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I I I I I I I I I I I I I ..JI

January 1989 Vol. 23, No.1 OFFICERS Philip E. Dixon. President David M. "Mac" Glover. President-Elect Sandra Wilson Cherry, Sec.-Treasurer




Jack A. McNulty. Council Chair William A. Martin. Executive Director Judith Gray, Assistant Executive Director

2 3

The President's Report



Law, Literature & Laught(i!r

Madison P. Aydelott III Mark Camhiano H. Murray Claycomb Ronald D. Harrison Robert L. Jones III James H. McKenzie Paul D. McNeill Martha M. Miller R. Gary Nutter Robert G. Serio James M. Simpson Jr. Carolyn B. Witherspoon

EX-OFFICIO Philip E. Dixon David M. "Mac" Glover John F. Stroud Jr. Sandra Wilson Cherry

Jack A. McNulty Edward Boyce

EDITOR Ruth M. Williams, Director of Communications

The Arkansas Lawyer (USPS 546-040) is published quarterly by the Arkansas Bar Association. 400 Wes+ Markham. Little Rock. Arkansas 72201. Second class postage paid at Little Rock, Arkansas. In

all counts. POSTMASTER: send address changes to The Arkansas Lawyer. 400 West Markham, Little Rock. Arkansas 72201. Subscription price to non-members of the Arkansas Bar Association

$15.00 per year and to members $10.00



per year included in annual dues. Any opinion expressed herein is that of the author, and not necessarily that of the Arkansas Bar Association or The Arkansas Lawyer. Contributions to The Arkansas Lawyer are welcome and should be sent in two copies to the Arkansas Bar Center, 400 West Mark-

ham. Little Rock. Arkansas 72201. All inquiries regarding advertising should be sent to The Arkansas Lawyer at the above address.

Creditors' Rights in Bankruptcy, by Nelson V. Shaw

7 12

Probate Law, by Jean Stockburger and Coleen Barger The Paralegal in Practice, by the Pcrralegal Committee

Point of View/Letters

Congressional Update. by Bill Massey


22 28 31

Disciplinary Actions In Memoriam

34 38 39 40

The Developing Law


In-House News

Executive Director's Page Young Lawyers' Update Arkansas IOLTA Program

ON THE COVER: The use of paralegals in the practice of law has steadily increased in the last decade. In Arkansas. the possibility exists for a paralegal training program in the University of Arkansas System by 1990. In "The Paralegal in Practice" the Arkansas Bar Association's Paralegal Committee offers lips on hiring paralegals -- from establishing guidelines and determining areas of assistance to compensation and assimilation of paralegals in the law office. January 19B9/Arkansas Lawyerll


An Exciting Year By Philip E. Dixon Thus far, it has been an exciting, very busy and meaningful year as president. My most recent computer printout reflects that approximately 21 hours per week are being devoted to the affairs of the Arkansas Bar Association. I do this gladly and willingly because of the outstand-

ing contributions made by the members, committees, sections and staff of our Association. In addition to the many committee and staff meetings, telephone conferences and daily correspondence, my activities during 1988 have included working with, speaking to or participating in the W. Harold Flowers Law Society meeting in Heber Springs; bar leadership retreat at Lake Greason; Arkansas Bar Association Annual Meeting Conference; Judicial Disability Commission; American Bar Association Annual Meet-

ing in Toronto, Ontario; Federal Court Naturalization Ceremony; Missouri Bar Association Annual

Meeting in St. Louis, Missouri; Fall Legal Institute in Fayetteville; Arkansas Bar Association Executive Council meetings; Supreme Court Admission Ceremony; Arkansas Bar Association House of Delegates meeting in Fayetteville;

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St. Francis County Bar Association meeting in Forrest City; Arkansas Judicial Council meeting in Jonesboro; luncheon for lawyer-legislators sponsored by the Arkansas Bar Association; Senior Physicians of Arkansas; Bar Leaders Conference in Little Rock; Fourth Judicial District Trial Practice Seminar at DeGray State Park; Central Arkansas Commercial Bankers; University of Arkansas, Fayetteville Law School Committee; Pulaski County Medical Society; and the Oklahoma Bar Association Annual Meeting at Tulsa, Oklahoma. The Bar Leaders Conference held at The Capital Hotel on October 28 was a huge success. More than 80 bar leaders from across the state attended the full-day session. Thirty-one local or county bar associations were represented. together with committee and section members of the Arkansas Bar Association and specialty bar associations. Phillip Carroll put together an excellent program. The speakers included David Matthews; Morrill H. Harriman Jr.; Martha M. Miller; Robert McCord; Lynn Foster;

Charles A. Morgan; Mac Glover; and Rodney Slater of our Association and George Buckley of the American Bar Association. I truly believe that the immediate and future benefits of this Conference will be significant. Past President Bob Compton of EI Dorado will lead a group of "blue ribbon" trial attorneys in a one and one-half day "mock trial" at the annual meeting in Hot Springs in June, Garland Countians will serve as jurors and the trial will proceed from voir dire to final verdict, with outstanding and experienced trial lawyers participating in each phase of the case. In addition, a "mini-Gridiron" presented by the Washington and Benton County Bar Associations will be featured at the annual meeting. I had the opportunity to enjoy the show at the Fall Legal Institute. It will provide an evening of fun, talent and laughs. Also in keeping with our theme -- "All Arkansas" -the Friday night banquet and extravaganza will highlight Arkansas foods, including catfish, fried chicken, rice and other delicacies. The entertainment will feature the singing and musical talents of judges and lawyers from across the s tate with Professor Dent Gitchel. of the University of Arkansas at Little Rock School of Law, serving as master of cere-

monies. Mark your calendar now and plan to attend a meaningful. educational and fun-filled annual meeting. A word of praise. It is a genuine pleasure to work with your president elect, Mac Glover. He is always so willing to help me and the Association in every possible way. His contributions are greatly appreciated. All of you are doing a great job. Keep it up and it will continue to be an exciting year.o


Courtesy and Advocacy THOUGHTS

OFA SMALL TOWN LAWYER am a "small town lawyer." In saying that, I recognize that many lawyers would classify members of the Wichita bar as "small town lawyers." But what I mean is that I REALLY am a small town lawyer. That doesn't mean that I am as folksy as Jimmy Stewart, nor am I well known for funny stories about pigs and mules and farmers' daughters. It simply means that I practice law in an authentic small town. We have a real courthouse where we occasionally have real trials (sometimes with real juries), and we have real judges who really do administer real justice. Other than the fact that we could hold our local bar meeting in the front seat of a 1957 Thunderbird, we do many of the same things as the "city lawyers." However, there is a difference between the rural and urban practice. Contrary to what our city brothers and sisters may think, things don't move much slower (or for that matter much faster) than they do in the city. The days are the same length in Smith Center as they are in Wichita, and each morning brings with it yesterday's phone messages, usually stuck to the bottom of a dirty coffee cup. The big


Editor's Note: James L. Bush of Smith Center, Kansas, population 2.240, is a member of the Windscheffel & Bush law firm. Our thanks to William R. Wilson Jr" of Little Rock for his assistance in obtaining this article.

difference is not in what we do, but in how we go about doing it. It was just the other day while making the long trip back from bankruptcy court in Topeka that I finally figured out what's missing from the urban practice of law. The one thing that seems to be much more common out here on the open plains where we have (get) to work with the same people every day is

becoming a rather rude and discourteous lot. The discourtesies range from the simple absence of pleasant niceties all the way to downright outrageous conduct. Unlike the days of yore when opposing counsel (no matter how ill-advised) was referred to as "learned," today's


courtroom comments are more

My former partner, now retired, personifies casual courtesy. His personality is something of a blend of urban sophistication and country charm that allows him to feel comfortable in virtually any situation, whether its swapping true stories with the chief justice or "true" tales with one of the local fishermen. He looks and sounds like what everyone believes a lawyer should look and sound like, right down to the unruly tuft of snow white hair that tops is head. Because of this perfect blend of personality with profession, he never bas to give much thought to professional courtesy; it is part of him. Not all of us are so lucky. Compared to my former partner, who is blessed with one of those "Hail Fellow Well Met" personalities and meets his "closest" and "best" friends wherever he goes in the state, I am a relative wallflower. As a wallflower in various courts throughout the state, I frequently have the opportunity to

likely to be something like, "opposing counsel is obviously ignorant of the law:' a rather inflammatory

By James L. Bush

observe others in action, and my general impression is that we are

accusation in the presence of one's

client. It seems that shaking hands is also becoming a thing of the past unless the other attorney happens to be a close family member about to embark on an aroundthe-world journey in a hot air balloon. I personally admit some failing in this regard, but generally try to excuse it by blaming the other person for not offering his or her hand first. I also have to frequently remind myself to ignore my earlier training that one does not shake hands with a lady unless she offers her hand first. an obviously outdated and chauvinistic rule. I suppose that politicians have given the custom of shaking hands a bad name. In any event, it does add a degree of warmth and courtesy to any professional transaction. Even boxers shake hands before they try to beat each other's brains out. I learned at a very early age that it was not polite to call people January 1989/Arkansas Lawyer/3

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names, unless of course it was the names that their parents gave them, which could still get a person in trouble if it was a name the "namee" didn't happen to be particularly fond of. Although I am not a prude and have. on occasion, referred to someone (sometimes even another lawyer) as a stubborn, no good, lying, cheating, dog kicking, SOB, '@!!@%& and /@&$, I have never had the courage to actually call anyone that to his or her face. That is attributable not so much to a high degree of gentility on my part, but rather to my previously acquired instincts for selfpreservation. I am therefore, amazed at the number of attorneys that freely call each other, and worse yet, their clients such nonendearing terms. For a profession that is widely recognized for its ability to utilize the entire English vocabulary (sometimes in a single document), it seems a shame that we can't be more creative when addressing one another in anger. I seriously doubt that opposing counsel becomes more amenable to settlement by virtue of an unrealistic characterization of his or her parentage. I think we could do our profession a great service and perhaps even speed up the process of justice a bit at the same time if we would strive a little harder to be more dispassionately passionate in arguing the interests of our clients. Consideration seems to be another victim of our endless quest to obtain tactical advantages over our adversaries. It seems that maximizing the inconvenience of our adversaries has become a commonly accepted litigation tactic. Hearings and discovery are often scheduled at inconvenient times and in inconvenient locations in order to increase the chances that the adversaries will be unable or unwilling to attend. Judges all too often encourage this type of conduct by failing to utilize the resources available to them in scheduling telephone hearing conferences or requiring the submission of matters on written briefs. Out here on the plains where every

courthouse is separated by miles of open highway and the term "bypass" usually refers to a serious heart operation, nothing is more discouraging than to travel several hours to attend a hearing were the primary accomplishment is a consensus that there are unresolved issues that should be addressed in another he=ing. I am often bemused al the comments of the "city lawyers" who, upon arrival in our courtroom, bemoan the early morning departure time and endless hours of driving required to get "way out here." Those lawyers that frequently make such trips fully understand the vastness of our state and can generally be relied upon to keep unnecessary travel to a minimum. Unfortunately, there are many members of the bar, particularly those employed with governmental agencies, that travel only in an elevator or whose travel plans are primarily concerned with finding a parking space close to the courthouse door. Many of these lawyers seem perplexed at the frustration expressed by counsel who has traveled four hours to get to court to resolve an issue that could have been resolved by 10 minutes of earnest telephone conversation. There have been occasions when I have had to travel more than 400 miles simply because another attorney was too busy to return a phone call. It is on such occasions that the temptation to address the other lawyer in something other than polite terms is the greatest. We attorneys are rather image conscious. We are concerned about what we wear, how we stand, how we speak, how and when we should smile, even what kind of pen we should have in the pocket of our tastefully matched dress shirt or blouse. We have been repea tedl y told that we are how others perceive us. We don't want the judge, the jury or an adversary to get the wrong impression of us, so we carefully mold an image that fulfills our individual impression of what we think we are. When I want the judge or jury to perceive me as bold or decisive,

I wear a red tie with my conservative grey suit and crisp white dress shirt. I don't know that the tie is particularly effective on either the judge or jury, but it makes me feel bold and decisive. By the simple act of wearing a certain tie, I have become what I want to portray. Although our concern with image is not altogether bad, it may have reached the point where we are reluctant to be polite or courteous out of fear that such courtesy may be misconstrued as a sign of adversarial weakness or it may break the image that we are striving to create. Sometimes we even try to mold an image by the way in which we interact with one another. For example, we small town lawyers have a tendency to be rather cliquish when out-of-town lawyers are around. I suppose that this is an unconscious attempt on our part to make the stranger feel a little more uncomfortable on our turf. After all, if the stranger feels as comfortable as we do, we will lose the home town advantage. Bankruptcy practitioners show their unique mastery of the bankruptcy system by constant reference to rule and code section numbers. Woe be to the outsider unable to drop a couple "Rule 2004 Exams" or "Section 341 Hearings" into the casual courthouse conversation. Tax practitioners are the worst. They can make complete sentences without using any words at all. Ironically, our zeal in making a certain impression may in fact work against us more than we may realize. The novice bankruptcy practitioner may have readily agreed to a deposition of his client, but may have some doubt about a "Rule 2004 Exam." An attorney prosecuting or defending a personal injury claim is going to try even harder to win the case, and restore his or her injured ego, if the other attorney has acted rudely or disrespectfully toward him or her. A defense attorney is probably not going to become more generous by being characterized as a "stingy bastard." Lest I be accused of simply identifying a problem without offering

a solution, I would suggest that all of this time and effort in attempting to make an impression on one another is somewhat a moot point. Canon 7 of the Code of Professional Responsibility obligates us to represent a client zealously within the bounds of the law. Therefore, unlike the barnyard rooster who must puff his feathers and strut his stuff to show how tough he is, we don't have to prove anything to one

another. We are judicially mandated to be tough and zealous advocates. Therefore, assuming that fact, we can dispense with the tough rhetoric and rude behavior and deal with one another in a professional and courteous manner. Not only would the practice of law be made more enjoyable by reducing the hostility and rudeness, we might even find the process to be more efficient


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(cited hereinafter as "LLL") Correction time!

In the October column ("From Catty to Snippy"), a typographical error (hereinafter referred to as "typo") occurred somewhere between my office and the print shop, The amount of judgment the Craighead County jury awarded Connie Clayton against Kemp for the loss of Kali the alley cat was $250, not $2560. I certainly hope the number of cases filed over cat killings did not shoot up dramatically as result of this ghastly error. Speaking of typos, for some time now I have been collecting errors in transcription that go beyond the ordinary, ho-hum garden variety. I'm talking about the creation of non-word words. Clerical help new to the legal field always come up with some great ones, but even seasoned court reporters add their share. A classic, in my opinion. was transcribed by a recently hired secretary at a law firm with which I labored some years back: "In order to protect yourself from a claim of usury, the Rule of Thurn is to be completely certain that no computation known to man will yield greater than ten percent per annum interest." Such a Rule is right up there with the One in Shel-

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Mistranscription Gems and "Real Lawyers" News By Vic Fleming ley's Case and the One against perpetuities. A veteran court reporter blessed me with this gem, taken from a bank officer's deposition. "Q: What documents had you prepared in conjunction with the proposed deed in lieu of foreclosure transaction?" "A: An Agreement for a Stopple and a Warranty Deed." She was not asked what size or brand of Stopple the agreement

second time you have referred to this case as being an appropriate one to settle for the costs of the fence." Quite recently, I received a pleading from a colleague in which reference was made to the "Uniform Contribution Amongst Tortfeasors Act." That may not have been a typo, now that I think about it. Here's one from a letter I received a few years ago, one which I am sure was not a typo, but rather an accurate transcription that was signed without question: "As soon as I get chait of my client. I will call you." The lawyer got aholt of me on the phone the next day, as I recall. Occasionally, such non-typos occur when one's longhand cannot quite be deciphered. One of my current trusted employees, typing a brief in which [ wished to point out the distinguishing characteristics of a case, came up with this from my handwriting: "In the present case, there are two disfunctions: ..." The boss' handwriting being one of them. Another current assistant of mine may just have something of a hearing problem. I asked that she procure for me "Iile marked" copies of a document. I almost signed the letter reading "Please send me five more copies of the mortgage."

in which I was trying to coerce my

Real Lawyers ... And now, the fast breaking news for "Real Lawyers." Absent some unforeseeable complications, by the spring of 1989 Real Lawyers Do Change Their Briefs, by yours truly, should be rolling all the presses of Rose Publishing Company. Written some two years ago, this hook is not a collection of LLL columns. It is, rather, a penetrating analysis of legaldom. Or something like that. Watch for it.D

opponent into a settlement, only to find this language: "This is the

e>Copyrigbt 1989 by Vic Fleming

was for.

Not long ago, I proofread a letter





Creditors' Rights In Bankruptcy There are a few areas in the practice of law that remain unaffected by the increasing number of bankruptcy filings.' The general practitioner is often requested by business and commercial clients to provide them with basic representation as creditors in bankruptcy court. While the United States Bankruptcy Code often favors the debtor, there are several remedies available to both the secured and unsecured creditor.'




By Nelson V. Shaw Shortly after the debtor files his or her bankruptcy petition, the creditors will receive a document

entitled "Order for Relief and Meeting of Creditors."3 This document will provide the creditors with pertinent information including: the chapter of bankruptcy in question; the filing date of the bankruptcy petition; the filing dates for section 523(c) compliants; information concerning the first meeting of creditors; and various other information

concerning the bankruptcy action. Meeting of creditors The meeting of creditors is to

occur in not less than 20, but not more than 40, days from the date of the debtor's petition.- The creditor will receive at least 20 days' notice of this meeting. It is not mandatory that the creditors attend this meeting: however, by failing to attend, the creditor loses a valuable opportuni ty to gain information made under oath by the debtor. January 19S9/Arkansas Lawyer/7



Proof of claim

As soon as possible, the creditor should file a proof of claim using the format given in Official Form Nos. 19, 20 or 21. The proof of claim is a document designed to document the debt owed to the creditor and should include the following: -Identification of the person filing the claim and hislher connection with the claimant; -As assertion of the amount of the deht; -A statement of the basis on which the debt is founded; -An attachment of any writing upon which the claim is founded; -An attachment of the debtor's account if the claim is founded on an open account; -The disclosure of any judgment rendered on the claim in another court; -An assertion that all payments on the debt have been credited; -The enumeration of setoffs;


from a Chapter II case to a Chapter 7 case which requires a claim in order to participate in the estate, or; -Assets may be located and subsequent notice may inadvertently be forgotten. A claim properly filed is presumably allowed as filed unless it is objected to by a party in interest. The objecting party then has the burden of proof to rebut the validity of the claim.' Notice of appearance

Under section 1109(b) of the Bankruptcy Code and Bankruptcy Rule 2002, the creditor can request that notice of all proceedings be given to him. This notice is usually requested by simply filing a notice of appearance and requesting that the creditor be given notice pursuant to section lI09(b) of the Code and Rule 2002. By filing this notice, the creditor can monitor every

action taken in the bankruptcy action. This particular "remedy" should be considered in every bankruptcy action.

-The specification of the secu-

rity, if any; and -The nature 01 the case. The proof of claim should be filed by creditors as individuals and not as a class.' In Chapters 7 and 13 cases, the proof of claim must be filed within 90 days after the first date set for the section 341 meeting. 6 The court will set the time within which claims must be filed in a Chapter Il case.' While a secured creditor is not

required to file a proof of claim, he/she would be wise to "err on the side of caution" and file the proof of claim. This is true even if the creditor is notified that the debtor's case is a "no asset case." The reason for this caution is based on several possibilities: -The debtor's information may not accurately reflect the claim; -The case may be converted

8/Arkansas Lawyernanuary 1989

Motion to lift stay

One of the most widely used of all creditors' remedies is the obtaining of relief from the section 362 automatic stay. Once a debtor files a petition, an automatic stay takes effect.' This stay stops nearly every action that may have an effect on the property of the debtor's estate. This action is taken by the creditor's filing a motion to terminate, lift or modify the stay.l. The grounds for obtaining relief from the

stay aTe "for cause" and

include, but are not limited to: -Lack of adequate protection;ll -The debtor's lack of equity in the property;l2 -The desire by the creditor to permit another tribunal to complete an action;13 -The continual delaying tactics


of the debtor {and the lack of adequate protection);" -The debtor's lack of "good faith";l5 -The collateral sought is not necessary for reorganization;16

-The debtor's failure to make 10 mortgage payments;l7 -The debtor's abandoning 01 mortgaged real property;l. -The possibility of irreparable injury occurring to the collateral;l9 -Failure to insure the collateral; 20 or 路A combination of any of the above. 21

The party opposing the motion for relief from the automatic stay has the burden of proof on all issues except the issue of whether the debtor has equity in the property subject to the motion. The party seeking relief has that burden." The facts of each case will help determine whether relief is to be granted." Motion to dismiss

Under section 707 of the Bankruptcy Code, the bankruptcy court may, after notice and a hearing. dismiss a case "for cause." In a Chapter 7 case involving an individual, the court may dismiss a case on its own motion if the court believes the debtor is abusing the bankruptcy law." As used under II USC section 362, "cause" can be a number of things. "Cause" may include: -Unreasonable delay by the debtor; -A material default by the debtor in the implementation of a plan; -Failing to follow the rules of the court or revocation of a plan with the subsequent denial of confirmation of subsequent plans.25 In addition, the following "cause" could be considered for dismissal under section 707:



-Nonpayment of any required fees; -Substantial abuse of the Code; or -A case filed in "bad faith."" The dismissal of a case has the effect of undoing everything that the bankruptcy process may have accomplished, i.e., lifting the automatic stay, An order of dismissal would also vacate most of the orders mandated by the bankruptcy court. 27 Further, under section 305 of the Bankruptcy Code, the bankruptcy court can decline to hear a matter even though it has jurisdiction. The doctrine of abstenlion under section 305 is appropriate where the interests of the parties are best served by allowing the dispute to occur (or to continue) in another forum.


Objection to discharge The general rule is that unless the trustee or a creditor objects to the debtor's discharge or to the dischargeability of a certain debt. a discharge will be granted. 29 Under section 727 of the Bankruptcy Code, there are eight grounds for denial of a discharge: -The debtor is not an individual;

-The commission of an intentionally fraudulent transfer within one year before the petition;

-The concealment. destruction or falsification of records; -Knowingly presenting false information to the court;30 -The debtor has committed a bankruptcy crime;31

-The failure to explain a loss of assets;

Motion to convert The Bankruptcy Code under sections 706, 1112 and 1307 provides means for converting a case from

one chapter to another, The standards for converting a Chapter 11 or a Chapter 13 case to Chapter 7 are centered on basically two alternative elements: -The debtor is being dilatory, or -The rehabilitation effort is not feasible and won't work. A Chapter 7 action can be converted to a Chapter II action under II USC section 706. After a request is made by an interested party and notice is given, the court will set a hearing on whether the case should be converted, The court has the discretion on whether the case should be converted,28 It is important for the creditor to move promptly when seeking a conversion to a Chapter 7 case. Otherwise, the continued operation of a business at a loss will mean the debtor's estate will dwindle to the point that there will be nothing available for creditors.

-The debtor refuses to testify; or -The debtor has received a discharge in a case commenced within six years preceding the present bankruptcy case. The creditor has the burden of proof in a complaint objecting to discharge." The creditor must prove five elements in order to prevail on the fraudulent causes of action:

-The debtor made the representations;

-The debtor knew the representations were false;

-The debtor made the representations to deceive the credi-

tor; -The creditor relied on the representation; and

-The debtor was damaged." Appointment of trustee Under section 1104 of the Bankruptcy Code, a party in interest, at any time before confirmation and after notice is given, may

request the appointment of a trustee in a Chapter 11 proceeding.


Under Chapters 7 and 13, a trustee is automatically appointed." The court, under section 1104, may appoint a trustee "for cause,"

which includes: -Fraud; - Dishonesty; -Incompetence; -Gross mismanagement; or

-Failure to maintain books and records, with the suffering of continuing 105s. 35

As under sections 362 and 707 of the Bankruptcy Code, the bankruptcy court will look at the facts of each case to determine whether a trustee should be appointed for cause under section 1l04(a)(l) of the Bankruptcy Code," or in the interest of creditors under section 1I04(a)(2) of the Code," The movant for the appointment of a trustee has the burden of proof by clear and convincing evidence,38 In the event a trustee is not appointed, an examiner may be named if such is in the best interest of the creditors or it the debtor has in excess of $S million in unsecured, non-trade debt.'" The examiner's role is usually limited to an investigative function and can provide an oversight function. Reaffirmation

The debtor can promise to pay an existing debt and keep the property securing that debt pursuant to II USC section 524, The debtor must execute a reaffirmation agreement and his attorney must sign an affidavit stating he has fully informed the debtor of this agreement. Both documents must be filed with the court and are subject to the court's approval.

Additional remedies Creditors should be aware of the following remedies: -Trade creditors have the right to reclaim goods after an action is commenced;40

-An involuntary bankruptcy January 19B9/Arkansas Lawyer/9



action is feasible in some cases;u ·Abandonment to a party with a possessory interest may be possible;" and • Avoidance of a transfer by the debtor pursuant to II USC section 544.42 The recent development of




shown that a general law practice devoid of bankruptcy business is a rarity, and in all likelihood is one headed for exlinclion.o FOOTNOTES In 1987. there were 5.695 bankruptcy peti~ Hons filed in Arkansas (all chapters). ~

The House Report on the United States

Bankruptcy Code stated "This (bill) is not primarily a debtor's bill. .." H.R. Rep. No. 595. 95th Congo (1977). 3 11 U.S.C. section 341. 4 U.S.C.S. Court Rules. Bankruptcy Rule. Rule 2003(0). S See Sheftelman va. Standard Metals


Co'!'., 817 F2d 625 (10th Cu. 1987); however.

see In re American Reserve Corp., No. Erl1768 (7th Cir. 2/18188). U.S.C.S. Court Rules. Bankruptcy Rule. Rule 3002(c). 7 U.S.C.S. Court Rules. Bankruptcy Rule. Rule 3002(cX3). 8 In ra Farmers Co-op 01 Arkansas and Oklahoma. Inc.. 43 Bankr. 619 (Banla. W.D. Ark. 1984). 9 11 U.S.C. section 362. Also see David M. Lira. Bankruptcy 64-66 (1988). 10 U.S.C.S. Court Rules. Bankruptcy Rule. Rule 9014: In re Coin, 3S Bankr. 904 (S.D. N.Y. 1983). II See In re Marchand. 61 Bankr. 81 (Bankr. E.D. Arle. 1986); In re Glover. 17 Bankr. 161 (Banh. E.D. Ark. 1982); In re HoUman. 51 Bankr. 42 (Bankr. W.D. Ark. 1985). 12 17 Banla. 161. 13 In re Bailey. 11 Bankr. 199 (Bankr. E.D. Va. 1981): 3S Bankr. at 910. 14 In re GSVC Restaurant Corp.. 3 Bankr. 491 (Bankr. S.D. N.Y. 1980). IS In re Little Creek Dev. Co.. Tl9 F2d 1008 (5th Cir. 1986). In re William., 42 Bankr. 474 (Bankr. E.D. Ark. 1984). See the following cases for discussions on lack of "good faith"; In re Eden Associates. 13 Banh. 578 (Bankr. S.D. N.Y. 1981); In re Jenkins. 13 Bankr. 1003 (Sonkr. W.D. Ark. 1981). 16 In re Sulzer. 2 Banler. 630 (Banh. S.D. N.Y. 6

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1980). " In re Hinkle. 14 SOOO. 202 (Banb. E.D. PA. 198I); In re Tainan. 48 Bankr. 250 (E.D. PA. 1985) and. In re Dabney. 4S Bankr. 313 (E.D. PA. 1985) (arrearage should exceed three months). IS In re MacCubbin. 21·Bankr. 233 (Bankr. M.D. PA. 1982). 19 In re Montgomery MalL Ltd. Partnership. 704 F2d 1173 (lOth Cu. 1983). 20 The use of this "cause is effective. especially when used in conjunction with the lack of adequate protection. 21 Tl9 F'2d. 1008. 22 11 U.S.C. section 362. 23 House Report No. 95-595 Congress. First Session (l977) page 34. 24 11 U.S.C. section 7rJl. 25 11 U.S.C. sections 1112. 1208 and 1307; see also In re Missouri. 23 Bankr. 78 (Bankr. E.D. Ark. 1982); Matter of Odom Enterprises. Inc.. 22 Bankr. 785 (Bankr. E.D. Ark. 1982). .. 13 8ankr. 578; 13 Bankr. 1003: 42 Bankr. 474. 27 11 U.S.C. section 349. 21 See 11 U.S.C. section 'lC6. Notes of Committee on the Judiciary Senate Report No. 95-989; In re Mead. 28 Bankr. 1000 (Bankr. ED. PA. 1983); In re Providence Television Ltd. Partnership. 75 Bankr. 139 (Bankr. N.D. ILL. 1987). " II U.S.C. sections I 12(b) and 1307(b). " In re Woodhull. 30 Bankr. 83 (Bankr. E.D. Ark. 1983). 31 These crimes include the making of a false oath or account. the use or presentation of a false claim and the giving or receiving of money for acting or forbearing to act. See the Legislative History to 11 U.S.C. section 727 and also. see 18 U.S.C. section 152. 32 U.S.C.S. Court Rules. Bankruptcy Rules. Rule 4005. 3] In re Locke. 50 Banb. 443 (Bankr. E.D. Ark. 1985); In re Kerr. 58 Banb. 171 (Banla. E.D. Ark. 1985); In re Hunt. 30 Bankr. 425 (Bankr. M.D. Tenn. 1983). 34 II U.S.C. sections 701. 702. 703 and 1302. ~ In re Harlow. 34 Bankr. 668 (Bankr. E.D. PA.I984). 36 In re Colby Constr. Corp.. 51 Bankr. 113 (Bankr. S.D. N.Y. 1985); In ra La Sharene. Inc.. 3 Bankr. 169 (Bankr. N.D. GA. 1980). :r1 In re Concord Coal Corp.. 11 Bonier. 552 (Bankr. S.D. W. VA. 1981). 311 In re Pots and Company. Inc., 20 Bankr. 3 (Sonkr. E.D. PA. 1981). " 11 U.S.C. section 1104(b) 40 11 U.S.C. section 546(c} and (d). 41 11 U.S.C. section 303(b); 50 Bankr. 443: In re Garland Coal and Mine. 67 Bankr. 514 (Bankr. W.D. Ark. 1998). 42 11 U.S.C. section 554. 43 In r. Ozark Restourant Equipment Co.. 41 Bankr. 476 (Bankr. W.D. Ark. 1984). remanded 61 Bankr. 750. N

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lOaTH CONGRESS UNUSUALLY PRODUCTIVE productive 100th Congress adjourned sine die on October 22 in time for members to return home to campaign for reelection on November 8. The list of its legislative accomplishments is impressive. For the first time in II years work was completed on all 13 regular appropriations bills by the time the fiscal year ended at midnight September 30, and legislative logjams broke allowing the enactment of several landmark bills, some of which had been bottled up for years. Here is a brief summary of some of the legislative accomplishments of the 100th Congress. Anti-drug Bill, Responding to election-year pressures and a genuine concern about our nation's growing drug problem, the 100th Congress in its last official act before adjournment passed a $2.6 billion measure to combat drug trafficking and abuse. The bill includes a death penalty provision for major drug traffickers who kill while carrying out a drug deal. It creates a cabinet-level drug czar, generally stiffens penalties for drug users and dealers and authorizes substantially more money for


treatment and rehabilitation programs. Under one of its more controver-

sial provisions. beginning in September 1989, convicted drug users and dealers could have eligibility for federal benefits, including college loans and housing guarantees, taken away by court order. The bill also contains tough new child pornography provisions. But due to budget restraints, only $500 million was appropriated to implement the bill, split roughly half for interdiction and half for rehabilitation and treatment. (H.R. 5210, Pub, L, No. 100-690) Technical Corrections Tax Act. In its waning hours, Congress corrected numerous typographical and technical errors in the 1986 tax reform act and the 1987 budget reconciliation bill. but it didn't stop there. Included in the so-called technical corrections bill were also dozens of tax breaks, including the following: a new exclusion from income for interest earned on U.S. Savings Bonds that low- and moderate-income parents use to finance children's college; exemptions for farmers and other off-road users from collections of an excise tax on diesel fuel; liberalization of the capitalization rules for artists

Editor's Note: Bill Massey; a native of Malvern, is chief counsel to U.S. Senator Dale Bumpers. Massey received a J.D. from the University of Arkansas School of Law; Fayetteville in 1973 and a LL.M from the Georgetown University Law Center in 1985.

121Arkansas Lawyer/january 1989

and writers and photographers; continuation of the research and development tax break for business; renewal of tax credits for low-income housing; extension through 1988 of employer exclu-

By Bill Massey

sions for employee education and legal assistance and through 1989 of various energy credits and the tax exemption for mortgage revenue bonds, Also included in the legislation were Senator David Pryor's "Taxpayer's Bill of Rights" and Senator Dale Bumpers' legislation adding 540 historically significant acres to the Manassas Battlefield Park in Virginia. (H.R. 4333, Pub. L. No. 100-617) Omnibus Trade Legislation. After three years of negotiations with the White House and posturing on both sides, a major trade bill became law in August 1987. In addition to toughening section 201 (the escape clause) and 301 (unfair trade practices of foreign governments) of the 1974 Trade Act, the bill contained rather comprehensive provisions dealing with many issues related to trade and international competitiveness, including foreign debt. business bribery and other foreign corrupt practices, currency matters, patent law and education. Several controversial provisions -- such as those requiring disclosure of foreign investments in the U.S. and mandating retaliation against nations that maintain

large trade deficits with the U.S. -were dropped from the final package. (H.R. 4848, Pub. L. No. 100-418) Fair Housing. In 1980, during the lame duck session of the 96th Congress, efforts to bring up fair housing legislation in the Senate were successfully filibustered and the legislation died. For the next

seven years no serious effort was made to enact the bill. Finally, after arduous negotiations among members 01 Congress, civil rights activists, the Reagan Administration and the National Association of Realtors, a compromise was reached. The new law lor the first time hars discrimination in the sale or rental 01 housing against the handicapped or families with young children. The bill gives HUD new enforcement and litigation authority when mediation fails to resolve a complaint. Any party could choose a trial in U.S. district court or the case could be handled by an administrative law judge if all parties agreed. The ALJ would have the power to decide the case, impose fines and issue injunctions, (H.R. 1158, Pub. 1. No. 100-430) Welfare Reform. Reform of our nation's 50-year-old welfare laws was accomplished after heated negotiations and substantial compromise on all sides. Under the $3.3 billion compromise. some wellare recipients will be subject to work requirements for the first time, and child care and medical coverage will be extended to families that are successful in securing employment and leaving the welfare rolls. In addition, the legislation would substantially strengthen child support enforcement by requiring states to meet strict federal standards and would require states to offer education and job training programs to welfare recipients. (H.R. 1720, Pub. 1. No. 100485) Clean Water. On February 4, 1987, by an overwhelming margin, Congress overrode President Reagan's second veto of a $20 billion water pollution control bill. While Reagan viewed the bill as a "budget buster," Congress saw the measure as landmark environmental protection legislation. The measure ended seven years of contentious wrangling between Congress and the administration

over federal aid for local sewage treatment plants and other water projects. The bill reauthorized through 1994, $18 billion in aid (55 percent federal share) for sewage plant construction and set limits on wastewater discharges into waterways. (H.R. I, Pub. L. No. 100-4) Drought Reliel lor Farmers. Responding to a devastating drought, Congress passed a broad measure to provide relief to farmers and livestock producers who were the hardest hit. Under the bill. any farmer who lost 35 percent or more of any crop is eligible for payments equal to 65 percent 01 either his projected lederal subsidy or the projected market price for his crops. The cost of the bill is anticipated to be in the range of $5 billion. (H.R. SOlS, Pub. L. No. 100387) Civil Rights. On March 22. 1987. Congress voted to override the President's veto of landmark civil rights legislation designed to overturn the 1984 Supreme Court decision in Grove City College v. Bell. In the Grove City case. a 6-3 majority of the Court surprised civil rights advocates by ruling that when an entity receives federal dollars, only the "program or activity" which actually gets the aid, not the entire institution, is barred from discrimination. The new law, known as the Civil Rights Restoration Act of 1987, amends lour civil rights statutes to make clear that even if only part of an institution receives federal aid. the entire institution is prohibited from discrimination. (Pub. 1. No. 100259) See Massey. Congress Overrides President's Civil Rights Veto. 22 The Arkansas Lawyer 156 (1988) Intermediate Range Nuclear Forces Treaty. In May 1988, by a vote of 93-5, the Senate consented to the ratification 01 the United States-Soviet Union treaty requiring the elimination within three years of all ground-launched

nuclear missiles with ranges of 300 to 3400 miles. In practical terms, the Soviets will be required to destroy roughly 1600 warheads, and the U.S. roughly 400. It was the first major arms reduction agre'ement of the Reagan Administration. Highway and Mass Transit Reauthorization. Without a vote to spare, on April 2, 1987. the Senate lollowed the House's lead and voted 67-33 to override the President's veto of a highway reauthorization measure totaling $88 billion. The President had charged that the five-year package was "pork barreling" at its worst. but the bill had strong bipartisan support. The enacted measure authorized $70 billion for highway construction and $18 billion for mass transit programs. Included in the bill were authorizations 01 particular interest to Arkansas, including improvements in Highway 71 and Waldron Road in Fort Smith and in the Jonesboro and Pine Bluff areas. (H.R. 2. Pub. L. No. 100-17) Veterans. On March 15. 1989. a Cabinet-level Department of Veterans' Affairs will begin taking care of the needs of the nation's 27.4 million veterans under the terms of Pub. L. No. 100-527. Veterans' organizations had been pushing for years to elevate the Veterans' Administration to cabinet status. A separate bill ends a decade-long struggle to grant the right to judicial review for veterans' claims. The legislation creates a new Article I court. the U.S. Court 01 Veterans' Appeals, to hear appeals by veterans from "clearly erroneous" decisions of the Board of Veterans' Appeals and repeals the existing and anachronistic $10 cap on attorneys' fees. Veterans will be allowed to pay their lawyers a "reasonable fee." (S. 11. Pub. 1. No. 100-XXX) Medicare Catastrophic Coverage. Ever since the enactment of the Medicare program in 1965. conJanuary 19891Arkansas Lawyerll3

carns have been raised about its failure to protect against the threat of astronomical medical bills encountered by the very seriously ill. In the largest expansion of the program since its creation. Congress partially met these concerns by capping the amount the nation's 32 million Medicare beneficiaries are required to pay under Part A (hospital and home health care) and Part B (physician and other outpatient costs). Previously, there was no ceiling on beneficiary out-of-pocket costs. For example. hospital coverage began to phase out after 60 days and ended after 150 days. Under the new law, Medicare picks up the entire hospital bill after the beneficiary pays a single annual deductible, and helps to pay for prescription drugs as well. The cost of the new coverage is paid for by Medicare recipients, and is based in part on each one's federal income tax liability. (H.R. 2470, Pub. L. No. 100-360) Notification of Plant Closings. On August 3, 1988, President Reagan allowed legislation guaranteeing workers advance notification of closings and layoffs to become law without his signature. Beginning February 3, 1989, employers with 100 or more fulltime employees must give employees 60 days' advance writlen notice of a "plant closing" (an employment loss of 50 or more employees) or "mass layoff" (generally a layoff for six months or longer of onethird of a workforce but no less than 50 employees). (S. 2527, Pub. L. No. 100-379) See Massey, Employer Notice of Plant Closings Becomes Law, 22 The Arkansas Lawyer 205 (1988) SBA Minority Business Reform. Responding to the Wedtech bribery scandal and other abuses under the so-called 8(a} program, Congress for the first time has required minority-owned businesses to compete for contracts award-

l4lArkansas Lawyerl)anuary 1989

ed by the Small Business Administration. Under the 8(a) program, SBA enters into contracts wi th other federal agencies and subcontracts the work to minorityowned businesses. The non-competitive nature of the program had proved to be an easy target for those willing to bribe and use political influence to secure lucrative contracts. In addition to requiring competitive bidding for contracts over $3 million and beefing up criminal penalties for those who abuse the program, the new law requires firms to secure an increasing percentage of their business from non-8(a) sources over the nine years they participate in the program. (H.R. 1807, Pub. L. No. 100-590) Price Anderson Act Amendments. Congress cleared a IS-year reau thorization of the PriceAnderson Act. which limits the liability of public utilities for nuclear reactor accidents. The coverage for a single accident was increased from $700 million to roughly $7 billion. Also, utilities could be fined up to $100,000 a day for violations of Energy Department safety regulations. (H.R. 1414, Public L. No. 100-408) Military Base Closings. At the close of the session Congress managed to send to the White House legislation that will lead to the closing of several military bases. The legislation is a recognition by Congress that some bases have become superfluous or obsolete. The new law authorizes an independent commission to recommend for closure a list of bases by December 31, 1988. The list would be submitted to the secretary of defense on a "take it or leave it" basis, would not be subject to amendment and would take effect unless rejected in toto by the secretary of defense or by legislation passed by Congress and signed by the President. (S. 2749, Pub. L. No. 100-526)

Insider Trading. Responding to the case of Ivan R. Boesky and its aftermath, Congress beefed up penalties for insider trading. Civil and criminal penalties for trading stocks using material non-public information will be increased -- up to 10 years imprisonment or $1 million in fines for criminal violations, and for civil violations, $1 million or treble the profits gained or losses avoided. Also, the SEC would be authorized to pay bounties for information leading to convictions. tH.R. 5133, Pub. L. No. loo-XXX} Regulatory Fairness Act. This legislation, championed by Senator Dale Bumpers, corrected a longstanding inequity in the Federal Power Act. A utility company petitioning for a rate increase is entitled by law to begin collecting the higher rate after 60 days. When a company filed a petition for a rate reduction. however, the reduced rate did not go into effect until approved by the FERC, perhaps months or even years later. There was no provision in previous law for a refund of higher rates collected in the interim. The Regulatory Fairness Act corrected this inequity by allowing FERC to require utilities to refund those amounts ultimately found to exceed a just and reasonable rate. tH.R. 2858, Pub. L. No. 100-473) Elementary and Secondary Education. In April 1987, Congress reauthorized most federal elementary, secondary and adult education programs for five years. The legislation increased funding for low-income students and the handicapped and set up a new program to encourage students to stay in school. It also included a nongermane amendment by Senator Jesse Helms to outlaw pornographic phone services. (H.R. 5, Pub. L. No. 100-297) FIFRA Reauthorization. After years of wrangling, Congress was able to pass a non-controversial reauthorization of the Federal

Insecticide, Fungicide and Rodenticide Act, dropping provisions to pre-ampt stricter state standards for pesticide residues in food and to hold farmers liable for damage caused by pesticides they applied according to label instructions. The act legislates a nineyear schedule requiring chemical companies to test their products, under scrutiny by the Environmental Protection Agency, to determine adverse health effects. (S. 659, Pub. L. No. 100-532) Medical Laboratory Standards. Following media reports of serious and fatal diseases going undetected because of pervasive clinical laboratory errors, Congress enacted legislation requiring labs to secure federal certification. endure frequent inspections and meet strict proficiency standards. Coverage also includes the more than 100,000 labs in physicians' offices. (H.R. 5471, pub. L. No. 100578) Japanese-American Internment. Americans of Japanese descent imprisoned during World War II were offered an apology and $1.25 billion in reparations under legislation signed into law on August 10, 1988. The roughly 60,000 survivors of the 120,000 interned during the War will each receive a tax-free payment of $20,000 under the new law. (H.R. 442, Pub. L. No. 100-383) Polygraph Protection. Private employers are prohibited from requiring employees or applicants to submit to a polygraph test in most circumstances under legislation enacted in June 1988. The prohibition would not apply to federal. state or local governments, nor to security companies or those that make and market controlled drugs. Lie detector tests would not be barred when an employer has a reasonable suspicion that an employee has engaged in illegal work-related conduct such as embezzlement. In no event could

the results of such a test be used as the sole basis for discharge or discipline. (H.R. 1212, Pub. L. No. 100347) Casualties of the 100th Congress Scores of bills, however, died or were killed before adjournment, including legislation dealing with the federal minimum wage, worker notification of hazardous substances, a waiting period for the purchase of handguns, clean air, parental leave, day care, banking

deregulation, the savings and loan crisis, product liability reform, campaign finance reform, stock

market regulation, corporate takeovers, access to health care by the uninsured, textile quotas, airline consumer protection. pension reform and mandatory drug testing. These issues and others, including our staggering national debt. will be considered when the IOlst Congress convenes at noon on January 3, 1989.0

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The General Assembly and the courts brought about many changes in adoption, guardianship and decedents' estates in Arkansas during the last two years -- some minor, some dramatic -- and lawyers who work in these areas need to be ever vigilant to adapt their practice accordingly.

By Jean D. Stockburger

and Coleen Barger This article will cover legislation passed in the 1987 General Assembly; review selected decisions of the Arkansas Supreme Court and the Arkansas Court of Appeals in 1987-88 and outline proposed legislation for 1989.

When a field of law is largely statutory. it is susceptible to quick and drastic changes. The legislature can make sweeping revisions and when it does, the courts are called upon to interpret the new provisions or to harmonize them with the existing body of case law: 161Arkansas Lawyernanuary 1989

ADOPTION LAW In the Matter of the Adoption of S.I.B.. 294 Ark. 598, 745 S.w. 2d 606 (1988). The girl was 15 and pregnant. She didn't tell the child's father about her condition and he didn't ask. It had been just a brief sexual encounter, and when the baby boy was born. she gave him up for adoption. When the adoptive parents filed a petition for adoption, the probate court. on its own motion, stayed the proceeding pending notice to the biological father of the child, An appeal went

would entitle him to such notice. 1 The Court noted that the Due Process Clause protects a father only "when the father acts like a father and takes on some of the responsibilities of fatherhood:" Equal Protection was likewise inapplicable because a mother who wishes to give up the child for adoption and a father who has never established a relationship with a child are not similarly situated. The Court said that since the putative father in S.I.B. did not

to the Arkansas Supreme Court for

avail himself of the existing statu-

a determination of whether notice to the father is mandated by the Equal Protection and Due Process Clauses of the United States Constitution. The Supreme Court held that notice to the father was not required in this case, as he met

tory procedure to establish his paternity', nor take any other affirmative action to confirm his fatherhood, he was not entitled to notice under either constitutional provision. In making its decision, the Court relied on holdings of the U.S.

none of the statutory criteria that

Supreme Court in Quilloin v. Walcott' and Lehr v. Robertson', cases which upheld the adoption of a child over the objections of the natural father who had not legitimated the child or established a custodial. personal or financial relationship with it. In a concurring opinion, Justice Thomas A. Glaze expressed his reservations about the adequacy of Arkansas' statutory notice provisions, pointing out that although the Court's holding was based in large part on analogies to Lehr, the father in Lehr had not taken advantage of New York's "putative father registry" -- a statutory scheme that enables putative fathers to protect their interests in their children by simple registration.' Justice Glaze indicated that under Arkansas' present scheme, those interests will not be afforded that kind of procedural due process, and that the law may be constitutionally suspect. He advocated the enactment of a law similar to New York's in order to ensure the constitutionality of Arkansas' adoption-notice statutes. Putative Father Registry Act The Arkansas Bar Association will propose legislation in 1989 to enable participating unmarried fathers to receive notice of adoption proceedings and to ensure finality of adoption decrees. A father's name may be filed in a "Putative Father Registry" in one of two ways: -He may file a Notice of Intent to Claim Paternity with the Arkansas Department of Health prior to any adoption or guardianship proceeding involving the child; or -The man's name may be supplied to the Department of Health by a court clerk following any form of judicial proceeding that has the effect of establishing paternity or ordering the man to pay child support. The legislation sets out the following categories of fathers who are entitled to notice. These include fathers who have: -Been adjudicated in Arkansas or in another jurisdiction to be the child's father or support provider;

- Filed a timely registration with the Putative Father Registry; -Been recorded on the child's birth certificate as the father; -Held themselves out to be the child's lather while openly living with the child and the child's mother at the time adoption is sought; or -Been identified by the mother in a written, sworn statement. 1987 Revisions of the Adoption Statutes 7 The 1987 General Assembly revised Ark. Code Ann. §9-9-1O I to clarify the procedure for surrender of custody of a minor by a hospital when a petition to adopt or a petition for guardianship in a pending adoption has been filed. The statute provides that the court shall issue an order directing the hospital to surrender physical custody of the minor to the petitioners or to the agency or attorney acting for either, and relieves the hospital from any liability to any person for complying with such an order.' Section 9-9-102 provides that in all custodial placements by the Arkansas Department of Human Services in foster care or adoption, the child's minority race or minority ethnic heritage shall be given due consideration, with preference being given to placement with relatives, families of the same racial or ethnic heritage as the child or families who are knowledgeable and appreciative of the child's racial or ethnic heritage. Similar considerations will be used where a child's genetic parents express a particular religious preference for placement. 9 Amendments to §§9-9-302 and 99-303 apply to children in public custody. Section 9-9-302 authorizes the director of a licensed child placement agency to serve as the guardian of the person and estate, with power to consent to adoption for any child whose parents have entered their appearance and agreed to authorize the agency.1O Section 9-9-303 extends to licensed child placement agencies the petition and review procedures previously available to the Department of Human Services for appointment of a guardian for a

minor child. II Sections 9-9-50 I to 505 re-enact the Voluntary Adoption Registry Act of 1985 in order to incorporate the rules and regulations recently promulgated by the Department and available from it upon request. 12 Revocation of Consent to Adoption Bruce v. Dillahunty, 293 Ark. 479. 739 S.w. 2d 522, reh'g denied (987). The day alter she gave birth to a baby girl. the 16-year-old and her parents executed separate consents to adoption and release of custody, with the understanding that the baby would be privately placed with a married couple. Three days alter executing the documents, the mother telephoned the attorney representing the prospective parents in order to revoke her consent and regain custody of the child. The baby was not released. Shortly therealter, the mother of the child engaged an attorney and formally revoked her consent by affidavit. but the child remained in the custody of the adoptive parents. Two weeks later the mother and her parents, as next friends, petitioned the probate court for a writ of habeas corpus, alleging that the consent documents they signed were fatally defective since they did not contain a statement acknowledging that such consent may be revoked within 10 days of its execution, pursuant to the requirements of Ark. Stat. Ann. §56220 (now codified at Ark. Code Ann. §9-9-220 (987)). The chancellor denied the petition, ruling that the cited authority applied only to "agency" adoptions, and that private adoptions were governed by Ark. Stat. Ann. §56-208 (Ark. Code Ann. §9-9-208 (987)). The Arkansas Supreme Court declined to adopt the proffered distinction between private and agency adoptions. asserting that there is "no logic" in permitting a minor to relinquish her rights in a private adoption setting, "where she is neither protected by a guardian ad litem nor told of her right to revoke her relinquishment. and then providing such protections when an agency is involved. "13

January 19S9IArkansas Lawyer/l?

justice David Newbern, writing for the majority, stressed that the appeal was not over the adoption, but rather the writ of habeas corpus. The majority felt the use of the habeas doctrine was appropriate when there had been no temporary custody order and no filing of a petition for adoption. The Court discussed three cases in which plenary custody hearings resulted in denials of the writ sought by the natural parent against parties who had physical custody of the child. I< The three cases were determined, however, by findings of fitness of the adoptive/custodial parents and best interests of the child, and in Bruce, the Court noted the lack of reference to allegations of unfitness or hearings concerning the best interests of the child. IS The Court concluded that the chancel-

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lor had no basis for denial of the writ, and the case was reversed and remanded for the entry of an order consistent with the opinion. The Court was deeply divided over the reasoning in Bruce. justice Glaze. in a concurring opinion," disagreed with the implication of the majority opinion that the adoptive paren ts would be required to obtain a court order of custody in addition to the legally executed consent by the baby's natural parent(s) before they could prevail on a habeas corpus challenge. He saw the issue to be the lawfulness of the consent executed by the mother, not the lawfulness of the adoptive parents' custody. In a strongly worded dissent, justice Darrell Hickman accused the majority of misreading the law." justice Hickman underscored the stipulated voluntariness of the consent given by the mother of the child and her parents, stressing that "[a] valid lawful consent was granted, it has not been withdrawn in a proper proceeding, and until it has been, the custodians of the child have a superior legal right." In a separate dissent, justice M. Steele Hays expanded on a point mentioned by justice Hickman -that no hearing had yet been held to determine the best interests of the child)' justice Hays felt that the majority had overlooked the most important considerations: oThat the best interests of the child must be considered by the court before a consent to adoption may be withdrawn; and oThat it was the petitioners' act in surrendering the child, rather than that of the prospective par-

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ents, that occasioned the present litigation. In view of the debate spawned by Bruce, the Probate and Trust Section is considering drafting a bill for the General Assembly to clarify the issue of revocation of consent in private adoptions. GUARDIANSHIP In 1987, the Arkansas Supreme Court ruled that the state's temporary guardianship procedures were an unconstitutional violation of due process.'" The legislature responded by passing Act 535 of 1987,21 which provides that upon a court's finding of imminent danger to the life or health of an incapacitated person, or risk of loss, damage or waste to his property, a temporary guardian may be immediately appointed for a period of not more than 90 days, provided that the ward is personally served with notice of the order within 72 hours of its entry. Notice to the ward must include copies of the petition, the temporary order and order of appointment, notice of a hearing date and, if the ward is over the age of 14, a statement of his rights. The statement of rights must advise the ward of his right to be represented by counsel, to present evidence in his own behalf, to cross-examine adverse witnesses. to remain silent. to be present and to subpoena any professional who prepared an evaluation of the ward.22 A full hearing on the merits of the temporary guardianship must be held within three working days of the entry of the order. As the statute is worded, it creates the possibility of holding the hearing on the same day that notice is given. an outcome which was not intended. The legislature may wish to re-draft the pertinent subsection so that the full hearing will not take place until a certain number of days have elapsed since the notice was given. Other Revisions to Guardianship Statutes oArk. Code Ann. §28-65-103 was amended to clarify the confusion resulting from the repeal of Act 345 of 1983. The effect of the amend-

ment is to validate all guardianships established between July 4, 1983, and June 28, 1985.23 oThe professional evaluation statute, Ark. Code Ann, §28-65-212, has been amended to excuse the requirement of such an evaluation prior to the hearing, when the guardianship appointment is based on the ward's minority, disappearance, detention or confine-

ment by a foreign power, or when a temporary guardianship is sought." Recent guardianship case law In Winters v, Winters," a doctor who had been injured by electrical shock agreed to his wife's appointment as guardian of his estate in order for him to receive $6500 per month in disability payments. Despite the existence of the guardianship, the doctor continued to conduct his own business affairs and made all of the couple's financial and investment decisions. Each of the wife's annual accountings was confirmed without objection of the husband. When marital difficulties later developed, the husband petitioned for termination of the guardianship, restoration of his competency and a final accounting by the guardian. Upon that accounting, the. husband filed a number of exceptions. Finding that the husband had performed the major part of the financial decisions during the challenged accounting period, the trial court overruled all but one of the exceptions and declared the ward estopped by his own actions from raising objections. The Arkansas Court of Appeals held that although a guardian of an estate has the same duties and responsibilities to his ward as a trustee has to his beneficiary, where the beneficiary or ward is competent and has "full knowledge of his rights [and] consents to, or acquiesces in, an improper

investment by the trustee, [hel can-

should have dictated an opposite result, referring to the well-established rule that a particular determination of incompetency is only prima facie evidence of continued incompetency, and that such a presumption may be rebutted by proof to the contrary.

PROPOSED LEGISLATION IN DECEDENTS'ESTATES The Probate and Trust Section has drafted three bills affecting Arkansas' Probate Code. The first provides for probate of wills and

determination of heirs without estate administration, amending

Ark, Code Ann. §28-41-103 and repealing Ark. Code Ann. §28-41104. The bill permits the court to enter such orders whenever the decedent's personal property does not exceed the value that can be collected under the "small estates" affidavit provision. 27 or where the only asset of the decedent is real property, or both. The petitioner may ask for probate of a testate decedent's will, without the



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appointment of a personal representative or administration of the estate, where the purpose is to establish title to the decedent's devisees in real property. Where a decedent dies intestate, tbe petition may ask for a determination of the decedent's heirs and their respective interests in the decedent's real estate. in accordance

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with the procedures already present in Ark. Code Ann. §28-53-101 for determination of heirship. A second bill proposes to amend Ark. Code Ann. §28-4l-101 to reduce the value of small estates that may be collected without administration to the prior figure of $25,000. The bill restricts the use of tbe small estates affidavit procedure to distributees of personal property." The third bill proposes to amend the non-claim statute and statute governing notice of appointment of personal representatives by extending the claim period from three to six months." One effect of this bill is to repeal Act 1007 of 1985, which shortened the nonclaim period. In studying this proposal, the drafters discovered that many of the related statutes were never amended when the nonclaim period was shortened,'" and they have carefully worked to eliminate any such inconsistencies in the new statutory scheme. The drafters deliberately chose not to amend the statute prescribing the time limit for filing will contests,31 set at three months, as

they saw no reason to tie in this provision with the nonclaim

statute. In light of the recent U.S. Supreme Court decision overturning Oklahoma's non-claim statute for violation of due process," the proposed notice statute has been revised to read. "Wi thin one (I) month after the first publication of the notice, a copy of the notice shall also be served upon each beir and devisee whose name and address are known and upon all unpaid creditors whose names, status as creditors, and addresses are known to or reasonably ascertainable by the personal representative in accordance with §28-l112(b}{l), (2) or (3). The burden of proof on any issue as to whether a creditor was known to or reason· ably ascertainable by the personal representative shall be upon the

creditor claiming entitlement to such actual notice."" Where such a creditor receives actual notice from the personal representative within 30 days of the expiration of the nonclaim period, the creditor shall have an additional 30 days after the expiration of the six-month limitation in which to file any claim. Oklahoma Nonclaim Statute Violates Due Process The Oklahoma case involved a creditor's due process challenge to the adequacy of notice by publication. Tulsa Professional Collection Services. Inc. v. Pope, --- U.S. ---, 108 S.C!. 1340,99 L.Ed.2d 565 (1988). The decedent had been hospitalized for several months prior to his death. When he died, his widow was named executrix of his estate and, following tbe prescribed statutory procedure, she published notice to creditors in the local newspaper. The notice stated that any claims against the estate had to be filed witbin two months of the first publication of notice. The appellant. the hospital's assignee, did not file a claim within the notice period, but instead relied on an Oklahoma statute requiring the personal representative to pay the expenses of the last sickness of the decedent. The trial court rejected the collection service's claim as time-barred.

On appeal, the collection service 20/Arkansas Lawyer/January 1989

raised the due process issue, arguing that the probate process involved state action and that notice by publication was both inadequate and an unconstitutional deprivation of a property right without due process. The U.S. Supreme Court agreed with the appellant. relying on the landmark cases of Mullane v. Central Hanover Bank & Trust CO.34 for the proposition that state action affecting property must be accompanied by notification to interested parties. and Mennonite Board of Missions v. Adams. 35 for the rule that due process requires actual notice to any party whose name and address are reasonably ascertainable. The Court used a balancing test to weigh the interest of the creditor. whose right to payment is forever cut off by the passage of the nonclaim period. and the interest of the state in the prompt resolution of probate proceedings against the burden imposed by a requirement of actual notice. The Court concluded that actual notice was not inconsistent with the goals of the nonclaim statute and stressed that notice by mail is not only inexpensive and efficient. but also routinely employed throughout the probate process. Recent Arkansas Cases in Decedents' Estates and Wills

Wills -Davis v. Aringe. 292 Ark. 549. 731 S.W. 2d 210 (1987) -- Divorce revokes provisions made in favor of ex-spouse. even where will executed prior to marriage; -Smith v. Estate of Smith. 293 Ark. 32. 732 S.w. 2d 154 (1987) -Altering rule that devise of fee simple cannot be cut down by subsequent vague or general language - where conveyance is made pursuant to joint wills. contractual nature of such wills controls; -Conkle v. Walker. 294 Ark. 222. 742 S.w. 2d 892 (1988). -- Although lost will generally established in chancery court action. probate court has jurisdiction to establish lost will incident to administration of estate. Illegitimates' right of inheritance -Boatman v. Dawkins, 294 Ark.

421.743 SW. 2d 800 (1988) -- The 180day time limit on illegitimate's right to assert claim against father's estate does not violate Equal Protection Clause of the Fourteenth Amendment.

Escheat - Newton County v. West. 293 Ark. 461. 739 SW. 2d 141 (1987) -- Title to escheated property passes to county of residence as of date of decedent's death. not when probate court enters its order of escheat. The escheat statutes were amended in 1985 to provide for property to escheat to county and no longer to state. 36 When a field of law is largely statutory, it is susceptible to quick and drastic change. The legislature can make sweeping revisions and when it does. the courts are called upon to interpret the new provisions or to harmonize them with the existing body of case laws. The General Assembly and the courts brought about many changes in adoption, guardianship and decedents' estates in Arkansas during the last two years -- some minor, some dramatic -- and lawyers who work in these areas need to be ever vigilant to adapt their practice accordingly.o

" Id. at 485, 739 S.W. 2d at 525 (Glaze.

J.. concurring).

" Id. at 487, 739 SW. 2d at 526 (Hickman, J.. dissenting).

" Id. at 490. 739 S.w. 2d at 528 (Hickman. J., dissenting).

" Id. at 491, 739 SW. 2d at 528 (Hays. I.. dissenting). ., In the Matter of Evatt. 291 Ark. 153.

722 S.w. 2d 851 (1987). For an excellent discussion of the decision. see "Guardianship Reform: Five Years of

Change: by ludge Ellen Brantley. 21 Arkansas Lawyer 100 Guly 1987). " Codified at Ark. Code Ann. §28-65218 (Supp. 1987). D See Ark. Code Ann. §28-65-213 (l987). Note, however. that professional evaluations are no longer required prior to a hearing on a temporary guardianship.

See Ark. Code Ann. §28-65-212(a) and text accompanying note 24 infra.

" Ark. Code Ann. §28-65-103 (Supp. 1987). " Ark. Code Ann. §28-65-212 (Supp. 1987). .. 24 Ark. App. 29. 747 S.W. 2d 583 (1988). " Id. at 35. 747 SW. 2d at 586. " Ark. Code Ann. §28-41-101 (Supp. 1987). This value is presently set at $50.000, but the second bill proposed by the Probate and Trust Section would re·

establish the prior $25.000 limit. See text accompanying note 28. infra. " Compare Ark. Code Ann. §28-41101(0) (Supp. 1987). " See Ark. Code Ann. §§28-40-111 (Supp. 1987) and 28-50-101 (1987). .. See. e.g.. Ark. Code Ann. §§28-50-104. 109. 110 and 113 (1987). " Ark. Code Ann. §28-40-113 (1987). 3Z

FOOTNOTES , 294 Ark. at BOO. 745 SW. 2d at B07. , Id. at 601, 745 S. W. 2d at 608. , Ark. Code Ann. §9-1O-104 (1987) provides that a putative father may petition the county court to establish his paternity. A petition to determine heirship, however, must be brought in probate court. See Henry v. Johnson. 292

Ark. 446. 730 S.w. 2d 495 (l987l. • 434 U.S. 246 (1978). , 463 U.S. 248 (1983). • 294 Ark. at 605. 745 SW. 2d at 609 (Glaze, J.. concurring). 7 The 1987 amendments to the adoption statutes are collected in the 1987

Supplement to Volume 29 of the Arkansas Code Annotated.

• Ark. Code Ann. §9-9-101 (Supp. 1987). , Id. §9-9-102. " Id. §9-9-302. " Id. §9-9-303. " Id. §§ 9-9-501 to 505. " Bruce v. Dillahunty. 293 Ark. 479. 482, 739 SW. 2d 522. 524 reh'g denied (1987). " See Verser v. Ford. 37 Ark. 28 (1881); Washaw v. Gimhle. 50 Ark. 351, 7 S.w. 389 (1887); and Massey v. Flinn. 198 Ark. 279. 128 S.w. 2d 1008 (1939). " 293 Ark. at 484. 739 S.W. 2d at 525.

Tulsa Professional Collection Ser-

vices. Inc. v. Pope. --- U.S. ---. 108 S.C!. 1340. 99 L.Ed.2d 585 (1988) (holding that due process requires actual notice to

reasonably ascertainable creditors of the estate). See discussion at text accompanying note 33, infra.

Compare Ark. Code Ann. §28-40111(aX4) (Supp. 1987l. " 339 U.S. 306. 70 S.C!. 652. 94 L.Ed. 865 (1950). " 462 U.S. 791, 103 S.C!. 2706. 77 L.Ed.2d 180 (1983). " See Ark. Code Ann. §§28-13-101 to 112 (1987). D

Editor's Note: Jean D. Stockburger of Little Rock is a partner in the Mitchell, Williams, Selig and Tucker law firm and is the outgoing chair of the Arkansas Bar Association's Probate and Trust Section. Coleen Barger. an associate at Mitchell. Williams, Selig and Tucker. is a 1988 graduate of the University of Arkansas at Little Rock School of Law. lanuary 19891Arkansas Lawyer/21

221Arkansas Lawyerflanuary 1989


PRACTICE he use of paralegals in the practice of law has steadily increased in the last decade. To respond to this market demand, educational institutions have increased the number of training programs available for those interested in pursuing careers as paralegals. Arkansas is no exception. The Arkansas Bar Association is currently working with the University of Arkansas System to develop a paralegal training program by 1990 which will ensure qualified professionals are provided to the bar. No matter the size, law firms utilizing paralegals have determined that they can be an economic asset and, if properly utilized, a tremendous aid to a lawyer's ultimate work product. By definition, a paralegal is a professionally trained legal assistant who should be recognized as a part of the professional staff. In addition to possessing a basic knowledge of legal concepts, the paralegal should possess self-motivation, patience and a willingness to adapt to different styles

By the Paralegal Committee

Annabelle Clinton, Chair January 19891Arkansas Lawyer/23






PARALEGAL and situations. He or she should be trained to assist the lawyer in organizing, developing, reviewing

and preparing information relating to a legal matter. In most law firms, paralegals will have contact with clients and should also possess good communications skills.

And they must be mature enough to recognize their role as a profes-

sional in the law firm. The role of a paralegal in a law firm will depend upon the area of assignment. In a large firm, a paralegal may work in a designated section of the firm and be limited to performing certain types of tasks. In a smaller firm, a paralegal may assume a broader role encompassing a variety of activi-

ties. Either way, the paralegal should be fully informed about his or her role and have specific guidelines to follow in carrying out responsibilities. Without specific guidelines, the paralegal may have a difficult time understanding his or her role, and the firm will have a difficult time effectively utilizing the paralegal's services. oThe lawyer should identify from the outset the paralegal's limitations and possible uses. He or she should ensure that the paralegal understands the subject matter involved in a particular situation

and fully understands the task to be performed. Although thorough instructions may he time consum-

ing for the lawyer, the additional time will be beneficial to all concerned. One method of providing basic guidance to paralegals is to utilize written guidelines. The guidelines should provide the paralegal with a basic understanding of his or her role with respect to tasks, reporting, au thorily and evaluation of performance. II used properly, 241Arkansas LawyerlJanuary 1989

written guidelines can be very helpful to both the paralegal and the law firm. -Although trained in basic con-

cepts, the paralegal's role should never include the exercise of a

lawyer's professional judgment. The paralegal should not be placed in a position to decide what information takes priority over other information or to make decisions which affect the client. This is obviously a function that the client expects the lawyer to discharge and a function the lawyer should never attempt to delegate to a paralegal. Although sometimes a fine line exists in the alea of professional judgment, the lawyer should take great care to ensure that the paralegal's role does not include the assumption of this type of authority. oThe paralegal should be instructed on ethical considerations. Rule 5.3 of the "Model Rules of Professional Conduct" provides: "With respect to a nonlawyer employed or retained by or associated with a lawyer: "(a) a partner in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person's conduct is compatible with the professional obligations of the lawyer: "(b) a lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person's conduct is compatible with the professional obligations of the lawyer; and "(c) a lawyer shall be responsible for conduct of such a person that would be a violation of the rules of professional conduct if engaged in by a lawyer if: "(I) the lawyer orders or, with the knowledge of the specific conduct. ratifies the conduct involved; or

"(2) the lawyer is a partner in the law firm in which the person is employed, or has direct supervisory authority over the person, and knows of the conduct at a time

when its consequences can be avoided or mitigated but fails to take reasonable remedial action." As noted in the comment to this Rule, it is the lawyer's obligation to ensure that the legal assistant fully understands the ethical aspects of his/her employment because the attorney will be held accountable. oEvaluations of paralegals should be performed on a regular basis. The paralegal is entitled to know how his or her work is being accepted and the law firm will benefit if problem areas are identified. Evaluations may be performed by each lawyer following a project using a standard form or, in the alternative, the responsibility of supervising the paralegal's progress may be delegated to a committee. Regardless of the method used, evaluations of work product. time devoted to a project. creative methods and thoroughness are vital to the improvement of the paralegal and must be done on a regular basis. In sum, the role of the paralegal is largely left to the discretion of the firm. II organized effectively, the use of paralegals can be a tremendous asset to the lawyer and the law firm, AREAS OF ASSISTANCE

As stated earlier, regardless of the size of the law firm, paralegals cao provide assistance in a variety of ways. The following lists provide a basic guide to some of the ways law firms are using paralegals in specific areas of the law. LITIGATION Organize and maintain litigation files. Draft discovery pleadings and

organize documents. Index and summarize depositions. Interview clients and witnesses and take photographs.

Organize and prepare exhibits. Obtai!) and summarize medical records, accident reports and other factual information and

physical evidence. Have subpoenas issued and served. Abstract testimony for appeals. Basic legal research (shepardizing, copying cases, etc.). Obtain and prepare information on jury panel. Assist in scheduling. CORPORATE LAW

Assist in preparing and filing standard partnership documents and amendments. Assist in preparing and filing standard fictitious name documents and amendments. Assist in preparing and filing standard incorporation documents and amendments. Prepare minutes of meetings of shareholders and directors. Prepare waivers and notices of meetings.

Prepare resolutions approving acquisitions. Help prepare "buy-sell agreements."

Prepare bills of sale. Assist in preparing closing documents and assist at closings. UCC lien searches. Prepare and file UCC financing statements for secured transactions.

Help prepare SEC reports (proxy statements, 10K. etc.). REAL ESTATE LAW

Review title reports. Help prepare deeds, notes/mortgages. Help prepare leases. Prepare applications for real estate tax exemptions. Conduct index searches of public records. Order title insurance. Prepare legal description for survey Prepare memorandum of leases. Prepare draft assignment of leases. Prepare mortgage satisfactions. â&#x20AC;˘ Assist at real estate closings. Prepare draft agreements of sale. Prepare draft loan applications. Prepare and process mortgage foreclosures.



Prepare peti tions for probate of will and attend probate proceedings. Collect, inventory and value assets of the decedent. Apply for medical insurance reimbursement and social security benefits. Maintain estate records and financial aspects of estate. Prepare postmortem tax plans. Help prepare tax returns. Attend lRS estate tax audits. Prepare accounting, petition for adjudication and schedule of distribution. Terminate decedent's affairs and arrange for final distribution of assets to beneficiaries. Maintain trust records.

Prepare fiduciary income tax returns.

Help prepare accountings and related court documents. Distribute assets at termination. TAX LAW Prepare draft individual tax returns. Prepare draft corporate tax returns.

Prepare draft partnership tax returns. Prepare draft exempt organization returns. Prepare tax projections and tax shelter calculations. Prepare draft applications for tax exempt status. SECURITIES

Proofreading registration forms. Blue sky fili~gs of registration papers. Blue sky research. Respond to inquiries from state securities departments. Legal investment memorandums. Prepare standard auditor response letters. Maintain security form files. Maintain files and monitor com-

pliance. Unlike an associate lawyer, the paralegal must understand that job progression may not exist within a law firm. Likewise, the firm must recognize that a major com¡

ponent of motivation -- job progression -- does not exist for paralegals and that creative methods of motivation may be necessary in order to encourage professional performance.

Specific guidelines should be developed relating to the education and/or experience of applicants required to meet the specific needs you have for the use of a paralegal. Many law firms have developed levels of work assignments, with accompanying levels of salary and benefits, in an attempt to provide a career path for paralegals. These apply to smaller law offices, depending on the qualifications of the paralegal hired, the type of legal work you undertake and your specific needs. Levell Tasks to be delegated are very routine and require little independent thinking. All work should be evaluated by the attorney. The tasks falling into this category include title searching, setting up filing systems, collection work of a very routine nature, routine incor-

porations, keeping minute books, docket control. etc. Background needed: -- No college -- one to two years college. -- No training -- a couple of evening courses. -- No experience -- secretarial experience within the firm. 1-evel2 Tasks involve more technical matters and require some ingenu-

ity and the ability to think independently. Work is still subject to review by others. The tasks that can be delegated in this category include tax work, complex form completion, final accounting, residential closings, drafting of interrogatories, elementary pleadings and motions, designing of systems for trial. management of cases, drafting various agreements. deeds of trust. etc. Background needed: A college degree; or -- Formal paralegal training; January 19891Arkansas Lawyer/25

and -- No on-the-job experience. Level 3 Tasks are handled on a project basis, where a high degree of technical knowledge is needed and the ability to think and work independentl y is required. Assignments are varied and complex and the person works under a minimum of supervision. Tasks include drafting complex legal documents, administration of complex estates, management of paper flow of large

commercial loan closings, lease negotiations, etc. Many times paralegals in this category have developed an area of factual experience and can begin to serve as an adviser in a particular area such as types of surgical procedures, the construction and design of automobiles or machinery, nofault insurance, characteristics of drugs, history of development. etc. Background needed: -- A college degree; or -- Formal paralegal training;

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(adding new areas in accordance with your practice) and assess the abilities of the paralegal according to their background. A job description should be developed before beginning the hiring process. Advertising for the position can be done at colleges and universities, in local papers or at paralegal training programs. COMPENSATION AND PROFIT

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261Arkansas Lawyer/january 1989

The primary motivation for the hiring of a paralegal is the fact that he/she is without a doubt a profit center. The paralegal bills for their individual time when the client is paying on an hourly basis. But the paralegal also plays another very important role that also results in a profit to the attorney even when time cannot be billed directly to a client. Training a paralegal to gather and review information, both documentary and testimoniaL in potential lawsuits or contingency fee cases results in the attorney having the time to focus on other matters. Paralegals are often more valuable than new associates because they are available to perform leg work (no court interruptions) and they often are more committed to stay with the lawyer (as opposed to new associates who ofte,n look for better opportunities). The benefit to the attorney is obviously that he/she is able to prepare cases at less cost and to be available to perform other work simultaneously. The paralegal's time should be accounted for and billed similarly to that of the attorney when the client pays on an hourly basis. The number of hours billed by the paralegal times her hourly rate should easily exceed the salary, expenses and overhead attributable to that paralegal. The firm should determine the expected number of bill-

able hours, the expenses and overhead and an hourly rate for its paralegal. This obviously depends on the level of paralegal hired and the type of work performed. Salaries in Arkansas range from $15.000 (Level I) to $30.000 (Level 3). Compensation is obviously dependent on the expertise offered by the paralegal. The same is true with charges to clients. the range generally being $15 an hour (Level I) to $40 an hour (Level 3). As an example. assume that you have hired a legal assistant with Level 2 training and pay an initial salary of $18.000. Taxes and fringe benefits will raise your actual cost to approximately $23.000. If the paralegal's time is billed at $25 an hour. shelhe will pay for their way by just billing a total of 920 hours annually. This breaks down to an average of 18.4 hours a week (assuming a two-week vacation). It can easily compute to a substantial profit to the law firm if the paralegal's time is appropriately billed. ASSIMILATION

The effectiveness of a paralegal is directly dependent on the professional manner in which he or she is perceived and treated by the attorney(s) and other support staff. The paralegal should be provided with full secretarial support. individual office space. business cards and flexible hours similar to the attorney to permit night and weekend work. All members of the office must fully understand the role of the paralegal since in most instances it will be a new concept.o Editor's Note: This article was prepared by members of the Arkansas Bar Association's Paralegal Committee with input from members of the Arkansas Association of Legal Assistan ts. The Commi ttee extends thanks to member Laura Hensley of Little Rock for her special efforts in coordinating the preparation of this article.

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DISCIPLINARY ACTIONS July to October The Arkansas Supreme Court Committee on Professional Conduct from July to October 1988, issued seven letters of reprimand, two letters of caution, two warnings and suspended for one year the law license of John W. Unger Jr. of Fort Worth, Texas, formerly of El Dorado. The Committee took no action of a disciplinary nature on 188 informal complaints against attorneys and voted "no action warranted" on eight formal complaints.

JOHN W. UNGER JR. Suspension of License John W. Unger Jr. of Fort Worth, Texas, formerly of EI Dorado, was suspended from the practice of law in September for one year for violation of Rules 1.15,4.1 and 8.4 of the Model Rules of Professional Conduct. Unger agreed to act as the attorney of a trust created to pay judgmen t creditors in a bankruptcy proceeding. At the time of distribution, Unger indicated to an attorney involved in the proceeding that he was holding 10 percent of the claim as a contingency fund in the event taxes were due. The attorney said he had numerous conversations with Unger during 1987 regarding the distribution of the additional $4,000, and that on January 21, 1988, he received a letter from Unger explaining that the 10 percent hold-back had inadvertently been spent by him. Unger told the Committee the loss of funds was totally unintentional and the result of negligence. He said he would reimburse the parties and readily accept a reprimand. He also offered to provide at least 100 hours of pro bono work. Under the rules of the State Bar of Texas, any action to suspend Unger's law license would prevent 28/Arkansas Lawyerllanuary 1989

him from practicing in Texas.

JAMES D. HOLLAND Letter of Reprimand James D. Holland of Horseshoe Bend was issued a letter of reprimand in September for violation of Rules 1.3 and 8.4 of the Model Rules of Professional Conduct. Holland was hired in October 1987 to file a lawsuit against his client's ex-wife. The client said Holland drafted a complaint and default judgment and told him the papers had been served on his ex-wife. Later, Holland was unable to provide the client with a case number. The client said Holland also told him that a court date had been set, but later said the date had been continued. Holland contacted the client in January 1988 and recommended that he consider an out-ofcourt settlement. The client learned from the chancery clerk that his complaint was never filed by Holland.


Conduct. Kline was hired in May 1986 to file a lien and a lawsuit for his client. Kline told the client he had filed the lien and was waiting 30 days for the attorney's response. In July 1986, he told the client the lien had an incorrect address and the sheriff had been unable to locate the other party. The client said he verified the address and during the remainder of the year tried to contact Kline about the lien and the lawsuit, but Kline would not return his calls. The client said he learned in June 1987 that his lien had not been filed and that time had run out to file additional liens. He said Kline apologized in June for the error and said an assistant in his office had mishandled the case. Kline assured him he would file lawsuits in both cases, but did not file any lawsuit until February 10, 1988. The client said that the suit was filed two years after Kline took the case and that he'd been untruthful with him throughout that time. He said Kline did not return his phone calls for months and took action only after he contacted the Committee.

Letter of Reprimand Naif Samuel Khoury of Fort Smith was issued a letter of reprimand in September for violation of Rule 1.6 of the Model Rules of Professional Conduct. Khoury represented a client in a divorce case and a child custody case. She said during these proceedings her exhusband submitted an affidavit prepared by Khoury which contained inaccurate statements and information she had told Khoury in confidence.

MARC A. KLINE Letter of Reprimand Marc A. Kline of Little Rock was issued a letter of reprimand in July for violation of Rules 1.3 and 1.4 of the Model Rules of Professional

CHRISTOPHER C. MERCER Letter of Reprimand Christopher C. Mercer of Little Rock was issued a letter of reprimand in July for violation of Rules 1.3 and 1.4 of the Model Rules of Professional Conduct. Mercer was paid a $50 retainer in January 1987 to represent a client in a property matter. The client said the property was surveyed at Mercer's request at a cost of $350. The client said Mercer made an appointment with the surveyor but failed to appear. The client later paid Mercer an additional $100. The client said beginning in June 1987, he had difficulty contacting Mercer. Mercer told him in August 1987 that his secretary had not been giving him his messages and

had stolen money from him. Mercer told the client several times he only needed another two weeks to complete the matter but later quit taking the client's phone calls. In January 1988, Mercer told the client everything would be ready within a few days. This was the client's last contact with Mercer. The Committee said it has been advised that Mercer's license fees are delinquent. His 1987 fees were paid with a check that was returned for insufficient funds and his 1988 fees have not been paid.

ROBERT F. MOREHEAD Letter of Reprimand

him custody of the child. The client later learned that neither Simpson nor the other attorney presented the precedent to the court and the case was dismissed in February

1987 for lack of prosecution. He said he discontinued child support payments to his wife on advice from Simpson in 1986 after his child moved in with his ex-wife. The client said Simpson has not returned his phone ca\ls. At the hearing, Simpson acknowledged that in hindsight. he should have followed up to make sure a precedent was filed.

ROBERT R. WHITE Letter of Reprimand

Robert F. Morehead of Pine Bluff was issued a letter of reprimand in September for violation of Rules 1.3 and 8.4 of the Model Rules of Professional Conduct. Morehead was hired in April 1985 to handle a lawsuit involving the removal of timber from his client's land. The client paid Morehead $350. Morehead told the client in June 1985 that the lawsuit had been filed. The client heard nothing further from Morehead. In September 1987 the client learned from the Bradley County circuit clerk that the case had been dismissed with prejudice in April 1987. Morehead said he filed suit for the client but could not get him to provide addresses for service. He said the client never provided him with the names of any witnesses or paid the filing fee. He said a dismissal of the case with prejudice is not consistent with the rules of civil procedure.

HARRELL A. SIMPSON JR. Letter of Reprimand Harrell A. Simpson JI. of Pocahontas was issued a letter of reprimand in September for violation of Rule 1.3 of the Model Rules of Professional Conduct. Simpson was hired to represent a client in a child custody case. Simpson told the client that his ex-wife's attorney would prepare documents to finalize the court decision giving

Robert R. White of Fayetteville was issued a letter of reprimand in September for violation of Rule 8.4(c) of the Model Rules of Professional Conduct. White was paid $5000 to handle an adoption. The payment was placed in a trust account under the agreement that the client could change her mind within 10 days regarding the adoption and be reimbursed the retainer less any expenses. In a few day, the client told White she did not want to go on with the adoption. He told her he'd reimburse the retainer in full. When no refund was received, she made several unsuccessful attempts to contact White. She received a letter in June 1987 in which he said the check would be sent to her within 30 days. When the check was not received, she wrote a demand letter. In August 1987, she received a check for $4,600. The check was later returned for insufficient funds. Since September 1987, the clien t said she has tried unsuccessfully to obtain her money from White. She said White has constantly promised her the money.

CHARLES L. HONEY Letter of Caution Charles L. Honey of Prescott was issued a letter of caution in

September for violation of Rule 1.3 of the Model Rules of Professional

Conduct. Honey was hired by a client to handle a foreclosure proceeding on an apartment complex

he owned and to handle a lawsuit. The client said the mortgage company indicated in correspondence

with Honey a willingness to consider a deed in lieu of foreclosure on the apartments. Honey agreed to follow through on the company's offer. The client said Honey took no action on the offer and foreclosure proceedings were instituted.

He said he made several requests for his file and a return of the fee he'd paid Honey but received no response. The client had also hired Honey to file a lawsuit in November 1985. He said Honey waited a year before filing the suit. The trial was scheduled for November 30, 1987 and he tried to contact Honey in June, July and August, but was able to speak with him only a couple of times. Honey ca\led him on November 19 and said he had more than 500 cases to handle but offered to meet with him the day before the trial. Six days before the trial, the client said he was contacted by another attorney who had been trying to mediate a settlement in the case. He said a $6,000 settlement was accepted.

TIM D. WILLIAMS Letter of Caution Tim D. Williams of Conway was issued a letter of caution in August for violation of Rules 1.3 and 8.4 of the Model Rules of Professional Conduct. Williams was hired in 1985 to represent a client in a claim against a roofing company. The client said she signed a complaint prepared by Williams in January 1986. Over a two-year period, Williams repeatedly assured the client that everything was progressing nicely and that her case would come to trial in the near future. She said Williams advised her in writing that a trial date had been set. She later learned Williams did not file the lawsuit until after the letter to her was written.o

January 19891Arkansas Lawyer/29


Charles L. Carpenter Charles L. Carpenter, age 71, of North Little Rock, the first tenured delegate in the Arkansas Bar Association's House of Delegates, died Tuesday. October 11, 1988. The foHowing is an edited excerpt of the eulogy delivered by his son, Larry Carpenter, at his funeral. Last Saturday evening I went by to see my father. As we were sitting on the edge of the bed talking, he looked over at me and said, ''I'm going to die." We talked about that a moment and then he said, "This is a hard process." After another moment or so he looked at me and said, "Don't lean on me." I was a little puzzled by this because I wasn't leaning on him at all. I later decided that he recognized that he did not have much time left and needed what little time he had, free of the needs of others, to himself.

My father spent his life trying to do what was good and what was right. Love was his only motivation. I think that he loved the profession of law and enjoyed helping others. When he was admitted to practice in 1941. one of his goals was to reach the 50-year plateau. He fell a little short of that goal. His vision, though, was for the Arkansas Bar Association to be instrumental in helping our profession achieve its highest standards. In a campaign he once said, "Some things are legally right and morally wrong and I have not hesitated in the past to point out the differences. I have also pointed out...proposed actions that were morally right but legally wrong. I will continue to do this." This vision led him to take positions that were sometimes unpopular and that seemed too strong. But he always took these positions out of a sense of duty and respect and love. I think he always tried to bring integrity and humor to his professional activities. He had long been in favor of a judicial compensation commission. He felt that compensation for our judges and staff should not be a hostage of the legislature (although he would not have put it quite that way). When the bar began to work on an amendment to accomplish this several years ago, Bill Wilson said the first person he would appoint to the Association's committee would be Charlie Carpenter. Dad also served on the committee that helped determine use of the Arkansas Bar Center for social activities and as liaison from the Association to the Arkansas Judicial Council to help better the trial system for all of us. In going through his papers at the office, I have found numerous inquiries from attorneys and judges seeking advice on ethical

questions which are not spelled out in our codes of conduct and require guidance. A few years ago a young attorney came by the office, virtually in tears. An ethical situation, not specifically covered in the rules which govern attorneys, had arisen in municipal court. He talked to my dad about what he had seen and why he was so upset. Dad did a little research to see how other states had handled the problem and then petitioned our supreme court to amend the rules to make clear that certain conduct was not acceptable. The court adopted the new rule. He also loved people. In recent years my parents traveled to various places around the world. One of these trips was to China. For several years thereafter, he received correspondence from a young man who had served as their guide and who sought advice on several problems. Sometimes people would come by the office just to talk or because they needed a shoulder to lean on. One of his last public appearances was September 2 when his good friend George Bentley retired from the Arkansas Gazette, Dad worked hard to get his strength up so that he could attend the party for George. The last time he left the house was when he taught his Sunday school class on September 4. Saturday evening Tom's little boys, Matthew and Mark, went in to give high-fives to the man they called D-Daddy (Matthew is responsible for that little corruption, not being quite able to say Granddaddy when he started talking). Kids don't shake hands anymore, but they said night-night and he smiled and told them "nightnight." Some months before when Matthew got hurt. Dad sent a note to Tom about it: January 19891Arkansas Lawyer/31

"When Matthew pulled the chair over and hurt himself Sunday night we all rushed to pick him up. I wanted to comfort him and I know your mother wanted to comfort him. but you picked him up and took him into the living room and talked to him. I wanted to take him and hold him and comfort him but at that point I realized that you were his father and that it was your right and obligation to do this. When I was a boy we looked forward to the circus coming to town and the circus parade. At the end of the parade there was always a steam calliope and we knew that when the calliope went by the parade was over. Sunday night I realized that the calliope was going by and that is as it should b e. " That is very like the part of the Bible we all know, a season and a time for every purpose. Dad loved his profession. his family and his friends. "And of all the sacraments and of all the sins. the greatest of these is love."o

Judge William H. Arnold Judge William Hendrick Arnold III. age 64. of Texarkana. a former Eighth Judicial Circuit judge. died Saturday. September 10. 1988. Judge Arnold served as judge for the southwest Arkansas judicial district from 1967-71. Except for the years when he was a judge, Arnold practiced law as a partner in the Arnold and Arnold law firm in Texarkana. His practice. which began in 1950. included litigation in the federal and state courts in both Arkansas and Texas. In 1962. he was appointed by the Arkansas Supreme Court to the Committee on Civil Jury Instructions. He served on the Committee until 1988. The Committee drafted and published two editions of Arkansas Model Instructions for civil law, a handbook which came to be a standard for the conduct of jury trials in civil cases. 321Arkansas Lawyer/january 1989

Judge Arnold was also a member of the Arkansas State Board of Law Examiners from 1959 to 1965 and chairman of the Committee on Admissions to Practice of the United States District Court for the Western District of Arkansas. Texarkana Division. until 1982. He was a 30-year member of the Arkansas Bar Association and a former president of the Miller County Bar Association. He was also a member of the American. Southwest Arkansas and Texarkana Bar Associations, the State Bar of Texas and Phi Delta Phi fraternity. He was a director since 1955 of the Texarkana Federal Savings and Loan Association and was a director of Southwest Title Company. Judge Arnold was a native of Texarkana and the son of William Hendrick Arnold Jr. and Grace Hendricks Arnold. His grandfather. William Hendrick Arnold. was president of the Arkansas Bar Association in 1906 and, in 1930 and 1931. preceded his grandson as a circuit judge for the Eighth Judicial Circuit of Arkansas. He received his high school diploma from Western Military Academy in Alton, Illinois. in 1940. He withdrew from the Rice Institute in 1942 to enlist in the U.S. Army Air Corps. He served in North Africa and Iran during World War II. After the war, he graduated from the University of Texas at Austin in 1948 with a B.A. degree and in 1950 with an LL. B. Judge Arnold was active in the Lions Club. the Texarkana Chamber of Commerce. the United Fund. the Board of Directors of the Conifer Council. Girl Scouts of America. the American Legion. the Elks Club. the Texarkana Pilots Association and the Miller-Bowie chapter of the American Cancer Society. A brother, Thomas Saxon Arnold of Texarkana, survives.D

Wayne R. Cook Wayne R. Cook. age 76, of LitUe

Rock. died Wednesday, July 13. 1988. Cook was a former member of the Chicago Crime Commission and had worked in the Illinois Attorney General's Olfice. He was a former deputy state attorney general in Indiana and was appointed chairman of the Arkansas Board of Review by Governor Bill Clinton. He was a graduate of the University of minois and held a master's degree in foreign relations from Georgetown University and a law degree from Indiana University. He was a member of the Arkansas Bar Association and the Pulaski County, Chicago. minois. Indiana and Indianapolis Bar Associations. He was also a member of the Senior Lawyers Division

of the American Bar Association. Cook was a member of the Adjudicature Society, the Seldon Society. the Army Navy Club and the Retired Ollicers Association. He was past president of the First Armored Division Association. Cook was a veteran of World War II and recipient of the Bronze Star, the Purple Heart and the Medal of the French Liberation. Survivors are his wile, Irene G. Samuel; a son, Lou Samuel of Little Rock; a daughter. Bonnie Tallitsch of Rothschild. Wis.; a sister, Rosalind Pelman of minois; and six grandchiidrenD

Lloyd B. McCain Lloyd Breckenridge McCain, age 61. of Little Rock. a former city attorney for Dumas. died Friday. September 16. 1988. McCain. a native of Lake Village. was a former deputy prosecu tor for Lincoln and Desha Counties in Arkansas.

He was a graduate of Southwestern College, now Rhodes College. in Memphis, Tenn .. and received a law degree in 1950 from the University of Arkansas. In 1957. he joined the legal stall of the National Old Line Insurance Co.. as assistant counsel. In 1959.

he was elected secretary of the Company's board and became a board member in 1960. He was promoted to general counsel in 1962 and elected senior vice president in 1976. McCain served as vice president, general counseL secretary and board member of Equity National Life Insurance Co. and American Old Line Insurance Co. He was a 33-year member of the Arkansas Bar Association and a member of the American and Pulaski County Bar Associations. He was also a member of the Legal Section of the American Council of Life Insurance, serving as its vice president in Arkansas in 1986 and 1987. He recently was re-elected to that position for 1988 and 1989. McCain was a past president of the Little Rock Rotary Club and the recipient in 1985 of the Club's Paul Harris Award. McCain was a member of the Second Presbyterian Church. Survivors are his wife, Jane Davis McCain; a son, Davis McCain of Memphis; a daughter, Marian Olsen of Clayton, Mo.; his mother, Marian McCain Liston of Little Rock; two brothers, Robert McCain of Denver, Colo., and Edwin McCain of Memphis, Tenn.; and a grandchild.o

Richard Bruce Shaw Richard Bruce Shaw, age 59, of Fort Smith, died Wednesday, August 3, 1988. Shaw was a former president of the Sebastian County Bar Association. He was senior vice president of the Bank of Mansfield, past chairman of the Fort Smith Planning Commission, past president of the Fort Smith Junior Chamber of Commerce and a charter member of the board of trustees of the Town Club of Fort Smith. Shaw was a graduate of University of Arkansas School of Law. He was a 33-year member of the Arkansas Bar Association and a

member of the American and Sebastian County Bar Associations and the International Association of Defense Counsel. Shaw was 32nd-degree Mason, a Shriner and a member of Sigma Phi Epsilon. He was a member of First United Methodist Church. Survivors are his wife, Mitzi Shaw; a son, Richard Bruce Shaw Jr. of Fayetteville; three daughters, Karen McCaskill of Fort Smith, Kaay Bowman of Sioux Falls, S.D., and Janet Hickman of Knoxville, Tenn.; his father, Bruce H. Shaw of Fort Smith; a brother, Jay Michael Shaw of Fort Smith; a sister, Lucinda Sangree of Rochester, N.Y.; and seven grandchildren.o

the office of the chief counsel of the Revenue Service in Washington, D.C. In 1966, Sen. John L. McClellan named him assistan t counsel to the Senate Subcommittee on Criminal Laws and Procedure, of which McClellan was chairman. He was a 30-year member of the Internal

Arkansas Bar Association, a mem-

ber of the American Bar Association and a member of Sigma Alpha Epsilon fraternity. Survi vcrs are his mother and stepfather, Mr. and Mrs. E. E. "Dusty" Rhodes of EI Dorado; two sons, Victor 1. Nutt III of Humble, Texas, and Stephen A. NUll of Dallas, Texas; and three grandchildren.o

Victor Lee Nutt Jr. HANDWRITING EXPERT Victor Lee Null Jr., age 55, of Brinkley, named in 1966 as counsel to a United States Senate subcommittee, died Monday, October 10, 1988. Null all ended Southern State College, now Southern Arkansas University, in 1950-51, enlisted in the Navy for two years and then entered the University of Arkansas where he obtained a law degree. He was a retired vice president of Gulf and Western Corp., where he worked in the firm's international tax and government relations divisions. Nutt was a former deputy prosecuting attorney for the First Judicial District from 1958 to 1963 and maintained law offices in Augusta and Searcy. In 1963, he became an adviser in

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Recent Arkansas Tax Cases


By John C. Lessel




, L..:.!. ยง3121(c)(I982).

The Arkansas Supreme Court has rendered several tax cases in the past 18 months. though none is particularly startling. Some of , the cases further develop the body of tax law in Arkansas. however. , The analysis which fol- I lows groups the cases by , type of tax under review. except for the one group which deals with procedural issues. No common thread can be found in these cases except the continuation of the Supreme Court in applying the criminal standard of "beyond a I reasonable doubt" to a taxpayer who is attempting to establish his right to an





exemption from tax.


Employment Taxes In the case of Ragland v. Pittman Garden Center, et aJ.. 293 Ark. 533. 739 S.W. 2d 671 (1987), the Court held that the exemption from withholding tax for "agriculturallabor" did not include wages paid for landscaping services which occur after the horticultural products are delivered to the customers' premises. In holding that Ark. Stat. Ann. ยง84-2075(a) (Ark. Code Ann. ยง26-51-902(1)) did not include the landscaping services, 34JArkansas Lawyernanuary 1989

-'-'-=="--__-"-' the Court looked to federal definitions found in 26 U.S.C. ยง3121 (g) (4) (CXI982). In resolving the issue of how to apply the agricultural labor exemption for employees who had both exempt and non-exempt labor, the

Court noted that the agricultural labor exemption applies only if the employee in question performs services that constitute valid agricultural labor for at least one-half of any pay period (a period of not more than 31 consecutive days), as

The Court was unable to make that determination based upon the record before it and remanded the case to the trial court for further proceedings. Property Taxes The case of Clark v. Union Pacific Railroad Company, et aJ., 294 Ark. 586. 745 SW. 2d 600 (1988), dealt with the proper application of Amendment 59 and Act 848 of 1981. The Court held that new millage passed after Amendment 59 was implemented cannot be collected against personal property. The Court stated, "Amendment 59 provided that the amount of revenue derived from personal property cannot be increased until the

rates for real and personal property equalize. It is undisputed that application of the new millage personal property would increase the revenue collected." Tax-Exempt Entities In Sebastian County Equalization Board, et aJ. v. The Western Arkansas Counseling and Guidance Center, Inc.. 296 Ark. 207. --- S.w. 2d --- (1988). the Court considered whether or not a mental health clinic qualified for taxexemption under the Arkansas

Constitution, Article 16, Section 5. The Court analyzed the public charity exemption granted by the Constitution and held that the Counseling and Guidance Center qualified despite having a portion of its patients as paying patients and having a gymnasium and community room affiliated with the Center. The Court affirmed its decision in Burgess. Judge v, Four States Memorial Hospital, 250 Ark. 484,464 S.w. 2d 690 (1971). The exact opposite conclusion was reached in Holiday Island Suburban Improvement District No. 1 of Carroll County. Arkansas. v, Carolyn Williams, Tax Assessor. Carroll County. Arkansas, et aI., 295 Ark. 442, 49 S.w. 2d 314 (1988). Willi'Ims, the tax assessor for Carroll County, placed the real property of Holiday Island Suburban Improvement District No. I on the tax rolls of the County in 1985. In a suit for declaratory judgment filed by the District, the chancellor held that the District was a government entity and that its fire stations, water system,

sewage treatment and administra-

tive building were exempt. However, the chancellor found that the Districts two goll courses, boat dock, maintenance shop, recreational center and campgrounds were not exempt because they

were not used exclusively for public purposes. The Court found that the property was not used exclusively for public purposes since the facili ties were restricted to property owners of Holiday Island, a membership organization whose members were

restricted to property owners in the District. The Court rejected the argument that the public can include a large number of property holders and that the ability to become eligible for use of the facilities by purchasing property somehow made the facilities used exclusively for public purposes. The Court also rejected an argument by the District that satisfaction of the public purpose requirement for the issuance of tax-exempt bonds satisfies the

public purpose requirement for exemption from property taxation. The Court noted that the term "public purpose" is not exact .....but has various shades depending upon whether the context is eminent domain, revenue bonds, lending the credit of a political subdivision, or tax exemption under §5(b) of Article 16." Sales and Use Taxes In Ragland v. Dumas, 292 Ark. SIS, 732 S.W. 2d 118 (1987). the Court held that gravel used for site preparation and road construction

at oil and gas drilling si tes was not "machinery" or "equipment" under Ark. Stat. Ann. §84-1904(r) (Ark. Code Ann. §26-52-402). Nevertheless, the Court found in favor of the taxpayer on the basis that the transactions with the construction company's customers were not subject to the gross receipts tax. The Court noted that the purchase of the gravel from its suppliers by the construction company would be subject to the gross receipts tax. The use of those materials in the construction of the roads and foundations for the drilling activities was merely incidental to the services provided by the construction company and,

therefore, that activity was not subject to the gross receipts tax. Accordingly, no tax was due. In Ragland v. Allen Transformer Company, 293 Ark. 601. 740 S.W.2d 133 (1987, reh'g denied) (U.S. appeal pending), the Court drew a distinction between gross receipts

tax imposed upon transfers of tangible personal property and that imposed upon itemized services. The Court noted that while Ark. Stat. Ann. §84-l902(c) (Ark. Code Ann. §26-52-103(a)(3)), defines sale as a transfer of either title or possession of tangible personal property. no such requirement was necessary for the taxation of the services under Ark. Stat. Ann. §841903(c)(3) (Ark. Code Ann. §26-52301(3)(C)), which levies a gross receipts tax on the service of alteration and repair of electrical appliances and devices. The issue was framed by the

taxpayer's repair of electrical transformers for both Arkansas and non-Arkansas customers. In either case, the company would send its own employees to pick up the transformers for delivery to its business location in Fort Smith. At its Fort Smith shop, the transformers were repaired and then transported back to the customer's place of business. The transformer company's argument that the out-aI-state transactions were not subject to the gross receipts tax was rejected by the Court. The theory advanced by the transformer company was that no transfer of possession of the transformer occurred within Arkansas in the case of out-of-state customers and, therefore, the tax did not apply. The Court rejected a requirement for transfer of property as a condition to taxation of the services and noted specific statutory exemptions which were provided by the General Assembly for services performed in-state for outof-state customers. The Court also rejected allegations of ambiguity and violation of the commerce clause. In Martin v. Riverside Furniture

Corp., 292 Ark. 399, 730 S.w. 2d 483 (1987, reh'g denied), the Court held that advertising materials which were delivered from out-of-state vendors to the Fort Smith office of the furniture company where they were collated, packaged and mailed to sales representatives and dealers located outside Arkansas were subject to Arkansas' use tax. The Court held that the advertising materials did "finally come to rest" in Arkansas wi thin the meaning of Ark. Stat. Ann. §84-3105(a) (Ark. Code Ann. §26-53-106(b)). It noted that the advertising materials were not simply in transit through Arkansas but that the activities of the furniture company in processing the materials for dispersal was not a part of interstate commerce. Thus, the use tax was properly imposed. The Court went on to consider a point that was not addressed by either party. It noted that the case Ianuary 19891Arkansas Lawyer/35

of Burlington Northern Railroad Company v. Ragland. 280 Ark. 182, 655 SW. 2d 437 (1983) did not stand for the proposition that Southern Pacilic Co. v. Gallagher, 306 U.S. 167 (1939) was no longer good authority for determining the issue of whether an item is still within the stream of interstate commerce.

The Court specifically stated that any language which it might have advanced in the Burlington case that extended Complete Auto Transit v. Brady, 430 U.S. 274 (1977) beyond the question of whether a foreign entity has sufficient connection with the state to allow the state to impose a tax on the entity's activities, was rejected. A dissent by Justice Hickman would have held that the materials did not come to rest within the state so as to be subject to the use

who in turn would distribute them to physicians and dentists at no charge. Despite an open invitation to the Court to overturn its earlier decision, the Court declined the invitation and held that the failure of the state to prove the value of the inventory was fatal to its assessment based upon such withdrawals. In the case of Tony and Susan Alamo Foundation. Inc. v. Ragland. 295 Ark. 12 (1988), 46 SW. 2d 45, the Court found that meals, clothing, goods and services furnished by retail businesses run by the Foundation are subject to the sales tax. Despite the fact that the Foundation is a nonprofit. charitable institution authorized to do business in Arkansas. its decision to operate several businesses in

was subject to the same taxation as any other business. The third argument concerning the religion clauses of the state and federal constitutions was also rejected. Citing ample authority from both state and federal decisions, the Court noted that the taxation of business income from a charitable or religious organization did not violate the religion clauses. Finally, the Foundation argued that the Gross Receipts Act was· discriminatory because certain groups such as the Boy Scouts, Girl Scouts and 4-H Clubs were exempt from sales tax. However. the Court noted that the argument was not applicable since the exemption available for these organizations was from sales tax

Arkansas subjected it to the same

on their purchases, not their sales.


statutory scheme for taxation as

Procedural Issues

In Dunhall Pharmaceuticals. Inc. v. State, 295 Ark. 483 (1988), 49 S.w. 2d 666, a claimed exemption from gross receipts tax on sales by a corporation engaged in the manufacture and distribution of drugs to dentists was rejected by the Court. Even though Ark. Stat. Ann. §84-1904.3 (Ark. Code Ann. §26-52406) in the original and amended form covering the periods in question provided an exemption from gross receipts tax on the sale of prescription drugs by licensed pharmacists, hospitals or dispensing physicians, the Court noted Ibat a dentist does not meet any of the statutory definitions for persons whose purchase of the drugs would be exempt. Thus, the claimed exemption from the gross receipts on the sales to dentists was rejected. The state also asked the Court to reverse its earlier decision in State v. Dunhall Pharmaceuticals, Inc., 288 Ark. 16, 702 S.w. 2d 402 (1986), where the Court placed the burden upon the state to prove the value of items withdrawn from inventory and used in the compa-

businesses operated by non-charitable organizations. The Foundation made four arguments to advance its claim of exemption. First. it said the transactions were not sales. Second, it said that if they were sales, they were exempt from tax. Third, it alleged the Gross Receipts Act violated the religious clauses of the federal and state constitutions and fourth, it argued the statutory

In the case of Jones v. Ragland, 293 Ark. 320, 737 SW. 2d 641 (1987), the Court dealt with Theodore Jones, the individual who had challenged the participation by the Arkansas attorney general in the Arkansas National Guard. The facts revealed that Jones had been placed in jail when he refused to produce records for purposes of an audit by the state. In addition to discussing the

scheme of the Act was discrimina-

obligation of taxpayers to main-

tory and unconstitutional. In rejecting the lirst argument. the Court noted that the transfer of title or possession of tangible personal property (the food) in exchange for valuable consideration (the services of the employees)

tain adequate records, the Court rejected Jones' argument that the three-year statute of limitations applied to his case. Even though some of the tax years were prior to the enactment of Act 401 of 1979, Ark. Stat. Ann. §84-47l5(a) (Ark. Code Ann. §26-l8-306(a»), the Court dismissed his argument that extending the statute of limitations to the six-year period allowed under Act 401 was a retroactive application of the Act because he had not raised that

ny's business. In this case, the cor-

poration would take sample prescription drugs out of its inventory for distribution to its salesmen 36/Arkansas Lawyer/January 1989

were involved.

In rejecting the Foundation's claim for an exemption, the Court noted that no statutory exemption applied, that exemptions are to be construed in such a way strictly against such exemptions and that the simple fact that the Foundation is a religious and chari table organization does not exempt it from paying sales tax. The Court noted that the Foundation did not dispute that it operated the businesses in question for profit. Consequently, it

issue at trial. The dissent strongly

argued that the Court was overruling its decision in Ragland v. Travenol Laboratories. Inc.. 286 Ark. 33, 689 S.w. 2d 349 (1985), and stated that Jones had raised the issue at trial. The dissent argued that the Court should have

addressed that issue and ruled in Jones' favor. In Carroll County v. Eureka Springs School District #21. 292 Ark. 151. 729 S.W. 2d I (1987), the Court held that where a county mistakenly made overpayments of tax receipts to a school district and city, an action to recover these overpayments was an action falling within the implied obligation or liability provisions of Ark. Stat. Ann. ยง37-206 (Ark. Code Ann. ยง16-56-105). Therefore, the County could recover only for overpayments made during the three years before suit was filed. In Highland School District v. Travenol Laboratories, Inc., 291 Ark. 563, 726 S.w. 2d 670 (1987), the Court answered the question of whether taxes can be collected in a civil suit for fraud in the negative, In that case, a school district sued two corporations for fraud, alleging concealment of their ownership of certain real property as a

fraudulent effort to evade property taxes. The suit asked for judgment in an amount equal to what the school district would have received if property taxes had been assessed and collected. The Court affirmed the trial court's decision that "in the area of tax assessment, levying collection, private causes of action do not exist." Finally, in American Trucking Association, Inc. v. Gray, 295 Ark. 43 (1988), 46 S.w. 2d 377, the Court declared invalid the Arkansas Highway Use Equalization Tax based upon the United States Supreme Court decision in American Trucking Association. Inc. v, Scheiner, --- U.S. ---, 107 S.C!. 2829 (1987), invalidating a similar Pennsylvania tax. In addition, the Court decided that only the amounts placed in escrow following the Scheiner case were subject to refund and that the amount of attorneys' fees to be paid from the

fund was to be determined by the chancellor on remand.


A couple of other cases which had peripheral issues relating to taxation are not covered in the above discussion. With the continual changing and the increasing complexity of both federal and state tax law, the potential for significant tax cases increases in the futureD Editor's Note: John C. Lessel of Little Rock is a member of the Mitchell, Williams, Selig and Tucker law firm, Lessel is the chair of the Arkansas Bar Association's Section of Taxation and a former chair of the Pulaski Tax Counsel.

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Whitherthe UALR Law School? By William A. Martin The University of Arkansas at Little Rock School of Law is in trouble. I am not referring to its bar examination pass rate, although that may be a problem, but to the immediate danger that the American Bar Association may withdraw its accreditation because of inadequate facilities The Arkansas Law Center and Old Federal Building (OFB) which house the Law School may have been adequate for a starting day law school and law library in 1974, but they are in no way adequate at the close of this decade and the start of another and the American Bar Association's inspection team that visited in October knows it. The faculty offices are scattered over two buildings, making access

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to some difficult. And the offices in the OFB are far enough away from the main library so as to discourage its use. More serious still are the terrible acoustics in the beautiful court rooms in the OFB. Students frequently cannot hear what's going on, losing any teaching benefit of a Socratic dialogue. The classrooms in the Law Center fare better even though they were not designed by educators, do not provide the most desirable atmosphere for learning and the walls creating them were put up after the building was constructed. Most serious, though, is the grossly inadequate library space. The beautiful. high-ceiling reading room overlooking the Arkansas River masks the inconvenient and difficult access to the majority of the books. Reaching some requires climbing a narrow, winding staircase to the fifth level and then going up or down another set of steps. Obviously the library's

architect did not consider the needs of the handicapped or a preferred horizontal design when constructing the library. For the more ablebodied, access to the materials in the federal depository portion of the library or to those books less frequently used requires a trip to the basement of the OFB. The expansion needs of the law library cannot be met in the current facility. These needs may stabilize in the next 10 to 20 years with the ability to put sets of law books on compact computer disks, but that will be too late to save the Law School's accreditation. Since early in this century, the demand for legal education in central Arkansas has mandated a law school. The question as we face the next century is whether the Law School will be properly supported and fully accredited to meet the legal education needs in the central part of the state. While the best solution is to expand the Law Center and keep the Law School in downtown Little Rock, the reality is that's not going to happen. The only way to prevent losing the Law School's accreditation and damage to its reputation is to implement Ray Thornton's plan to renovate the GIT Building in MacArthur Park. Two years ago, the legislature appropriated money for the renovation but placed the funds in a low priority funding category. The Law School faculty, U of A officials and leaders of the Arkansas Bar Association know the ABA's threat concerning accreditation is real. The Governor must budget for this project and the legislature must fund it in 1989 to avoid disastrous consequences.o


AGratifying and Terrifying Experience By Edward Boyce There are few things more gratifying than seeing one's words in print, especially in a topnotch publication like The Arkansas Lawyer. We have a lot to be proud of in the administrative and editorial staffs of the Lawyer and the Arkansas Bar Association. This particular piece was due at the Arkansas Bar Center on Monday, October 10, 1988. I was waiting to see what my last article looked like before I wrote this one. The Lawyer arrived in my post office box on Sunday, October 9. I quickly thumbed through it and did not see my article. I checked the table of contents and was directed to page 229. When I reached page 229, the sheet was blank. I thought perhaps this was a comment on my style or possibly my message, but checking another copy of the magazine in the office, and finding my piece intact, I realized my article made only selected appearances. If you received one of the blanks, now is your chance to appear in The Arkansas Lawyer - just get out your pen and start writing. The Young Lawyers' Section is devoted to public service and to assisting young practitioners in making their careers better. Occasionally we even provide assistance to our older brethren. Starting a law practice can be one of the most gratifying and terrifying experiences of one's career. Jay Foonberg has written the definitive work entitled How to Start and Build a Law Practice. My father, Wayne Boyce, and I started an office several years ago. We had one advantage -- he had 30

practice law but you are not sure where or for how long in that location. Check with your printer.

There are

some high quality printing methods that look like engraving but are much cheaper. Once you settle into a 100gterm location. you may want to have an engraved plate cut. but remember.

you can add new associates but you cannot remove the old ones. -Office machinery is a book unto itself; however there are a few pieces

one cannot live without. The typewriter was once the all important tool and while it is still quite usefuL it cannot approach the usefulness of the personal computer. With the reduction in

the price of PC's, I highly recommend the computer. The photocopy machine is another necessity. Most equipment can be leased if you cannot presently

years' experience. This article by no means takes the place of Foonberg's book. but rather points up a few of the possible pitfalls and suggestions: â&#x20AC;˘ Advertising is a hot topic today. regardless of which side of the fence you stand on. Your local newspaper. especially in smaller lowns, is aching

for front page news. Notify the paper and invite the reporter to take your picture and introduce you on the front

afford the cash outlay. -Now for the Internal Revenue Service and the state taxing authorities -- another of my favorite topics. I am no accountant. My first bit of advice is to find an accountant that you can get to know, like and trust. The various taxing authorities will get you coming and going with employee withholding, social security. employment security, tax deposit rules and more. Obtain copies of Circular E from the IRS and the state withholding

page to the community.

tables from the Arkansas Department

-The telephone directory is another good place to get exposure. Try to forecast the future so that you get into the current directory by the time you start your practice. You probably cannot afford and may not want a full

of Finance and Administration.

page ad in the yellow pages, but consider a small block ad. The cost is minimal and folks seem to like it. -Stationery is a must in any lawyer's oUice. Foonberg says if you are going to make a million dollars you have got to look like you are worth a million. He recommends engraved letterhead. You know you want to





Security Division to establish an account. And ask your accountant to explain these to you. Then. cross your

fingers and hope for the best. For more information about opening your practice, get Foonberg's book and read it. Talk to another lawyer who has opened a practice in the last five years. The practical knowledge those two sources can provide is a pearl above price.o

January I9891Arkansas Lawyer/39


By Susanne Roberts It's time again for the Arkansas IOLTA Foundation, Inc.'s, annual review of grant applications for Interest on Lawyers' Trust Accounts (I0LTA) funds. Each January, the mailman's daily visit is awaited with an anticipation akin to that of a child expecting a gift from his favorite aunt. Will this particular package contain a special something designed to fulfill a need which would otherwise be neglected? Or will it contain something chosen in haste, with little care given to its propriety or quality? Let me digress here. The Foundation is beginning to make big bucks. Of course, "big" is a relative term, but the Foundation did

award $128,845 in grants last year. That's more than six times the amount granted by the Arkansas Bar Foundation last year. By the end of October 1988, we had collected $81.076.59 more in 10LTA income for the calendar year than we had collected by the end of October last year. I am often questioned while visiting lawyers out in the state about why 10LTA grants go to certain recipients in certain amounts. I suspect that many more of you have similar questions. The pivotal factor in awarding grants is quality. Quality of purpose and method are crucial factors in a gran t application. Our attorney board members -- Jerry Cavaneau; Phil Dixon; Walter Niblock; Sam Perroni; Judge Stephen Reasoner;

ATTORNEY HONOR ROLL Guly 19, 1988, to November 3, 1988) CONWAY Clark & Adkisson Kenneth Fuchs David L. Reynolds Troxell Law Office M. Watson Villines FORT SMITH Daily, West. Core, Coffman & Canfield JONESBORO Lyons & Emerson LITTLEROCK Jack D. Files Giroir Law Firm George N. Plastiras

Riddick & Riddick Gamer 1. Taylor Jr. MORRILTON Scott Adams Gordon & Gordon Steve Kirk NEWPORT Hodges, Hodges & Hodges NORTH LITTLE ROCK McCracken & Sims SEARCY Margaret Bunn Meads Odell Pollard TRUMANN Steve Inboden

FINANCIAL INSTITUTION HONOR ROLL Guly 19, 1988, to November 3, 1988) The financial institutions denoted by a double asterisk have expressly wai ved all fees and charges for IOLTA accounts. Those with a single asterisk have to date provided IOLTA accounts without charge.

40/Arkansas Lawyernanuary 1989

MOUNTAIN HOME First Federal Savings & Loan Association TRUMANN Bank of Trumann

Bobby Shepherd; and Chris Thomas -- and our lay members carefully examine the grant applications to ensure that the public receives the benefit of the 10LT}\. dollar and that the grantees who put the 10LTA dollar to use, whether for legal aid to the poor, scholarships or projects to improve the administration of justice, do so in the most beneficial and cost effective manner.

You may have noticed that most of the Foundation's grant awards are administered by institutions. Two reasons account for institutions like the legal services programs, the law schools and Henderson State University receiving funds: First, they apply for funding and second, they are well organized. The 10LTA Foundation wants diversity among its grantees. Our grant application was intentionally drafted to assist those with no grant writing experience. The eli-

gibili ty criteria in ten tiona 11 y allows an individual or group to apply for funds. When you apply, you must have a purpose which benefits the public and you must have a credible, well-organized plan to implement that purpose. In the past year, I've encouraged those individuals whose ideas seem ripe for 10LTA funding. Arkansas covers a lot of ground, though. I need you to become involved. You, the lawyers and judges, know what the needs of your community are. If you have an idea which seems tailor-made for 10LTA, commit yourself now to develop a plan to implement that idea. If you need feedback, guidance or help in organizing or developing a budget. please give me a call. I want to see that idea transformed into results as much as you. Well. I have to go now. The mailman just walked in with a package for me. I hope it's a good one.o

LAW SCHOOLS, A.I.C.L.E. AND HOUSE OF DELEGATES UNNERSITY OF ARKANSAS SCHOOL OFLAVV, FAYETIEVTIl.E By J. W. Looney Faculty Activities oRichard Atkinson spoke at the Arkansas Institute for CLE's Fall Legal Institute on "Transfers to Minors:

Alternative Vehicles and Their Consequences."

oJanet Flaccus is coau thor of an article in Arkansas Farm Research entitled "Impact of the New Farm Bankruptcy Act." She spoke at the 1988 Heartland Labor and Employment Law Institute in Kansas City. oRobert Laurence's article "Marlinez, Oliphant and Federal Court Review of Tribal Activity Under the Indian Civil Rights Act" was published in the Campbell Law Review. oDick Richards' coauthored, three-volume treatise on Employment Discrimination and his co-authored casebook have been published by Little Brown & Company. oLonnie Beard, John Copeland, Janet Flac-

cus, Jake Looney, Don Pedersen and LL.M. graduate


Robert Smith spoke at the Arkansas Agricultural and Rural Leadership Program, "Issues in Agricultural Law. oCarlton Bailey, Mort Gitelman and Ray Guzman conducted training in August on trial evidence for staff attorneys and private attorneys affiliated with Arkansas Legal Services. eDon Pedersen was

on the program planning committee for the annual meeting of the American Agricultural Law Association. Al Hoberg spoke at a meeting on the plans and acti vi lies of the National Center for Agricultural Law Research and Information. Professor Pedersen is also on the planning committee for the Agricultural Law Institute to be held in Memphis and co-sponsored by AICLE and the Mississippi Institute for CLE. oJake Looney was a delegate to a joint U.S.U.S.S.R. Emerging Leaders Conference sponsored by the American Center for International Leadership. Fifteen Soviet delegates and 15 U.S. delegates were selected to attend the week-long event in Steamboat Springs, Colorado. He

also served as educe路 tion leader for a legal study tour of the Soviet Union in which he conducted background lectures and coordinated meetings between U.S. lawyers and judges and their Soviet counterparts in the Soviet cities of Moscow, Odessa, Pyatigorsk and Leningrad. oJulia Wilder authored "The Great Lakes as a Water Resource: Questions of Ownership and Control." a chapter in Perspectives on Ecosystem Management for the Great Lakes published by State University of New York Press.

LL.M. Program The 1988-89 LL.M. group consists of 13 studen ts represen ling Arkansas, Minnesota, Nebraska, Louisiana, Kansas, Washington, D.C .. and California, pi us lawyers from Nigeria, Pakistan, Trinidad and Tobago. Nine LL.M. candidates received their degrees during 1988. Of the recent graduates, a number have had their thesis or nonthesis papers published, including: oDonald D. MacIntyre: "The Adjudication of Montana's Waters - A Blueprint for fmproving the Judicial Structure."

Montana Law Review;

o Walter Schmidt: Research paper on state farm debt mediation laws.

Accepted for publication in the Journal of Agricultural Taxation & Law; o Gene Olson: Water law paper in a somewhat revised form. Accepted for publication in the North Dakota Law Review; o Bob Davidson: "Antibiotics in Animal Feed - The Effects on Human Health."

In the hands of several book publishers for review; o Jerry L. Jensen: "Operational Financing: A Necessary Elemen t for a Successful Chapter 12 Farm Reorganization... Missouri Law Review.

Agricultural Law Center Two additional staff members have been

hired by the National Center for Agricultural Law Research and Information. oAlicia Tocco joins the staff after several years of practice in Phoenix where she specialized in agricultural and en vironmen tal matters. She is a law review graduate of the January 19891Arkansas Lawyer/41

University of Arizona College of Law and holds both B.A. and M.S. degrees from Northern Arizona University. ·Sally Kelley joins the staff as agricultural law librarian. She has an M.A. in library science from the University of Chicago and a B.A. and M.A.T. in Slavic languages and literature from Indiana University. Sally has considerable experience as a public and university librarian and has co-authored publications for the American Library Association.

Hotz Lecture Series Featured speakers in the fall Hartman Hotz Distinguished Lectures in Law and Liberal Arts will be political columnist Haynes Johnson and Senator Dale Bumpers. Johnson, who regularly appears on the PBS newsweekly program "Washington Week in Review, will discuss the 1988 presidential election results and what can be expected from the new administration.

Sen. Bumpers will discuss what to expect in the new congress. 0




annual fall party at the home of Sheffield Nelson on October 29. Association President Phil Farris and President Elect Buddy Raines were co-hosts for

the event. Two lectures have been scheduled for the spring semester under the sponsorship of the Ben J. Altheimer Foundation. The first lecture will be delivered by John C. Coffee Jr., the Adolf A. Berle Professor of Law at Columbia University School of Law, on March 16. The second will be delivered on April 14 by Charles W. Wolfram, the Charles Frank Reavis Senior Professor of Law and associate dean at Cornell Law School. FACULTY ACTIVITIES • Professor Robert R. Wright recently signed a contract with West Publishing Company for a fourth edition of his casebook on land use. Professor Wright became chairman of the Publications Board of the General Practice Section of the American Bar Association in August. He is also a member of the Committee on Centers for the General Practice of Law and a member of the media board of the ABA Section of Urban, State and Local Government Law.

ROCK SCHOOL OF LAW By Paula Casey The UALR Law School Association held its 421Arkansas Lawyer/lanuary 1989

.Professor Arthur G. Murphey Jr., attended a workshop on conflict of laws sponsored by the Association of American Law Schools in Washington, D.C. .Professor Eugene Mullins made a presentation about bill drafting at the Arkansas Institute

for CLE on "Lobbying Strategies and Techniques" held in Little Rock. Dean Lawrence H. Averill Jr., also participated in the program. .Dean Averill. Associate Deans Scott Stafford and Paula Casey and Professor Kenneth S. Gould attended a conference on ways to assure diversity in the legal profession sponsored by the American Bar Association, the Association of American Law Schools, the Law School Admission Council and the Council on Legal Education Opportunity in Washington, D.C. • Professor Andrew McClurg's article, "Logical Fallacies and the Supreme Court: A Critical Examination of Justice Rehnquist's Decisions in Criminal Procedure Cases," has been published in Volume 59 of the University of Colorado Law Review. .The Syracuse Law Review has accepted Professor Frances Fendler's article, "Waive the Fifth or Lose the Case -Total Preclusion Orders and the Civil Defendant's Dilemma," for publication. ·Jean Probasco, director of Admissions, and Associate Dean Casey attended the annual meeting of the Southwest Association of Prelaw Advisors at the University of Texas in Austin and a law school forum in Chicago spon-

sored by the Law School Admission Council and Law School Admission Services. ·Professor Eugene Mullins attended the Association of American

Law Schools workshop on "Legislation, Teaching and Scholarship in the Age of Statutes" in Washington, D.C. .Professors Cathy Derden and Ranko Oliver attended a legal writing institute conference at the University of Puget Sound Law School in Tacoma, Washington. • Library Director Lynn Foster and Reference Librarian Susan Goldner attended the annual meeting of the Midwestern Association of Law Librarians in Sioux City, Iowa.


The Rockefeller Scholars' Advisory Board selected three "scholars" for 1988-89. They are Toni Bogan and Carolyn Reynolds of Little Rock and Edna Hargraves of Marianna. The William R. Overton American Inn of Court selected 15 pupil members for 1988-89. They include Charles W. Burton; Elizabeth F. Elder; Jennifer Farmer; Tim Howell; Todd Lewellen; Patty Lueken; Roger McConkie; David E. Miller; David Morehead; Elaine Moss; Edward T. Oglesby; Mark Rogers; Tricia Sievers; Don A. Taylor; Paul Taylor; and Carol Worley. The purpose of the organization is to improve the competency and ethical ideals of American trial and appellate lawyers, judges and law studen ts. Officers of the organization are W.H. "Sonny" Dillahunty, president, Judge Henry Woods, counselor and Paula Casey, secretary/treasurer.D

A.LC.L.I. NEWS By Rae Jecm McCall The time has come. By the time this issue of The Arkansas Lawyer reaches your desk, the Arkansas Supreme Court will have announced

the "Minimum Continuing Legal Education (MCLE) Program in Arkansas. What this means for the Arkansas Institute for Continuing Legal Education is that the

know they won't be profitable because there is a real need to provide this service. An example is

the annual "Bridgingthe-Gap"program for new admit tees. We have a commitment to provide this program at an extremely reason-

able cost to registrants. That means we operate this program at a loss because it is a valuable service.

Video Replay Network Another


which we will continue to address is to provide

anticipation is over and

seminars of a practical

the real work begins. To varying degrees, lawyers in Arkansas have always acknowledged the need to continue their education. The success of AICLE over the past several years is a clear indication that voluntary CLE efforts are supported by many

nature on substantive areas of the law in various locations throughout the state. The Video Replay Network is one method to improve the accessibility of our programming. We will continue to explore additional ways of serving the attorneys who may have difficulty with the time and expense of traveling to seminars. Since AICLE has a statewide mission. we rely quite heavily upon the volunteer contributions of members of the bar, judiciary and law school faculty in the development and delivery of CLE programs. The AICLE Program Committee will consider any program proposal submitted. The procedures are quite simple and can be explored with an AICLE staff


However, the implementation of the MCLE program will create many new challenges for AICLE. First, it is recognized that there will no doubt be an influx of course providers attem-

pting to capture the CLE dollar. The approach used by many "for-profit" organizations is to concentrate on only the most popular topics and attempt to integrate Arkansas law into a standardized curriculum

through the use of local faculty members. The real difference between these organizations and

AICLE is that we have a real commitment to serving Arkansas attorneys' CLE needs. We quite frequen tl y offer programs that have a limited scope and audience appeal even though we


We urge you to get involved with CLE activities. Whether your involvement takes the form of serving as a program

planner, faculty member or by offering your suggestions, we can assure you that your efforts will be appreciated.

Upcoming Programs

•Mark your calendars now for January 19-20. That's the date of the 1989 Mid-Year Meeting of the Arkansas Bar Association. Association President Elect David M. (Mac) Glover has planned a CLE event you won't want to miss. The program will focus on "Lawyering -Trends and Traditions" by providing inspiring, entertaining and informative sessions. Look for additional information under separate cover.

oThe Lawyer's Guide to Negotiation and Settlement is the focus of a one-day seminar scheduled for February 17 which will feature Gerald R. Williams, professor of law at Brigham Young University School of Law. This program provides a general model for effective negotiating and will help you develop an individualized framework for enhancing your skills as a negotiator. oOn March 3, a practice-orien ted program entitled Family Law and Practice will be held in Little Rock and in vari0us locations through the Video Replay Network. This program has been designed with the general practitioner in mind. Don't miss this opportunity to update your knowledge and skill in this area of the law. For more information concerning programs and services, or if you have a comment or suggestion, contact the Arkansas Institute for CLE at 375-3957.0


ASS:XAATION HOUSE OF DELEGATES lv1EETING October L 1988 The fall meeting of the Arkansas Bar Association's House of Delegates was held on October I. 1988, at the Fayetteville Hilton. President Philip E. Dixon presided. Business oMartha M. Miller of Little Rock was certified to a one-year term in the House representing District 29. Miller fills the unexpired term of Mark Lester of Little Rock. who resigned. oThe minutes from the June II, 1988, annual meeting of the House were approved. • President Dixon announced that the Association's membership totals 3,257, an increase of 67 members over this time last year. oThe House approved the Association's financial statement. -The House increased the size of the State Trial Practice Committee to allow the appointment of a vice chair and approved the appointment of a construction law committee. • Association Executi ve Director William A. Martin reported that the Arkansas Law Center is in need of maintenance and repair and discussed the American Bar Association's House of Dele-

January 19891Arkansas Lawyer/43

gates' meeting in Toronto. Mandatory CLE W. Russell Meeks III, of Little Rock, chair of the Mandatory CLE Committee, reported that Christopher Thomas, director of the Arkansas Supreme Court's Office of Professional Programs, will be responsible for the administration and enforcement of MCLE in Arkansas. Meeks presented Thomas' plan for the implementation of

MCLE and recommended its approval. The motion was seconded and passed. Bar Leaders Conference

President Dixon announced that the Bar

Leaders Conference is scheduled for October 28, 1988, in Little Rock. Long-Range Planning E. Charles Eichenbaum of Little Rock and Judge Eugene Harris of Pine Bluff spoke on the need for a new judicial article. Eichenbaum

G.A. Tomlinson P.E. 8425 So. 73rd East Ave.


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moved that the president appoint a committee to present recommendations in January on how best to draft a new judicial article. The motion was seconded and passed. Legislation ·Vincent W. Foster Jr.. of Little Rock, chair of the Jurisprudence and Law Reform Committee, presented three proposals concerning the Association's 1989 legislative package. The

AmarillO. Texas;

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Equipment Co., Tulsa. 1949-1982; Responsible for all engineering functions 1957-1975; Formed Company for Unit Rig in 1976: General Manager. Canadian Operations. 1977; In charge of Unit Rig Product Litigalion 1977-1982.

GRADUATE MECHANICAl ENGINEER 32 years eJq>erience In design, testing. maf1l.llaeturing, supervision and opefation 01 equipment. Also 8Ktensive executive experience. Qualified as an expel'! ;I'l many lields, including: • Forklift & HoIsts • Material Handling Eqpt. • Construction Equipment • Trucks 01 all types • Heavy Vehicles • Air1ine Ground Handling Eqpl. • Electric Vehicles • Ditching Machines • M8J'1Ufacturfng Machinery 9 YEARS COURTROOM EXPERIENCE

House approved a proposal to reduce separation as grounds for divorce from three years to one year and an amendment to the notice to creditors provision of the Arkansas Probate Code to require actual notice to creditors known or reasonably ascertainable. The House placed on its January agenda proposals providing for the merit selection of appellate judges and a local option with respect to merit selection of trial judges. • Presiden t Dixon asked members of the House to poll their local bar associations and attorneys on the proposed professional services tax.o Sandra Wilson Cherry Secretaryrrreasurer

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441Arkansas Lawyernanuary 1989



JANUARY 19 - 21. 1989

Judge Henry A. Politz The "Cajun Judge"


The 1989 Mid-Year Meeting has a new look and a new focus. The theme -- Trends and Traditions -- is at the heart of every activity throughout the three-day even I. On Thursday, January 19, you may attend an Arkansas Bar Association section or committee meeting and an open forum on a model

judicial article. On Friday, January 20, join the distinguished faculty of the CLE portion of the conference as they examine "trends and traditions" in the legal profession. You will begin the day by attending your own trial, The People of the State of Arkansas vs. The Modern Lawyer! After the mock trial, the general sessions will continue with the traditional update on Arkansas law by Associate Justice David Newbern entitled "Significant Arkansas Appellate Decisions" and an update on minimum continuing legal education.

During lunch, you will be entertained by Honorable Henry A. Politz, U.S. circuit judge

for the Fifth Circuit (a.k.a. the "Cajun judge") as he discusses "The Spice of Life -- Cajun and Judicial Humor." In the afternoon. you can choose among a number of unique, thought-provoking concurrent sessions: -The Lawyer's Quest for Quality of Work Life -Class Action Practice in Arkansas -How the 1989 Legislation Session Will Affect Your Practice and What You Can do to Get Involved -Tips on Writing Better Briefs -Family Law Problems and Proposed Legislative Solutions -Public Schools in Arkansas -- Exploring the Rights and Responsibilities -Psychological Strategies for Jury Persuasion -Employment at Will in Arkansas -An Update on Tax Issues Attend the social functions, participate in the meetings, learn the latesl. This program has something for everyone. To receive a complete schedule of functions and registration information, contact the Arkansas Institute for CLE at 400 West Markham, Suite 700, Little Rock, AR 72201 or call 375-3957.

SPECIAL FEATURES • A handy guide to county, state and federal offices including departments of the U.S. and Arkansas state government.

A comptete digest of courts containing terms, rules and jurisdiction of federal, state and local courts with names, addresses and telephone numbers of court personneL • A complete roster of attorneys and law firms in Arkansas with addresses and telephone numbers.

• Professional associa!ions including officers, committees and sections of the Arkansas Bar Association.

• Professional and biographical data of some of the law firms and individual practitioners in Arkansas.

"YOUR BLUE BOOK OF ATTORNEYS SINCE 1935" LEGAL DIRECTORIES PUBLISHING COMPANY. INC. Order as many copies as you need today! 2122 KIDWELL STREET The price is $26.00 plus $2.67 postage and handling totaling $28.67 P.O. BOX 140200 Check must Accompany order. DALLAS, TEXAS 75214-0200 Facsimile, (214) 821-0200 'Price subject to change without notice. Telephone, (214) 824-8092 PLEASE CALL OR WRITE FOR ADVERTISING OR BIOGRAPHICAL CARD RATE INFORMATION


WILLlAt\1 E.. BROW/N. Prmdtnl Honorary t\ltmhtr 01 rht Naf/onlll AUOtlallon of Ltgal StrrflarltJ -