376 U.S. 234 (1965). See Genl-Chlor International, Inc. v. Multisonics Development Corporation, 580 F.2d 981 (9th Cire., 1978). 35 U.S.C. 1122 See Moore's Federal Practice, 1981 Rules Pamphlet, Federal Rules of Civil Procedure, Part 1, page 224. 5 U.S.C. 1552 (b) (4) 35 U.S.C. 1271 19 U.S.C. 11337 (Tariff Act 1337); 19 U.S.C. 1337a 35 U.S.C. 1283 35 U.S.C. 1284 Manual of Patent Examining Procedures, 11706 35 U.S.C. 1102 (b) As of 1976, one invention developer had generated a profit for 3 of 30,000 inventors. See In re Raymond Lee Organization, FTC Docket No. 9045 (July 8, 1977).

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Avoiding Legal Malpractice Claims Preventing Pitfalls In Litigation Practice by Duke Nordlinger Stern"


Professional liability acts, errors and omissions in the area of litigation practice account for the greatest frequency of claims in most states. In addition, it is not unusual for such claims to also represent losses with high severity. Unfortunately, since these claims are not concentrated in any particular stage of litigation practice, prelitigation, trial or appellate, this broad exposure requires continuous awareness of the potential hazards and perils. In fact, a review of causes of claims reveals that there have been losses as a result of errors or omissions in the handling of almost all of the multiple steps that arise in the course of litigation matters. Nonetheless, there are definite avoidance techniques that can be incorporated into the law practice to reduce the probability of claims. 1. Be continuously aware of the litigation practice malpractice risk. ignoring the malpractice risk in your litigation practice will not mitigate the probability of a claim. Rather, accept this potential peril and condition yourself to review each step of each litigation matter one additional time from the perspective of maipractice prevention. Force yourself to ask: "What have I failed to do? What have I done incorrectly?" II. Avoid the fees pitfall. A significant number of professional liability claims result because an attorney refused to continue to work for a nonpaying client or sued to collect a fee. While there is no system or procedure that can guarantee all clients will be financially responsible, there are techniques which reduce the likelihood of this hazard. Be certain from the beginning of the relationship that your client understands completely the fee and payment arrangement. Discuss how expenses will be handled. Bill on a periodic basis and be sure your state-

ments contain sufficient detail to justify the amounts requested. Closely monitor your accounts receivable. Be understanding in attempting to collect client fees and avoid an adversary atmosphere. Never withdraw from a representation without being certain your client's interests are protected, even if you will not be compensated for additional necessary efforts. III. Maintain and fully utilize an effective docket control system. Litigation practice can be a maze of time deadlines: statutes of limitation, procedural deadlines, appearances and other required activities. The law firm must maintain a docket control system which has unlimited capacity and a minimum potential for error. Such a system should be either a manual or computerized perpetual calendar (tickler system) since a diary book or wall calendar will not meet these critical requirements. Memory should be avoided as the reminder system for complying with the multitude of litigation steps. The perpetual calendar should be used to docket both ultimate and supporting events, as well as final and anticipatory notices for each category. IV. Screen all potential clients and matters before acceptance. Often a legal malpractice claimant is a person whose representation should never have been accepted. No law firm and its attorneys can be compatible with all potential clients and matters. Personality conflicts can exist, you may not have the ability to educate a particular potential client as to the realities of the matter in controversy or the firm may not have the specialized skills to handle the representation without denying the needs of other clients. Discovery of such problems after the attorney-client has been created increases the malpractice risk or the

probability of a claim even if frivolous. While there are no guarantees that screening will result in compatible clients and matters, objective appraisal of each possible new representation should raise flags as to potential problems. Force yourself to make such an evaluation before acceptance of each client and matter, and do not let your professional instincts be overcome by the individual's enthusiasm or need. You may still end up accepting a potential problem representation, but do so knowingly and let this knowledge correctly govern how you handle the matter. Detailed engagement and non-engagement letters should always be sent. V. Checklists improve the effectiveness of your litigation practice and reduce the probability of claims. Detailed checklists which can be used by your firm in handling litigation matters will complement an effective docket control system. Because there are similar steps and procedures in many representations, every firm should develop checklists for prelitigation, trial and appellate stages. Each time a litigation matter is accepted the checklists should be inserted into the new file. In creating the checklists care should be taken to have them as complete as possible and still have blank lines for the addition of the unique or unexpected. No stage of litigation should be considered complete unless all of the items on that portion of the checklist have been marked off as finished or not applicable. It is unfortunate that most attorneys are unaware of or ignore the significant malpractice risk in litigation practice. It can never be removed, but it can be reduced. Every attorney must maintain constant awareness of this peril and adopt avoidance techniques.


â&#x20AC;˘ Š 1983: Duke Nordlinger Stern, J.D., Ph.D., St. Petersburg, Florida. Mr. Stern's firm serves as the independent Risk Manager to five state bars and the Claims Prevention Consultant to two others. He publishes the quarterly MALPRACTICE PREVENTION REPORTER and is the author of thirteen books and manuals and more than one hundred articles on professional liability. January 1984/Arkansas Lawyer/29


The Differences Between Dedicated Word Processors And Microcomputers-The Bottom Line by Kline D. Strong CPA, JD, PhD

As I reported in the ABA Economics Section's monograph on Word Processing Equipment (1979) dedicated word processors (WPs) and data processors (DPs) are becoming more and more similar with respect to many of their functions. Thus, microcomputers (herein, sometimes, 'Micros') are now almost universally capable of running WP software programs, whereas many dedicated WP vendors are beginning to offer DP options. So what are the principal differences between dedicated WPs and DPs. Aside from various discreet 'technical' differences, there are two basic differences, one somewhat superficial but the other of supreme significance. The Observable Difference Remember, as the merger of technology continues, most differences will become less distinct. Nevertheless, for the moment and with respect to most equipment, WPs characteristically 'show' more 'special function' keys than do micros. That is, to perform specialized operations such as 'insert' or 'delete' or 'move' or 'global search', only a single 'special function' key need be pressed on most WPs while 2 or more keys must be pressed on most micros-usually a 'control' key and a standard key, pressed simul3D/Arkansas Lawyer/January 1984

taneously-but sometimes followed by a second 2-key sequence. Briefly, three other collateral comments are germane... • having to memorize the key stroke sequences common to micros is harder to learn than where a special function key is located; • on some micros, the keyboard is non-standard, i.e. one or more keys have been moved; • symbols may 'surround' a special print feature on the screen rather than show the feature 'exactly', e.g. underlining may be indicated on the screen by symbols at the beginning and end rather than showing the underlining itself. So-for word processing, at least-it would appear that WPs have an edge. But not necessarily. Those 'special function' keys may be scattered allover a larger WP keyboard and most will not be 'reachable without looking up' as are the usual keys on a standard keyboard. By contrast, the 'control' key and the other 'standard' key to be pressed simultaneously on a micro are usually 'reachable' without looking up-like playing chords on a piano. So-bottom line-it may be more of a question of what one gets used to. Clearly, secretaries who become accustomed to the micro 'chord-key'

requirements become very proficient and register few complaints, though, perhaps they could become even faster on the other kind of equipment. At this point, no one has produced probative empirical evidence one way or the other. An excellent source for a more detailed discussion of the preceding WP/DP comparisons is Loftin, "Word Processing on a Microcomputer" carried in the July/August 1982 issue of Legal Economics, the ABA Economics Section's periodical. The Less Visible But More Significant Difference Dedicated WPs were developed relatively recently-eirca 1970-specifically to handle the written word, not mathematical computations. In contrast, DPs derive from digital computers developed historically for mathematicians and physicists where input needed no 'editing' and output required no 'massaging' because 'word processing' consisted essentially of 'sterile' communications between a scientist and his 'intellectual' robot. Accordingly, the DP micro 'learned how' to do WP by being equipped with new software from a floppy or hard disk but kept its 'standard' keyboard more or less intact. On the other hand, WPs


were relatively slow to become equipped with the necessary power-via computer-type 'chips'-to handle DP functions adequately and even slower to get adequate software. Note, the differences discussed above have no effect upon the speed with which the 'words' or 'data' is printed-out when finally 'processed'. That is, some WPs can run printers at 30 wpm while others drive printers running at 55 wpm and the same can be said of micros. Simple, Fast and Practical Tests Phil Shuey, a Denver lawyer who is also expert in computer operations, has a rule called by his astute friends, "Shuey's Maxim" which runs like this ...

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CODE Of PROfESSIONAL RESPONSIBILITY CONTINGENT-FEE AGREEMENTS On July 17, 1978, the Arkansas Supreme Court adopted the following amendment to the Code of Professional Responsibility of the American Bar Association. Disciplinary Rule 2-1 06, is amended to read, in its entirety, as follows: Fees for Legal Services:

of the lawyer's compensation is contingent in whole or in part upon the successful accomplishment (by settlement or litigation) of the subject matter of the agreement, regardless of whether the fee is established by formula or in fixed amount.

(A) A lawyer shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee. (B) A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee. Factors to be considered as guides in determining the reasonableness of a fee include the following: (1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly. (2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer. (3) The fee customarily charged in the locality for similar legal services. (4) The amount involved and the results obtained. (5) The time limitations imposed by the client or by the circumstances. (6) The nature and length of the professional relationship with the client. (7) The experience, reputation, and ability of the lawyer or lawyers performing the services. (8) Whether the fee is fixed or contingent. (C) A lawyer shall not enter into an agreement for, charge, or collect a contingent fee for representing a defendant in a criminal case.

(2) Any contingent-fee agreement shall be in writing. The original and each copy shall be signed by the lawyer and by each client. One signed copy shall be provided to each client at the time of making the agreement, and one shall be retained by the lawyer. Any contingent-fee agreement shall set forth the precise method by which the fee is to be determined, including the percentage, or percentages, if any, to be applied in the event of settlement, trial or appeal, whether expenses are to be deducted before or after the contingent fee is calculated and any other factors relevant to the fee arrangement.

Illinois Code Of Professional Responsibility Requirements For Contingent-Fee Agreements Rule 2-106 of Canon 2 of the Illinois Code of Professional Responsibility (Illinois Supreme Court Rule 771, is amended, Article VIII), subsection (c), defines contingentfee agreements and sets forth certain requirements in connection with the use of such fee arrangements: Rule 2-106(c) Contingent-Fee Agreements states:

(1) For purposes of this rule a contingent-fee agreement shall be deemed to be any agreement for the provision of legal services by a lawyer under which the amount 34/Arkansas Lawyer/January 1984

(3) Upon final disposition of any action by settlement, trial or otherwise, a lawyer who has entered into a contingent-fee agreement shall prepare a closing statement setting forth in detail all information necessary to present a definitive statement of the application of the contingent-fee agreement in the action. One copy of the closing statement signed by the lawyer shall be provided to each party represented by him within a reasonable time after receipt by the lawyer of any sum or sums to which the contingent-fee agreement is applicable. (4) No contingent-fee agreement shall be made in respect of the representation of a defendant in a criminal case. Contingent-fee arrangements concerning the collection of commercial accounts and of insurance company subrogation claims made in accordance with usual practices in respect of such cases shall not be subject to paragraphs (2) or (3) of this rule. Three proposed forms of a contingent-fee agreement are set forth below and are considered to comply in all respects with the requirements of R. 2-106(c)(2). Rule 2-106(c)(3) requires a closing statement be prepared and provided by the lawyer to each party represented by him in regard to the legal mailer covered by the contingent-fee agreement. Two sample closing statements are set forth below. Attorneys should note that Rule 9-1 02(a) requires that all funds of clients paid to a lawyer or law firm, including funds

belonging in part to a client and in part presently or potentially to the lawyer or law firm, shall be deposited in one or more separate identifiable trust bank accounts maintained in the state where the law office is located. Rule 9-102(b) provides for the withdrawal of the portion offunds (deposited as required under 9-102(a)) belonging to the lawyer or law firm after reasonable notice to the client of an intention to withdraw. If the right of the lawyer or law firm to receive such funds is disputed by the client, the disputed portion of the funds shall not be withdrawn until the dispute is finally resolved. Rule 9-1 02. Preserving Identity of Funds and Property of a Client. (a) Other than advances for costs and expenses, all funds of clients paid to a lawyer or law firm, including funds belonging in part to a client and in part presently or potentially to the lawyer or law firm, shall be deposited in one or more separate identifiable trust bank accounts maintained in the State in which the law office is situated. (b) The portion of funds deposited in accounts described in Rule 9-102(a) belonging to the lawyer or law firm may be withdrawn when due, after reasonable notice to the client of an intention to withdraw, unless the right of the lawyer or law firm to receive it is disputed by the client, in which event the disputed portion shall not be withdrawn until the dispute is finally resolved. (c) A lawyer shall (1) promptly notify a client of the receipt of his funds, securities, or other properties;


(2) identify and label securities and properties of a client promptly upon receipt and place them in a safe deposit box or other place of safekeeping as soon as practicable; (3) maintain complete records of all funds, securities, and other properties of a client coming into the possession of the lawyer and render appropriate accounts to his client regarding them; and (4) promptly payor deliver to the client as requested by a client, the funds, securities, or other properties in the possession of the lawyer which the client is entitled to receive.

(The following form has been provided by an attorney employed by a professional corporation in Illinois which frequently represents clients in regard to taxation matters involving the Internal Revenue Service.) CONTRACT FOR LEGAL SERVICES (CORPORATION) This contract for legal services, made this day of , 19__, between Corporation, Attorney at Law, , Illinois, , hereinafter called "corporation" and , hereinafter called "client," WITNESSETH: 1. The client hereby retains and employs the corporation for representation before the U.S. Internal Revenue Service, to settle all claims for deficiencies, penalties and interest that may be assessed or proposed by the U.S. Internal Revenue

Service with regard to the follOWing tax matters:

2. In consideration for services rendered and to be rendered client agrees to pay said corporation the sum of $ as a retainer, and in addition thereto _ _% of whatever may be saved in negotiations or appeal by said corporation. Provided further, in the event a second trial or an appeal from the Tax Court of the United States or a United States District Court becomes necessary, client agrees to pay said corporation _ _% of whatever may be saved in such second trial or appeal. The "amount saved" shall be the difference between the total, penalties and interest proposed and the amount of taxes, penalties and interest as finally agreed upon and settled with the Internal Revenue Service. 3. The client agrees that in addition to the above corporation's fee, all costs and expenses directly incurred in the investigation or litigation of this matter shall be paid by the client. The term "costs" shall include an accountant's charges. The agreed accountant shall be 4. The corporation agrees to make no charge for services, except for the above retainer, unless savings are had in the above matter, and to make no settlement without consent of client. 5. The corporation hereby retains the right to designate the individual attorney or employee to perform the services under this agreement.

6. CLIENT agrees to pay all bills within 10 days after billing. All statements for professional legal services rendered which are delinquent more than 30 days are subject to an 18% per annum interest charge. Client Client ATIEST: _ _ _ _ _ _ _ _ _ _ _ (SEAL) _ _ _ _ _ _ _ _ _ CORPORATION BY (This is an agreement which has been submitted by an attorney who is a member of a partnership in Illinois.) RETAINER AGREEMENT (PARTNERSHIP) I HEREBY RETAIN AND EMPLOY the law offices of (Partnership) _ as my attorney, to bring suit upon and/or to represent me in the prosecution and recovery or settlement of my claim for _ sustained by me as a result of against _ ofr _ I AGREE TO COOPERATE with my attorney as requested in locating any witnesses, securing testimony and in other matters as desired by him. January 1984/Arkansas Lawyer/35

MY ATTORNEY FEE shall be 33-1/3% of all monies recovered before, during or after trial excluding appeal or a retrial. I REALIZE IT WILL BE necessary for my attorney to advance certain expenses during the course of the litigation and I agree to reimburse him for all expenses advanced. Those expenses shall be subtracted from any sum recovered after my attorney fee is deducted. In the event of no recovery, I am still responsible for the payment of expenses advanced. However, if no recovery is made, I will not be responsible for any attorney fee. IF I DO NOT COOPERATE in the litigation or if I discharge my attorney, I agree to pay him a reasonable fee computed on a time basis in addition to the expenses he has advanced. Dated: , 19_. Signature of Client I HEREBY AGREE to the above and further agree to make no charge for service unless recovery is had in the above claim, and to make no settlement without consent of Claimant. Signature of Attorney

directly incurred in the investigation and litigation of this claim, including court costs, subpoena costs, photos, court reporters, professional fees (such as for engineers or accountants) and depositions. 4. In the event of no recovery, Client will not be responsible for any attorney fee in regard to this claim, but will be responsible for the payment of expenses incurred and advanced.

5. Client agrees to cooperate with Attorney as requested during the representation of Client in regard to the claim set forth above, including assisting in locating witnesses and securing testimony. In the event that Client fails to cooperate in the agreed representation or Client discharges Attorney without reasonable cause, Client agrees to pay Attorney a reasonable fee computed on a time basis in addition to expenses incurred and advanced by Attorney for Client's benefit. 6. Attorney agrees to make no charge for services rendered in connection with Client's claim unless recovery is had in this matter, and to make no settlement without consent of Client.

I HEREBY ACKNOWLEDGE that I have read and received a copy of the foregoing Retainer Agreement. Attorney Signature of Client


I hereby acknowledge that I have read the foregoing agreement by me signed and have received a copy of said agreement signed by _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Attorney.

(This is an agreement submitted by a sole practitioner who practices in Illinois.) Client CONTRACT FOR LEGAL SERVICES day This contract for legal services is made this of , 19_, between , Attorney at Law, ____, Illinois , hereinafter called "Attorney" and hereinafter called "client", WITNESSETH: In consideration of the covenants and conditions hereinafter provided, Attorney and Client mutually agree as follows: 1. Client hereby retains and employs Attorney to represent Client in the prosecution and recovery or settlement, inclUding bringing suit, of Client's claim for _ against 2. In consideration for legal services rendered and to be rendered, Client agrees to pay Attorney

SETTLEMENT CLOSING vs. Date of Accident _ Draft from: Claim No. and Policy No.: Amount: $ Payable to (attorney) and To be disbursed as follows: Attorney's fees Amount of settlement to $-,-_ The above draft will be deposited to my Client's Account in the _ _ _ _ _ _ Bank of , Illinois, and it is my intention to forthwith withdraw the amount for services as shown above.


-,--,-_ _% of all sums recovered from said claim whether recovery be by suit, settlement or in any other manner; and % of whatever may be recovered from said claim if a second trial or an appeal to the appellate or supreme court becomes necessary.

3. Client agrees, in addition to the above attorney's fees, to reimburse Attorney for all costs and expenses 36/Arkansas Lawyer/January 1984

_ Attorney for _-,-_--,-,--.,......_,-I hereby acknowledge receipt of the foregoing settlement resume this day of , 19_, and consent thereto. Signature of Client




To: Claim for

, client _

Monies received:


Payable to

(attorney) andl

To be disbursed as follows: For expenses advanced(see attached itemization)




$,--The monies received as specified above will be deposited in my law firm client trust account at the Bank of • , Illinois. It is my intention to withdraw the arnount for expenses and ~ attorney's fee as shown above on 19_. Attorney I hereby acknowledge receipt of a copy of the above closing statement this day of , 19__. Client



President's Report . .. continued from page 3 the country is 565,000. Admission to the Bar jumped 10,788 in 1963 to 42,382 in 1981. Law school enrollment for the same period grew from 54,433 to 129,739. Is this growth excessive? How many law graduates do not find "law-related" jobs? Why is there a downward trend of sole practitioners? Is the saturation point being reached in small and large communities? What is the role of the organized Bar on this subject? Some are suggesting that the Bar tell prospective law students what their job prospects actually are. Others believe the Bar needs a better handle on the subject, a better factual basis, before embarking on ill-aimed projects. What do you suggest?

Attorney's fee as agreedSettlement payable to

Law Week (52 LW 2221) reports a case from the U.S. District Court from the Eastern District of Michigan in which the plaintiff's attorney failed to reveal the death of his client from a cause not related to the lawsuit during settlement negotiations. (Virzi v. Grand Trunk Warehouse and Cold Storage.) Apparently the settlement required court approval. The plaintiff was expected to be a strong witness which may have influenced defendants to agree to settle. In criticizing the attorney the court said: "Although each lawyer has a duty to contend with zeal for the rights of his client, he also owes an affirmative duty of candor and fairness to the court and

to opposing counsel when such a major event as a death of the plaintiff has taken place [even though opposing counsel did not ask whether the client was still alive]."

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Editor's Comment: AEGIS is a feature of the Arkansas Bar Associa· tion's educational program concerning docket control and other areas of high risk experience in professional liability cases. The features are prepared by CNA Insur· ance,


Keep thy files... and thy files will keep thee

the problem

An attorney represented the sellers of real estate on which some outstanding taxes were owed. When the sale was consummated, the attorney withheld a sum of money from the sale for the payment of taxes. The attorney then issued a check to the county treasurer. However, those taxes had previously been paid, and the check was returned to the attorney's office. The returned check was not brought to the attention of the attorney; it was merely placed in the file.

the result

The tax purchaser filed for a tax deed, and the attorney filed suit to set aside that deed. If the litigation is not successful, a substantial claim is expected against the attorney.


Keeping a centralized filing system is not enough. Current files should be consistently maintained and reviewed in a systematic manner to make certain all parties involved in a case are kept informed of all developments as they happen.

38/Arkansas Lawyer/January 1984


COVER STORY . .. It is our tenth anniversary!! At the Arkansas Bar Association's Midyear Meeting during January 10-12, 1974, the Arkansas Bar Center was dedicated. Then Association President James E. West "attempted to express his feelings in the following free verse written for the occasion."

jur Mall is a ji'agile alld lellll,"mry beillg He is born. !I(' Ihw,\ }CH (J IvlJile, Gild dies Sonte men contribute l1Iud,. some /iff/e. (f/ld some! 1I0lhillg 10 I"eir sociel)'


Lawyers. nlore rltan most men. "al'e the f}fJpUI fuu;",'

10 ael eJIeclilie/), T"e ability 10 creale. 10 ,Iwpe alld 10 "",'e a la.I路lillg illlpUClllpOIl society

We, as lawyer,\', haJle perJf),.m~d tJ "lirade Itle ha,'e cOllstrucled a fjpillg 11l0llwnelll A siructure lI'hi," ,viii relllaill stalldillg 10llg after our l1fl/i'I!Jered days 011 Illis cartll/wlle expired Gmtilll/illg IhrVII~h Ihe years as a symhol oj our proJessioll Sarillg 10 Ihe world - - to gClleraliolls of t"e li,ll,rc Lawyas. 1IIOIIgh ji-agile mell. "ave crealed

a great structure Lawyers, Ihoug" f<'mporary lIIell, "aile bl/ill a permanent mOllllll1el1t

All "ail 10 Ihe legioll oj legal warriors wllo IlOpe IOlfgl/1 t/tis (rusade Whose lillie. lalellis alld cOlllribuliollS an elllbedded Jorever ill I"is edifice We art! ("ul1velled here today, ill lhis 1/ew

A rkallsas Bar Celllcr Tv dedicale I"is siruciure, I"is memorial. litis 11'IOlllllJle111

May il el'CI' seflle 10 improve legal educalifJlI. Ihe legal professioll, I"e a(/;Ilillislralioll oj jllslice

How well has the Arkansas Bar Center met the challenge? The Center was highlighted in color in the American Bar Journal, October 1975, p.p. 1228, 1229. Since then numerous related inquiries from other bar associations have been answered-in fact, the Arkansas Bar Foundation, the Center's owner, has been generally recognized as the finest bar foundation in the Country. The Center, with its public law library, law school, Association/Foundation oHices and meeting rooms, stands as a monument to the Arkansas Bar Foundation and, in turn, to the lawyers of Arkansas. Verily, the Arkansas Bar Center is a "great structure" and a "permanent monument." January 1984/Arkansas Lawyer/39

SEPARATION OF POWERS IN THE U. S. CONSTITUTION by William French Smith Attorney General of the United States

In May, I began a series of speeches on the Constitution. This is the third speech in the series, and I hope that they will stimulate reflection on the origins of the nation's fundamental law. I believe that with the Bicentennial of the Constitutional Convention just four years away, it is especially appropriate that we as a nation recall the original purposes of our operating charter. Today the subject of my speech is separation of powers. In a moment, I will comment on several contemporary issues that involve this principle. But first, I will focus on the American founding. And to begin with, I will draw the larger picture of politics and societythe same one the Framers drew-in order to locate where their unique concept of separation of power fits in. According to the Declaration of Independence, governments are instituted among men in order to secure the great goal of liberty. But as Americans learned in the years after 1776, designing a government capable of securing liberty was a most difficult task. It was plain enough to the founding generation that the government must be popular-that power had to derive from the people, and the people alone. Nonetheless, the founders worried, on the basis of what they knew about republics historically, that the people could be their own worst enemy, that a tyrannical majority might rise up and control a popUlarly-based government, invading private rights and damaging the common good. The founders solved the dilemma through what Alexander Hamilton called the "new science of politics." This science included, among other 40/Arkansas Lawyer/January 1984

elements, the familiar principle of representation: The government would be assembled and administered not by all of the citizens but by representatives whom the citizens chose to elect. Thus would political views be refined and enlarged and popular prejudice be tempered-to the benefit of private rights and the common good. Liberty also would be protected through the dispersal of power. Power would be divided between the national government and the state-thus the principle of federalism came into play. And the power allocated to the national government would itself be separated into the three branches-the legislative, the executive, and the judicial. This is where separation of powers fit into the Framers' thinking. This new science of politics also included one other very important idea-that of an extended, or large, commercial republic. The leaders of the Constitutional Convention believed that liberty would be protected only in a large nation populated by a large number of people. And ideally these people would be engaged primarily in such practical pursuits as farming, merchandising, and manufacturing. Such a people would be given less to philosophical pursuits and zealous crusades and more to commerce and trade. They would be less likely to organize themselves into a majority that would threaten the rights of others. The idea of an extended commercial republic was a novel development in the history of political theory. So, too, was the Americans' principle of separation of powers. No other government had ever been fashioned on this concept, and yet to

the Framers of the Constitution, it was unthinkable that any other concept should serve as the basic blueprint of the national government-â&#x201A;Źvery plan tendered at the Convention contained a tripartite division of power. Today the work of the Framers, which we take so much for granted, influences peoples abroad: Nations attempting to become democracies routinely separate power into the three branches in order to secure liberty. The Framers of our Constitution were influenced to a degree by the writings of Aristotle and Locke and Montesquieu, through whom the intellectual history of separation of powers can be traced. But what chiefly motivated the Framers to design a national government according to this principle was their own immediate political experience. Under British rule, the Americans had seen first-hand the abuse of unchecked executive power exercised by an hereditary rnonarch. They had had enough of King George lit and the royal governors. In the decade preceding the Constitutional Convention, Americans had designed state governments that minimized the role of the executive and concentrated most power in elected legislatures. These were supposed to be the true guardians of liberty, but some fell far short of that goal. In some states, the legislature, among other things, confiscated properly, erected paper money schemes, and suspended the ordinary means of collecting debts. These political experiences drove home a lesson that was perhaps best stated by Madison, who wrote: "The accumulation of all powers,

legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, selfappointed, or elective, may justly be pronounced the very definition of tyranny ...The preservation of liberty requires that the three great departments of power should be separate and distinct." As we all know, Madison and his colleagues allocated legislative power to Congress, executive power to the president, and judicial power to the Supreme Court and any lower courts Congress might create. And they separated the power allocated to the Congress into the House of Representatives and the Senate. The Framers envisioned the Senate as checking the power of the more popularly-based House of Representatives. Having separated power, the Framers also provided certain checks and balances on the respective functions of government. These are quite familiarto us today, and include such checks on the Congress as the presidential veto and judicial review of legislation; such checks on the presidency as the impeachment power of Congress and judicial review of executive decisions; and such checks on the judiciary as the congressional authority over the court's jurisdiction and the executive power to appoint judicial officers. In thus separating powers, however, the Framers did not intend their strict separation. As Justice Holmes once observed, "the great ordinances of the Constitution do not establish and divide fields in black and white" and "we do not and cannot ... divide the branches into water-tight compartments." Instead, the Framers envisioned, at various points, some sharing of powers by the branches. The Constitution requires, for example that the president "from time to time give to the Congress Information on the State of the Union," and "recommend ...such Measures as he shall judge necessary and expedient." The president thus is given a certain legislative role. While it is important to understand that the Framers did not intend a strict separation of powers, it is equally important to see that they did not intend for one branch of government to assume the power central to another branch. The Constitution assigns the branches primary responsibilities, and each branch is expected to carry out its function. This, then, in brief outline, is how the Framers separated powers and then checked and balanced them in the

interest of liberty. But this explanation fails to do justice to the work of the Framers unless more is said. Several points are in order. First is that the Framers were most concerned about restraining the legislative branch. True, they separated powers in part to restrain the executive. And while they were not as concerned with abuses of power by what Hamilton called "the least dangerous branch," the judiciary, they understood that any part of a government was fully capable of oppression. Still, the legislative branch was their main concern. The Framers intended it to be the most powerful part of the government because they believed the branch closest to the people should predominate. And they agreed with John Locke, who said that to govern is primarily to legislate. But the Framers also knew that where the most power resides in government, there lies the possibility for its worst abuses. The people might elect representatives who, forming a majority in the legislature, would oppress those citizens in the minority. Majorities in the legislature also might make the national government itself an instrument of oppression against all citizens. Congress, that is, might become the new source of tyrannical government. Madison wrote that "the legislative department is everywhere extending the sphere of its activity and drawing all power into its impetuous vortex." And he advised that "it is against the enterprising ambition of this department that the people ought to indulge all their jealousy and exhaust all their precautions." In retrospect it is clear that the Framers, if they did not exhaust all their precautions, instituted a fair number of safeguards. They divided Congress into two houses, thus hoping to slow the impulses of the people and their representatives. And they created an independent executive and an independent judiciary, in part to provide a means of at least temporarily blocking the will of tyrannical majorities as they might be expressed through submissive or demagogic legislatures. Pertinent here are the checks and balances represented by the presidential veto of legislation and the power of judicial review of congressional enactments. The second point regarding separation of powers is twofold, and specifically concerns human nature. The Framers recognized that man was driven by self-interest. They believed that one branch of government would resist

encroachment by another not only because each had the "necessary constitutional means" for doing so-such as the presidential veto-but also because each had the "personal motives" for invoking those means. In the famous sentences of Madison, "Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place." The Framers believed that the branches would check each other and thus secure liberty in part because man could be expected to act according to self-interest. One reads the Founding Fathers too crudely, however, if it is thought that their estimate of human nature was wholly negative. In the Framers' view, ambition and self-interest would help secure a balance of powers and thus protect liberty, buttheydid not intend to establish, as one writer has said, "permanent guerrilla warfare" among the branches. The Framers did not intend that the three branches would constantly obstruct one another. Rather, they hoped that ordinarily the three branches would collaborate, checking and balancing the other branches only as the occasion required. In their vision, the proper working of the national government requires a certain amount of what Madison called the "other qualities in human nature"-the ones that "justify a certain portion of esteem and confidence" about the human prospect. Madison in fact said that "republican government presupposes the existence of these qualities in a higher degree than any other form." These qualities include good will, civility, honesty, and decency. They include a willingness to give and take on issues that don't involve basic principle. The third and final point about separation of powers is that by distributing them the Framers hoped not only to secure liberty but also to strengthen government in general and ensure a substantial degree of coherence and effectiveness in its operations. Here the role of the executive branch is critical. The Framers believed in the primacy of the legislative branch, but they also believed the legislative branch might tend to be sluggish in its deliberations, producing inefficient government. To provide government with qualities the legislative branch could not ordinariiy provide, the Framers designed the executive branch. "Energy in the executive," said Hamilton, "is a leading character in the definition January 1984/Arkansas Lawyer/41

of good government." The executive could give the national government the energy it often would need. It could provide direction. It could, in the Framers' reckoning, stabilize government and make it more effective. This, then, was what the Framers hoped to achieve through separation of powers and checks and balances. They hoped to slow and retard the actions of majorities acting, as they primarily thought majorities would act, through the legislative branch. They hoped, that is, to prevent the legislature from acting tyrannically. More generally, they hoped to prevent any department of the national government from acting oppressively. At the same time that they hoped to protect liberty by separating and balancing powers, however, they also hoped to empower government, to make it strong enough to discharge its fundamental duties. As Justice Jackson once observed, "while the Constitution diffuses power the better to secure liberty, it also contemplates that [this] practice will integrate the dispersed powers into a workable government." The Framers' scheme of separation of powers and checks and balances has served us well for most of our history. Occasionally there have been abuses of power, on the part of each branch of government, and always there have been tensions between branches. But the Framers probably would be satisfied to see that for nearly 200 years now the American people have lived under a national government that has secured freedom and also been strong enough to serve compelling needs. Every period of our history, however, offers particular challenges to the fundamental organization of our national government and thus to the delicate balance of liberty and authority that separation of powers is designed to achieve. Not too long ago there was talk of the imperial presidency-a concern that the executive branch had become too powerful. Today, I believe, the challenge arises principally from the judicial and legislative branches. The judiciary has turned increasingly from deciding cases and interpreting laws to making law, supervising the manner in which laws are executed, and how appropriated funds should be spent. To borrow Madison's language about the legislature, the judiciary seems to be "everywhere extending 42/Arkansas Lawyer/January 1984

the sphere of its activity." Meanwhile, the legislative branch has taken an increasing interest in overseeing the enforcement of the laws it has passed. Capitol Hill fairly teems with oversight committees. As the judiciary has moved away from its more traditional role, it meanwhile has handed down badly divided and fragmented decisions, creating unstable precedents that invite more litigation. As the legislative branch more aggressively has sought to enforce the law, it meanwhile has, on many occasions, failed to do its legislative duties. Matters that Congress should decide have had to be resolved by others. And some of the laws Congress has enacted were not well considered; they do not reflect the degree of deliberation the Framers of the Constitution expected of the legislative branch. With the judicial and legislative branches frequently attempting to exercise the chief responsibility entrusted to the executive branch-that of enforcing the law-the executive branch has every right to complain. Yet my complaint is only partly that the other branches should let the executive branch tend to its central constitutional responsibility of administering the law. Rather, the burden of my complaint is that, as the Framers of the Constitution would well understand, the present proclivities of the judiciary and the legislature are upsetting the fine balance of powers that must exist in our national government if liberty is to be protected and if government is to be capable of effective action. An activist judiciary and an oversight-minded Congress can only weaken the executive branch and thus debilitate the entire national government. Perhaps no principle of constitutional government is in greater need of maintenance than that of separation of powers. And I mean this in the most fundamental sense. The various branches of government need to concentrate their energies on the tasks to which they. are constitutionally assigned. In this context, a most hopeful event-indeed, a splendid demonstration of the continuing relevance of the principle of separation of powers-was the decision by the Supreme Court this past June, in the case involving the legislative veto. For six decades Congress has placed legislative vetoes in a wide variety of legislative enactmentssome 200 in all. In its basic form, Con-

gress attaches to the exercise of statutory or constitutional authority by the president, an executive branch department, or one of the "independent" regulatory agencies a procedure pursuant to which a decision may be reversed by a disapproval resolution adopted by one house of Congress, both houses, or even a congressional committee or a combination of committees. Congress has placed these devices on virtually every type of executive branch and regulatory agency action-to decisions that are primarily administrative in nature, to those that basically are of a rulemaking variety, and to such matters as the reprogramming of appropriated funds. Legislative vetoes are not fOlwarded to the President for his approval or veto; they are the final legally significant action. They are also not authorized by the Constitution. Neither can authorization be inferred from any constitutional principle. Indeed, legislative vetoes violate the general principle of separation of powers. And they violate the specific requirement under Article I of the Constitution that legislation be presented to the president for signature. Legislative vetoes eliminate the president's constitutionally assigned role from the legislative process. They do not permit him to oppose oppressive measures, or to ensure that the legislation in question includes a national perspective, or even to defend the executive branch from legislative encroachments. Legislative vetoes, among other devices, work to thwart the energy and initiative found in the executive and so necessary to effective national government. In conclusively rejecting the legislative veto, the Supreme Court performed the duty of judicial review implied by the separation of powers. And in performing its duty, the Supreme Court helped maintain that very same principle. Henceforth, Congress will be unable to intrude, through the device of a legislative veto, on the jurisdiction of the executive branch. And Congress also will have to work harder, and deliberate longer, in order to achieve consensus. The Court's decision promises to make government run more effectively as the legislative and executive branches focus on their core responsibilities. In Federalist 51, Madison wrote that "a dependence on the people is ...the primary control on government." Lincoln recognized that whoever is able to change public opinion, is also able to continued on page 44

YOUNG LAWYERS' UPDATE by Carl A. Crow, Jr. YLS Chairman

Criminal Defense Handbook chairs the YLS Admissions Ceremony Committee, and Sammye Taylor of little Rock is vice-chair. Among those who assisted in the program were: Arkansas Bar Association President Dennis L. Shackleford; Dean Clay Patty; H. William Allen, Martha Miller McCaskill, Terry C. Paulson, Cyril Hollingsworth, Frank B. Sewall and Mark Lester, all of Little Rock; and Milas H. Hale of North Little Rock. The orientation program is a traditional project of the YLS and serves to inform new lawyers of resources and bar activities available to them.

The American Bar Association Young Lawyers Division has awarded the Arkansas Bar Association Young Lawyers Section the sum of $2,500.00 for development of a Criminal Defense Handbook. The handbook will provide to courtappointed attorneys for the first time a summary of relevant procedural rules, statutes and case law. Prosecuting Attorneys presently have access to similar materials, and the disparity in resources available to the prosecution and the defense relates directly to the quality of legal representation available to indigent defendants. Samuel A. Perroni of Little Rock chairs the YLS Criminal Defense Handbook Committee. Tom Carpenter, also of Little Rock, is vice-chair of the committee and serves as chairman of the Criminal Law Section of the Arkansas Bar Association. Both Sections will work together in preparation of the handbook. This grant is part of the ABA/YLD Public Service Subgrant Program. It is the third ABA/YLD grant to the Section since 1982. Previous grants in the total sum of $1,200.00 have partially funded the work of the YLS Legal Services to the Elderly Committee. Anyone who is interested in working on this project should contact Perroni, Carpenter or Judith Gray at the Bar Center.

AVLE Volunteers Needed Your participation in Arkansas Volunteer Lawyers for the Elderly (AVLE) is needed. In joining AVLE, a lawyer agrees to accept a maximum of three (3) pro bono cases per year. This is an excellent opportunity for Arkansas lawyers to meet their professional duty to provide legal assistance to those who cannot afford it. AVLE is a joint venture of the Young Lawyers Section and Legal Services programs in Arkansas. It has been endorsed by the Arkansas Bar Association Executive Council and House of Delegates as a project of the YLS Committee on Legal Services for the Elderly. Richard L. Ramsay of Pine Bluff is chairman of the AVLE Board of Directors. If you are interested in participating, please write to AVLE at P.O. Box 2038, Little Rock, Arkansas, 72203.

Practice Skills Course The 1983 Practice Skills Course was held OCtober 6-8 at the Riverfront Hilton Inn in North Little Rock. The annual program is sponsored by the YLS and the Arkansas Institute for Continuing Legal Education (AICLE). Formerly called the "Bridging the Gap Seminar," the program is designed to acquaint both new lawyers and those already in practice with the practical aspects of law practice in Arkansas. It has traditionally been very successful, and this year was no exception. Robert J. Lambert, Jr., of Springdale chairs the YLS Practice Skills Seminar Committee, and Elizabeth J. Robben of Little Rock is vice-chair.

Legal Services To Elderly Videotapes The YLS Committee on Legal Services to the Elderly, in conjunction with the University of Arkansas Law School at Fayetteville, has completed production of videotapes explaining to elderly

Admissions Ceremony The YLS sponsored an orientation program for new lawyers following the Fall Admissions Ceremony on September 12, in the Old Supreme Court Chamber of the Capitol Building. Robert Ridgeway, Jr., of Hot Springs

Arkansas Lawyers who volunteered their time to speak at the program, and their areas of practice, were: Ethics and Avoidance of Malpractice, Hon. Darrell Hickman of the Arkansas Supreme Court and Sidney H. McCollum of Bentonville; Real Property, William M. Clark, Jr., of Springdale, and Caro-

persons their rights in a variety of areas. Bryan Tilley, committee chairman, and Assistant Dean David Malone coordinated production of the videotapes. The tapes will be made available statewide as part of a YLS Speakers' Bureau. Details will be announced as soon as possible. The project is partially funded by a $10,000.00 grant from the Arkansas Office on Aging.

January 1984/Arkansas Lawyer/43

Iyn J. Clegg of Magnolia; Estate Planning and Probate, Clay P. Farrar, Jr., of Hot Springs and Thomas L. Overbey of Little Rock; Criminal Practice, Bobby R. McDaniel of Jonesboro and Chris Piazza of Little Rock; Workers' Compensation, James H. Larrison, Jr., of Little Rock; Domestic Relations, Harry T. Moore of ParagOUld and Collins Kilgore, Jr., of Little Rock; Representation of Creditor and Debtors, Phillip A. Raley of Pine Bluff and Jill R. Jacoway of Springdale; Litigation, Nicholas P. Patton of Texarkana and John V. Phelps of Jonesboro; Opening a Law Office, Richard F. Hatfield of Searcy and Martha Miller McCaskill of Little Rock; Setting Up Shop-How to Get Started, Frank C. Elcan, II, of Harrison and Kaye Oberlag of Little Rock; Operations-How to Maintain Practice, Robert B. Branch, Sr., of ParagOUld and Samuel A. Perroni of Little Rock. This program was the first to include a section on law office economics and related topics, in conjunction with the Arkansas Bar Association Section of Economics of Law Practice, chaired by William D. Haught of Little Rock. The YLS Economics of Law Practice Committee is chaired by Kaye Oberlag.

Trial Practice Seminar In Jackson, Mississippi The YLS sponsored a Trial Practice Seminar in Jackson, Mississippi, on September 24, the day of the Arkansas vs. Ole Miss game. The seminar was far more successful than the game! Han. Henry Woods, United States District Judge, spoke to the group on various topics related to trial practice. Charles Coleman of Little Rock was instrumental in making arrangements for the program.

Hot Springs CLE Meeting The annual YLS Trial Practice Seminar in Hot Springs is tentatively scheduled for the weekend of March 22-24, 1984. This will be the third year the YLS has sponsored a seminar in Hot Springs during the race meet, and this year's program promises to be better than ever. Reserved seats at Oaklawn Park for Saturday, March 24, will be available for purchase by persons attending the seminar. Details will be announced as soon as possible by committee chair Morse Gist of Hot Springs and vicechair James M. Simpson, Jr., of Little Rock.

As in the past, young lawyers from several neighboring states will be invited to speak and participate. You are encouraged to make plans to attend.

"' :!Ill

Separation . ..


continued from page 42 change the Government. As President Roosevelt said, "the whole fate of what government is trying to do . . .depends ... on ...the people." Although I have concentrated my remarks today on the powers in Washington, I believe that the opinion of the American people is the most critical variable in the operation of those powers. And that is why I hope that all Americans will take an active interest in political affairs. For only through the participation of our citizens in political life can we hope to keep the powers in Washington in proper balance. And only by maintaining that proper balance can we hope to preserve the liberties that our Founding Fathers sought to protect through their new science of politics, a science that included the novel but vital principle of separation of powers.


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