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July 1980 Vol. 14, No.3

THE OFFICIAL PUBLICATION OF THE ARKANSAS BAR ASSOCiATION

(§Ie

Arkansas Lawyer SPECIAL FEATURES

OFFICERS

Phillip Carroll, President James Cypert, President-Elect

EXECUTIVE COUNCIL

Dennis Shackleford Clint Huey Webster L Hubbell Gus B. Walton, Jr. David R. Malone Thomas D. Ledbetter Robert G. Serio LeRoy Froman

EX-OFFICIO

Phillip Carroll James Cypert E. Harley Cox, Jr. Don M. Schnipper Herschel H. Friday Louis B. Jones

Cover: NINE VERY HUMAN MEN A Timetable for an Office Relocation.... Questions and Answers About the Performance of Music Under the New Copyright Law Canons of American Citizenship Control Your Files to Prevent Malpractice Claims Federal Income Tax Treatment of Certain Transfers Under the New Arkansas Property Division Law Annual Meeting

167 .Mary Ann Altman 140

John C. Goldstein 148 . . . . . . . . . . . . . . . . . .. 154 ,

Laurie H. Hutzler 132

Charles C. Owen 128 146

REGULAR FEATURES President's Report Phillip Carroll Juris Dictum Legal Economics. . . . . . . . . . . . . .. .. .. • .. .. . . . . . . . . . . . . . . .. Law School News ..........•.•.•.•...................... B. Tarkington Oyez-Oyez In Memoriam Executive Council Notes ..........•.•......James A. Butlry Service Directory Lawyer's Mart ........•.•.•.............................. Addenda.. . . C. E. Ransick W. Christopher Barrier Context AICLE News Claibourne W. Pally, Jr. The Arkansas Bar Foundation Boyce Love Tax Tips .......................•.........Paul D. Williams

126 144 140 158 156 142 164 IBC 131 167 136 160 162 168

EDITOR

C. E. Ransick

EDITORIAL COMMITIEE

Robert T. Dawson E. Alvin Schay Cyril Hollingsworth

The Arkansas Lawyer (USPS 546-040) is published quarterly by the Arkansas Bar Association, 400 West Markham, Little Rock, Arkansas 72201. Second class postage paid at Little Rock, Arkansas. Subscription price to non-members of the Arkansas Bar Association $6.00 per year and 10 members $3.00 per year included in annual dues. Any opinion expressed herein is that of the author, and not necessarily that of the Arkansas Bar Association. The Arkansas Lawyer, or the Editorial Committee. Contributions to The Arkansas Lawyer are welcome and should be sent in two copies to the Arkansas Bar Center, 400 West Markham, Litlle Rock, Arkansas 72201. All InqUIries regarding advertlsing should be sent 10 The Arkansas Lawyer, above address.

July 1980{Arkansas Lawyer/125


PRESIDENT'S REPORT by PHILLIP CARROLL

"PLANNING AHEAD IS THE HARDEST WORK THERE IS." -Ben Franklin

/

1980 s In mid-April, 1980, approximately forty members of the House of Delegates and other leaders of the Association met for the purpose of deciding upon the projects, both long and short range, which should be given priority attention by the Arkansas Bar Association. A report on the suggestions made by the three teams of lawyers, judges, and legal educators affords an opportunity to chart the Association's course in the months and years ahead:

TEAM 1. DEAN DAVID EPSTEIN, REPORTER. a. Mandatory continuing legal education. Increase the use of videotape for regional meetings. Is A.I.C.L.E. (the joint venture of the two law schools and the Arkansas Bar Association) structured properly to carry out its responsibility?

b. A bar sponsored bar examination preparatory course. Candidates now spend upwards of $300 to attend courses conducted by private groups. Can the Association do the job better and at lower cost?

c. Interest more lawyers in taking part in bar activities. Create and promote more bar activities at the local level. Organize small groups where none exist. 126/Arkansas Lawyer/July 1980


d. Increase professionalism. How do we get the idea across that the practice of law is a profession and not a business? Advisory opinions on legal ethics problems should be issued. Improve the outreach of the educational programs. Make the public aware of law practice as a profession. The Association should be a clearinghouse to increase the community involvement of lawyers. Take steps to decrease the cost of providing legal services. See to it that clients understand the cost early in the litigation process. Help younger lawyers in dealing with clients, and encourage settlements before costs get out of hand.

TEAM 2. DEAN ROBERT WALSH, REPORTER. a. Law reform. Draft legislation to replace outmoded laws. Promote the bar legislative package aggressively--<:onduct regional meetings to explain the package to legislators and local bar associations. Delegate watchdog responsibility during the legislative session to a small group of responsible bar leaders who can act quickly to fight bad legislation. (Set up weekly conference calls at a designated time to assure that the interests of lawyers are properly protected during the session.) Provide legislators with short and succinct summaries of the Bar's position on bills under consideration. Encourage good lawyers to actively participate in the legislative process.

b. Cost of legal services. Urge judges to rule quickly to reduce duplications, interrogatories and unnecessary discovery. Encourage the use of modern law office techniques, cheaper delivery of legal services, and the informal resolution of disputes. Form arbitration panels staffed by lawyers and perhaps even by senior law students. Work to increase the jurisdiction of small claims and municipal courts.

c. Improve the judicial system. The system will never substantially improve until salaries are high enough to attract the very best lawyers. All judges should have secretarial assistance. Telephone conference calls should replace docket calls and gatherings held merely to select trial dates.

d. Law student support. The proposal for a bar exam preparatory course sponsored by the Association met with a mixed reaction. Liaison should be established, however, between the bar examiners and the faculties of the two law schools. Following each exam, questions and the examiner's model answers should be SUbmitted to faculty representatives who will be given an opportunity to suggest revisions to the model answers as well as additional points that may be expected to be found in student responses to the questions. This liaison will tend to promote fairer grading practices and better bar exam questions; and it may enable the law schools to better anticipate the needs of students.

e. Public Information. Communicate and highlight the positive aspects of the profession.

f. The high cost of litigation. A special study committee should make recommendations and possibly draft legislation to expand the types of cases in which reasonable attorney fees are awarded to the victor.

TEAM 3. CHRISTOPHER BARRIER, REPORTER. a. Education of lawyers in and after law school. Urge more clinical training, improve lawyer client communications, and formalize relationships by engagement and employment letters. The study of professional ethics should be mandatory in law school and as a part of CLE training.

b. Access to lawyers and meeting the need for legal services. Specialists should be certified. Continuing legal education should be mandatory, utilizing regional seminars. Initiate prepaid legal services and other methods to serve middle income clients. Continue public education programs to educate the public about lawyers and what they do. Approach the elimination of unauthorized practice of law positively-attack substandard practices which are harmful to the public.

c. Economic delivery of quality service. Continue to publish "Systems" to help lawyers. A task force should look for more methods to provide tools to enable the small town practitioner to continue to exist as an institution. Look for inexpensive ways to resolve minor disputes.

d. Professional relationships. Continue with an active public relations program. Fight government regulations of the legal profession. Stay alert to the problem. Improve relationships with the press--<:onduct joint meetings-train lawyers to deal with reporters. Work with the jUdiciary-streamline procedures-urge the elimination of expensively printed appellate briefs. Look for new methods of getting cases tried more efficiently. Grease the machinery for assignment of judges between judicial districts. Cause judicial candidates to commit themselves to accept the assignment of cases from other districts. There ought to be several items in these suggestions that appeal to each member of the Association. Contact your representative in the House of Delegates and make sure your favorite project is made known. I'd like to hear from you too. Making the next year a memorable one for lawyers is the goal of your officers, but we can't do it alone. Pitch in and help! No advice will be ignored, and fair criticism of our efforts will cause corrections to be brought about promptly.

f--

July 1980/Arkansas Lawyer/127


FEDERAL INCOME TAX TREATMENT OF CERTAIN TRANSFERS UNDER THE NEW ARKANSAS PROPERTY DIVISION LAW BY CHARLES C. OWEN

The purpose of this article is to review the federal income tax consequences of certain transfers of appreciated property pursuant to a property settlement or divorce decree under the provisions of the new Arkansas property division law, as contained in Section 1 of Act 705 of 1979 (the "Act"), which amended Section 341214, Ark. Stat. Ann. (1962 Repl.). The first general rule in the Act provides that upon the entry of a divorce decree the marital property (as defined in the Act) shall be distributed one-half to each spouse "unless the Court finds such a division to be inequitable." If an equal division would be inequitable, an "equitable" division shall be made giving due consideration to eight enumerated factors. The second general rule in the Act provides that the separate property of each spouse shall be returned to the spouse "who owned it prior to marriage unless the Court shall make some other division that the Court deems equitable taking into consideration" the same eight factors. This article will discuss the federal income tax treatment of a transfer to a spouse of appreciated marital property by the spouse who holds title thereto for the purpose of an equal property division pursuant to the first general rule in the Act. 128/Arkansas Lawyer/July 1980

In the landmark decision of U.S. v. Davis, 370 U.S. 65 (1962), the United States Supreme Court held that a transfer of separate property by a husband to his wife in satisfaction of her inchoate marital rights resulted in taxable gain to the husband measured by the difference between the fair market value at the time of the transfer and the cost basis of the property. Prior to the Act (and under the Act in the case of a discretionary division by the Court of marital property or separate property), it was clear that such a transfer under Arkansas law resulted in a taxable gain to the husband. In considering whether the Davis doctrine will be applicable to a transfer to achieve an equal division under the Act, it is helpful to analyze the state law involved in Davis. Davis involved a transfer by the taxpayer-husband of shares of appreciated stock to this wife in exchange for a release of her inchoate marital rights under Delaware law. The taxpayer-husband contended that the transfer was comparable to a nontaxable division of property between two co-owners. In rejecting this argument, the Court note that under Delaware law the wife had no interesteither passive or active-in the management or disposition of the husband's personal property, that the

Author Charles C. Owen is a member of the Rose Law Firm, Little Rock; Co-editor of this series of articles by the Arkansas Bar Association's Taxation, Trust and Estate Planning Section; member of ABA's Sections of Taxation, and Real Property, Probate and Trust Law and is Vice-Chairman of the RPPT Committee on Significant Current Legislation, Probate and Trust Division as well as an active member of Committees on Exempt Organizations, Special Problems of Farmers and Ranchers and Formation, Administration and Distribution ofTrusts; and member of various CPA and Bar organizations.

wife's rights were not descendibie, that she must survive the husband to share in his intestate estate, and that upon dissolution of the marriage she would share in the property only to the extent that a Delaware court deemed "reasonable." In determini ng what


would be reasonable, the Court noted that Delaware law would require consideration of such factors as "the wife's financial condition, her needs in relation to her accustomed station in life, her age and health, the number of children and their ages, and the earning capacity of the husband." The Court stated that the inchoate rights granted a wife under Delaware law in her husband's personal property did "not even remotely reach the dignity of coownership," but rather constituted a burden on his property. Notwithstanding the Davis case, there are certain transfers in common law jurisdictions which are treated as divisions of co-owned property and, therefore, are not taxable to the transferor. These transfers involve either (1) certain divisions of jointly-held property or (2) divisions of property pursuant to state property law which is similar to community property laws. See Rev. Rul. 74-347, 1974-2 C.B. 26. With respect to the latter type of state property law, taxpayers have been successful in Oklahoma and Colorado in convincing federal courts that property held by the husband was acquired by the joint efforts of the spouses during their marriage and its division was a transfer of co-owned property. In Collins v. Commissioner, 412 F. 2d 211 (10th Cir. 1969), the court adopted an opinion of the Supreme Court of Oklahoma involving the taxpayer and his wife which held that the property transferred was acquired by the joint efforts of the parties during their marriage and in which the wife had obtained a vested ownership interest. Thus, the division of the property was held to be nontaxable. In Imel v. U.S., 375 F. Supp. 1102 (D. Colo. 1974), the court certified to the Colorado Supreme Court the question whether a transfer to the wife of 50% of the property acquired through joint efforts but owned by the husband was the partition of property in which the wife had an ownership interest. Following the receipt of an affirmative answer, the court held that the transfer was nontaxable. It is important to note, however, that in planning for a transfer under Arkansas law, Collins and Imel cannot be relied on as precedents for federal income tax purposes. In Commissioner v. Estate of Bosch, 387 U.S. 456 (1967), the Court held that the Internal Revenue Service and federal courts

are not bound by characterizations of rights and interests created under state law unless such characterizations are contained in an opinion by that state's supreme court. Bosch further held that federal courts are free to disregard intermediate court decisions if they are "convinced by other persuasive data that the highest court of the state would decide otherwise." For examples where taxpayers were unsuccessful in applying, by analogy, Collins, see Richard E. Wiles, 60 T.e. 56 (1973) and Wallacev. U.S., 439 F. 2d 757 (8th Cir.1971). Therefore, in order to argue successfully that the Davis doctrine does not apply to a transfer under the Act, it is necessary that the Act be interpreted as creating equal property interests in each spouse in marital property regardless of how title is held. In addition, such property interests should vest at the time of acquisition, thereby creating an interest which is descendible at death. Interpreted in this manner, the Act would, in effect, be a community property-type system. However, this does not appear to be the intent of the Legislature in enacting the Act. See the "1978-79 Annual Report, Chairman Family Law Section," Arkansas Bar Association, pages 9 through 17. At first blush, it does appear that the Act creates a form of community property law. However, under community property laws a spouse's community interest is generally vested and is descendible at the death of that spouse regardless of how title is held. Arkansas law does not appear to afford similar treatment, notwithstanding the Act. Such a conclusion is reasonable in light of the fact that only the property division laws relating to divorce were affected by the Act. Statutes affording dower and curtesy interests were not affected. Accordingly, a spouse who does not have title to marital property has only a dower or curtesy interest in that property in the event the other spouse dies. Furthermore, those interests, being personal, lapse with the death of the holder. Absent an Arkansas Supreme Court decision that the Act creates a vested interest in each spouse in the marital property, it appears that, at best, a spouse who does not have title to marital property has a contingent interest in that property subject to becoming vested or divested, as the case may be, upon the dissolution of the marriage,

and extinguished upon the death of either spouse prior to the commencement of a divorce action. Although marital misconduct is no longer statutory factor in the division of property, it appears that the interest of a spouse who does not have title in marital property is more of a dower-like interest burdening the property rather than an ownership interest. Thus, the Davis doctrine would apply to a transfer under the Act and treat such a transfer as a taxable event to the transferor. However, considering the legislative history of Act 705 of 1979 as set forth in the Annual Report noted above, the question of taxability of a transfer may become moot in the future as it appears that Arkansas may be headed toward the adoption of a community property system. The genesis of Act 705 of 1979 was House Bill 88 which was drafted in direct response to the dissenting opinion of Justice Darrell Hickman in McNew v. McNew, 262 Ark. 567, 559 S.w. 2d 155 (1977), 573-74, which questioned the constitutionality of the property division law in effect prior to Act 705. In his dissent, Justice Hickman stated the following at page 573: The Arkansas law regarding property was enacted before the turn of the century and can no longer be defended historically or legally with any confidence. lt clearly violates the Equal Protection Clauses of the Arkansas and the United States Constitutions. Although stated in the context of a divorce action, the above quote may well have significance and application to the Arkansas provisions for dower which are clearly gender-based and may be constitutionally suspect. See Orr v. Orr, 99 S. Ct. 1102 (1979). Thus, if those provisions are successfully challenged, the groundwork will have been laid for the adoption of a community property system, in light of the enactment of Act 705 of 1979 and the following from Justice Hickman's dissent in McNew at page 574: Parties marry, share their love, lives, fortunes and misfortunes. In divorce they should share equally the property they have accumulated during their marriage. Anything less is obviously unfair. It is submitted that anything less at death is equally unfair. " " July 1980/Arkansas Lawyer/129


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CONTROL YOUR FILES TO PREVENT MALPRACTICE CLAIMS By Laurie H. Hutzler, Esq. ©

'"WHA T DO YOU MEAN OUR FIRM IS RESPRESENTING MR. HAROLD' WE'RE ALREADY COMMITTED TO REPRESENT MRS. HAROLD IN THIS DIVORCE''"

1980, Legal Management Services, Inc.

~ ••

.'.

I

If your secretary quit tomorrow morning, could you be absolutely certain of finding the file for the case you are trying in court next month? Is that file currently located on your window sill, under your desk, or on the floor in the corner of your office? The following statements describe common trouble signs in a law office filing system. If a number of these statements accurately describe your current filing procedures, then your firm may be headed toward serious malpractice consequences. • Our files are not kept in a central filing area or file room. They are located allover the office. • Every so often we have to turn the office upside down to find a document or file which seems to have disappeared. (Actually, this happens more often than any of us would like to admit.) • We just can't ever seem to get rid of the large backlog of material that needs to be filed. It just piles up and piles up.

'"THE HEARING WAS YESTERDAY. THE JUDGE DISMISSED YOUR CASE''"

..<. -

v

'"OHNO' THE WHOLE FILE HAS DISAPPEARED''"

'"TELL THE CLIENT TO WAIT I WAS SUPPOSED TO FILE HIS LIEN LAST WEEKNOW I CAN'T FIND IT '"

,"

• We have an old safe for wills and other essential documents in the office. I'm not sure if it's fireproof. No one has ever checked. • All our files are stored alphabetically.

"WHAT DO YOU MEAN THIS IS THE MOST RECENT CORRESPONDENCE FILE'"

132/Arkansas -Lawyer/July 1980

• Our file room is jammed with files. I don't know what's all in there. Some of the stuff hasn't been examined for five or ten years.

• Filing is considered the least important administrative position in our firm. • Basically, our firm's record retention plan is to ignore the situation and hope it will go away.


Basic Filing Procedures There are two fundamental file retention principles which apply to all law firms regardless of size, degree of specialization, or nature of practice. Any firm which systemizes its filing procedures in consideration of these principles will operate at optimum efficiency and, as the firm grows, its filing system will expand with a minimum of difficulty. • The law firm must recognize the vital nature of the firm's files and the importance of the filing function. A file is the firm's record of the progress of each matter handled for a client. Each instrument in regard to the matter has been forged with care and precision. These documents should, therefore, be organized, preserved, and retrieved with the same degree of care and precision. Filing personnel should be carefUlly trained to perform this very important task for the firm and its clients. • Real control over the contents of the firm's files can only be achieved through a centralized filing system. In such a system, all the client's files are stored in, checked out of, and returned regularly to a central filing area or file room. One person should be assigned primary responsibility for filing maintenance and control. If the files are not kept in one centra/location with one person primarily responsible for keeping them in good working order,the firm will pay a penalty in lost files and misplaced documents. Such a situation can create serious malpractice consequences. In addition to the professional liability potential, inadequate filing procedures

create logistical problems which cost the firm time and money. If a firm does not have a reliable central filing system, attorneys will keep their clients' files in stacks on their desks (window sill, floor). When a secretary has difficulty finding files in the attorney's office, the filing of new material accumulates. One day, the attorney looks for a document or file that "was just there yesterday," and which now has "disappeared." Both the attorney and the secretary spend a good part of the afternoon sorting through the office. They both become file clerks for a while-an extremely expensive sideline for a busy professional. When files, used by more than one attorney, are not returned regularly to a central file room, the question of "who's got the file" is a constant source of aggravation, wasted time, and unnecessary effort. Organizing Your Filing System • A client file should be opened immediately after the initial interview. The attorneys in the firm should complete a new business memo each time a new client is interviewed and whenever a continuing client retains the firm for a new matter. This new business memo helps to remind the attorney to get all the information about every case. It triggers important key questions about impending deadlines and possible conflicts of interest. Most important, it provides a written record of what was discussed and agreed upon when the firm was first retained. A copy of the memo should be sent to the client to confirm the details of the representation. Another copy should be used to open the client's file. The memo should be the first document in every new file. The new business

memo is the first step in establishing clear, concise documentation of and files for each matter the firm handles. • Every new client and every new matter for an existing client should have a permanent identification number. Identifying the client by number avoids the confusion and misfiling that results when the firm has clients with the same or similar names. It is much easier to get client James Smith confused with client Jack Smith than it is to get client 119 confused with client 834. Indentifying each matter handled for a client by number makes the folders and subfolders for all matters easier to label, retrieve, and store. • Each file should be subdivided as soon as it is opened. Each matter within the client file should have an individual expanding folder containing single manila folders relating to the different aspects of the case. These subfolders should be prepared as soon as the file is opened. Only the attorney involved in the matter can determine how a client's file should be structured. The firm can, however, have a standard policy as to how certain common types of files should be subdivided. This arrangement can be pre-set in the types of cases that the firm handles frequently. If the firm does a lot of personal injury litigation, it might decide that each new client file should contain the following individual manila folders: a) Correspondence, b) Memos and Briefs, c) Pleadings, d) Statements, e) Photos and Exhibits, and f) Special Damages. When this type of case is accepted by the firm, these standard manila folders can be arranged immediately to be

Laurie H. Hutzler is lawyer, lecturer, author, consultant, video producer and active member of various professional and business groups. She is author of the Attorneys' Malpractice Preventation Manual, and a frequent lecturer on the topic of law office management and professional liability loss control. As president of Legal Management Services, Inc., Ms. Hutzler specializes in providing programs, pUblications and videotapes to corporations, government agencies and trade associations on law related topics. Ms. Hutzler's background combines commercial script writing experience with a J.D. degree from New York Law School and administrative experience in corporate law departments. She is a delegate to the White House conference on Small Business, Chainnan of the Videotape Committee of the Economics of Law Practice Section of the American Bar Association, Government Relations Liason for the Information Film Producers of America New York Chapter, a member of the Steering Committee of the Communication Industry Council of the New York Chamber of Commerce, a member of the International Council on Small Business and the National Federation of Small Business. July 1980/Arkansas Lawyer/l33


ready to receive material as it accumulates. • Each file should be organized so that documents are easy to find. A client's file is the complete record of the progress of a matter. It should contain one copy of all correspondence, notes briefs, memos, drafts, and other material prepared for or received on the client's behalf. The contents of the file should be arranged in descending chronological order (letter dated 4/4/77, letter dated 3/3/75, letter dated 7/1/74, etc.), with the most recent material filed on top. If duplicates are to be kept in the file, they should be placed in a separate folder labeled "Duplicates," otherwise, extra copies should always be discarded. The firm should use carbon or NCR sets which include distinctively colored pre-punched paper for the file copy (this makes duplicates easier to identify and discard). Unnecessary extra copies only clutter a file and make it more difficult to locate important documents. If an extra copy is needed in the future, it can always be photocopied at that time. Drafts should also be kept in a separate folder marked "Drafts." Each draft should be numbered and dated so that only one sample of each step in the drafting series is retained. If duplicates, extra drafts, paper clips, and legal pads are kept out of the firm's files, their bulk can be reduced from thirty to fifty percent! • Alt client files should be cross referenced. A cross reference system is a card file which indexes each matter that the firm has handled by client name and adverse party name. It is a permanent record of all the firm's cases. It should provide the only reference to the location of a file by client name. All other controls should be organized by number. If only the client's name is known, it is possible to check the client cross reference card to determine the client's number, the name of the adverse party, where the file is located, and how it is cataloged. The reverse can be obtained if only the adverse party is known and the client's name is needed. • Active and inactive files should be stored separately. The failure to distinguish between active, inactive, and dead files is one of 134/Arkansas Lawyer/July 1980

the main causes of filing control problems, crowded files, and filing errors. Active files concern ongoing, present matters. Inactive files are those in suspended animation oron hold (i.e.,litigation files awaiting the appeal period to lapse). Dead files are those of settled, completed or aborted matters. Many law firms keep, within their active files, ones which have received no attention for the last five or ten years. There is no reason to keep these files as costly, useless tenants in regularly used office space. During the first twelve months after a case or matter is closed, the file should be located in a separate area within or outside the file room which is reserved for inactive files. The file is still accessible, but it is out of the way of current files which must be used regularly. This separation of files involves less chance for misfiling. When all the work on a file for an non-continuing client is completed, the frequency of its being requested deminishes until at the end of twelve months there is a less than one percent chance that it will ever be needed again. After the tweive month period has elapsed, the file can leave the holding area and can safely be transferred to a storage area either within the office or in a warehouse. Microfilming is another possible method of dealing with closed files. In the past few years, the cost of microfilming has decreased to the point where many firms consider it to be a viable alternative to warehousing. • Most retention problems can be solved by a file retention schedule. A file retention schedule outlines the types of files and documents within the firm's various areas of practice, and how these files should be stripped, stored, and destroyed. The schedule lists: a) all the types of general cases that the firm handles, b) what will activate the closing of files, c) what papers may be returned to the client, d) what papers may safely be destroyed, e) how long the file should be retained in the holding area and in the storage area, f) what material should be retained indefinitely, g) what material, if any, is a matter of public record. It should be formulated in accordance with: the specific requirements of the firm and the nature of its practice, statutory requirements, regulations of local, state, and federal government agencies, the availability of copies in

the public record, and the nature and frequency of storage reference. • Every time a file is taken from the file room, a file removal form should be prepared. Even if the file is only removed "for a few minutes" there should still be a form on its removal. "A few minutes" have a way of becoming a few days, and by that time, someone else needs the file and it cannot be located. This form lists the file title, file number, the name of the person using the file, the date of its removal, and the date of its return. • Whenever an item is removed from a file any reason, a document removal memo must be completed. Even if you intend to replace the item tomorrow, someone else may need the file today and you may not be around to indicate that an important document is missing. Consequently, a decision might be made that was based on inadequate information-a situation that may invite disaster.

Summary In summary, the law firm must recognize the vital nature of the firm's files and the importance of having a centralized filing system. One person should be assigned primary responsibility for maintaining the file system, but every person in the firm should be well-acquainted with the system and be able to retrieve materials when necessary. Client files should be organized by a system of assigned numbers to avoid confusing clients with similar names. These assigned numbers must be cross referenced by client and adverse party. This cross reference system serves the function of locating client files and providing a double-check on possible conflicts of interest. Overall, the most important step in creating an efficient filing system is to standardize procedures so that staff personnel can automatically set up new case files and strip and move inactive files to a holding area without constant supervision by the attorneys in the firm. The new business memo the cross reference cards, file removal form, and the document removal memo will ensure that you have standardized information handling and processing for every client.

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CONTEXT By

W.

Christopher Barrier

MEMBERS OF THE CLUB There is a fraternal quality to the practice of law that you begin to sense even in law school. Members of the brotherhood of the bar share common interests and experiences, even when their practices vary immensely. Consequently, there is almost always an air of congeniality and easy familiarity among lawyers when they get together, whether its slapping backs at the Annual Meeting in Hot Springs or swapping yarns on docket day in Yellville. This shared altitude also influences the way law is practiced. With the exception of some towns where the bar is factionalized (usually along family, social and/or political lines), the practice in Arkansas appears to be characterized by camaraderie and cooperation. Depositions are set by agreement, not notice, and extensions of time to plead are granted by a handshake, without a court order. This clubby atmosphere has, in the past, been further reinforced by two other common characteristics: the overwhelming majority of Arkansas lawyers have been (and still are) male and white. While the bar is somewhat more integrated, by race and gender, than medicine and dentistry, it is of some significance that the Executive Council of the Arkansas Bar Association remains all-white, all-male. (Lest we feel too self-conscious, the American Bar Association, regarded as perhaps more progressive than the bar at large, is in the same situation.) NOTHING NEW. .. Of course, there have been female lawyers and black lawyers for over thirty years. However, they have remained largely outside the club, for several reasons. Black lawyers have had an almost exclusively black clientele, which has resulted in largely personal practices, as opposed to business, insurance, tax or regulatory 136/Arkansas Lawyer/July 1980

work. Female lawyers have handled a disproportionate share of domestic relations cases and other family-related work. As a result, the contacts of both with other lawyers have been limited, and their membership in the fraternity has been on a different level than that of their white, male counterparts. Trends of the last twenty years seemed to reinforce these divisions. Female law school attendance actually dropped nation-wide in the 50's and early 60's. (One national law school graduated a class exclusively white and exclusively male as late as 1967. In 1970, only 2.8% of American lawyers were women.) And John Walker's integrated law firm broke up several years ago. STATISTICS AND IMPRESSIONS... However, the statistics seem to indicate otherwise (as do my own subjective observations). Female enrollment at UALR's law school has, in some recent classes, exceeded 50%, and nationally, it's at 30%. Virtually all of the older, larger firms in Pulaski County have female associates, as do firms in almost all the state's larger cities. (The higher incidence of hiring of females in Little Rock is probably due less to what the Gazette occasionally refers to as "the civilizing influence of central Arkansas" than to more prosaic factors: The Little Rock firms have the chance to hire females as law clerks, one of the better roads to a permanent job. And many of the female students already live in the area-they apply to Little Rock firms first. In fact, my recollection is that an established firm in at least one other Arkansas town, probably Batesville, beat Little Rock's firms in this respect.) WHO HAS CHANGED? .. Subjectively, my impression is that female lawyers themselves have changed considerably in the last

twenty years. Female lawyers in Arkansas in the 60's were likely to be solo practitioners, unmarried, with heavy domestic relations practices (usually representing wives), with offices not located in larger, newer office buildings. They also tended to be somewhat combative-plainly they couldn't be members of the club, so they didn't even try. Female lawyers in 1980, on the other hand, tend to share characteristics with their male counterparts. They've gone to the same schools. Like the males, a higher percentage of them have lawyer fathers. And although it is undeniably still harder for females to get jobs (they do have to have better grades, etc., to get the same jobs), law firms are beginning to look for the same things in female and male applicants: intelligence. a strong academic record, poise, attractiveness, personality, good connections, and/or experience. In Arkansas, female law graduates tend to be a little older than their male counterparts, largely because UALR enrolls a higher number of women who are going back to law school-after raising children, putting husbands through school, getting divorced, etc. (The age factor and perhaps stronger motivation may account for the fact that these women also make better grades.)

PLEASE! NO DIVORCE WORK! . .. These new female graduates appear to be avoiding domestic relations work and the shriller, tougher image of their predecessors. They seem to be handling the full range of practice, from tax to titles, although insurance defense work is apparently still a male domain. If few have become partners in major firms, few have been out of school long enough to do so. Time will tell whether elevation will be slower, (although several New York firms have faced EEOC


charges in this regard). I would guess not. The changes In the image and substance of female lawyers-from maverick to middle-of-the-road-have been due to internal and external influences. Thirty years ago it took tough, strong-willed women to compete with men, in law school and in practice, knowing club membership was not open. Hence, the women who went to law school then were different from their contemporaries training to be nurses, teachers or stewardesses. INTO THE MAINSTREAM... Now, women are more careerminded generally, and there is greater public acceptance of two career families. (Fortune magazine projects a sharp escalation of the trend In the 80's.) Hence, female law students tend to be more representative and mainstream. And there are simply more women lawyers-10% in 1979. Furthermore, at least partially as a result of the woman's movement and the higher Incidence of male lawyers whose wives work, male attitudes have changed. According to one lawyer at a major firm. their first female associate was hired after a discussion of the list of desirable characteristics noted above--and no mention of gender or of client reaction. Their next female associate was hired from a field of three summer law clerks-two male--after the same discussion, and no mention of "too many female lawyers". WHAT'S IT REALLY LIKE? .. But, what's it like to be a female lawyer in 1980 in Arkansas? There are still office jokes to grin and bear, and occasional gaffes. For example, several years ago, Hillary Rodham (lawyer, teacher, wife and mother) addressed the House of Delegates of the Arkansas Bar Association, seeking funds for the Legal Clinic at the FayetteVille law school. An opponent began his remarks by saying he would be for the proposal "if its merits matched the charm and beauty of its advocate". To her credit, Ms. Rodham smiled and went on answering questions. To their credit, the delegates groaned audibly at the inappropriateness of the remark. Then, too, at a bankruptcy hearing in Little Rock several weeks ago, a male lawyer for a creditor persisted in referring to debtor's counsel as "the lady lawyer", rather than by name. And, a female graduate who recently went into practice with her father in a small northeast Arkansas town was shocked

by his candid revelation that, if she had not been his own daughter, he would not have even thought about hiring a femaie. EXCEPTIONS, NOT THE RULE... However, an informal poll of recent female graduates indicates that these lapses represent the exceptions rather than the rule. When calling another lawyer who doesn't know you, says one, be prepared to identify yourself as "a lawyer with the Fidget firm" to avoid the assumption you are a secretary calling for a lawyer. Apparently, older judges tend to be a little patronizing. Otherwise, lawyers and judges seem to have taken the growing number of female lawyers in stride. When job-hunting, says another, be prepared for discreet questions about the likelihood of husband being transferred and plans for children. The same lawyer has also concluded that male and female applicants with equal qualIfications do compete equally in dealing with established firms-if both have strong records. The crunch comes with the average student. Male lawyers simply seem more inclined to

take a chance on the average male student with otherwise appealing qualities while females have to be strong in all areas to get hired. Client attitudes are more complex. Corporate clients, especially banks, are used to quotas, etc., and accept female lawyers. Some clients don't, but some actually prefer women lawyers. In any event, says one female in general practice, humor, self-assurance and candor are the best ways to relieve client uneasiness. The trick is to reconcile flexibility and dignity, and it's not always easy.

BLACK IS DIFFERENT... As they have already noticed, being a black lawyer is different, also for vared reasons. In terms of getting into and out of law school and into a job, blacks start out with several strikes against them. Most lawyers start from middle class backgrounds. There is simply a much smaller black middle ciass. And blacks now graduating have a significantly reduced chance of having a lawyer parent.

o

"Colonel, you do remember telling us to hire this year's top law graduate as an associate to work with you, don't you? .. " July 1980/Arkansas Lawyer/137


And those lawyer parents will usually practice in one or both of two areaspersonal and civil rights. Little general business practice. Hence, even a black lawyer with some experience has little chance of making a lateral move into an established firm (and not just in Arkansas). FACTS OF LIFE... As a fact of life, law schools in Arkansas have more white female students than blacks of either sex, and a much, much higher proportion of the white females get jobs in private practice with established firms. Government (state as well as federal) has helped break some ground in hiring, both of blacks and females. Federal judges, notably G. Thomas Eisele, have been willing to hire blacks and females as clerks, giving them marketable experience beyond formal education. INTEGRATED FIRMS... There are now several integrated civil rights law firms and one small integrated firm with a general, personal clientele (largely black, however). And, one major Little Rock firm has a black associate who is expected to follow a normal course of training, eventually specializing in insurance defense, labor, business or similar area of the firm's practice. Black secretaries are scarce, but increasingly common. But, getting such a job is still tough, especially with the growing number of law graduates. Several major firms in Little Rock and most over the state report that they have never had a single black applicant-apparently, the assumption is rejection. And, unlike the giant New York firms, Arkansas firms are still small enough that forcing your way in with an EEOC charge is unattractive-you would have to practice with the people you sued. GROWING ACCEPTANCE•.. However, once in practice-even solo or civil rights-there seems to be a growing acceptance of the black practitioner. Overt slights have subsided on the part of lawyers and judges. (To put the matter in perspective, barely twenty years ago a Pulaski County chancellor announced from the bench that he was disregarding a man's testimony because he was "just a nigger".) Some patronizing by older lawyers and judges lingers, but it is difficult to 138/Arkansas lawyer/July 1980

determine whether it stems from race or age. And plainly, the personal dynamics vary considerably with the size and location of the community. THE BOTTOM LINE... The bottom line for black graduates is still the same as for white femalesyou must be strong in every respect to even be considered. And, even then, being black is much tougher, judging from the numbers. Presumably, with the first black having been hired by what Bucky Ellis refers to as an "old line, legal reserve law firm", others will follow suit. However, judging from law school grades and bar exam results, blacks are still not as well-prepared for law school as whites. (If legal education and testing have a bias, it is middle-class, not racial, but the result is similar.) Hence, for sociological and economic reasons far too vast to be considered here, we should not expect to see a massive influx of black associates into white firms. OLD CLUB, NEW RULES... Membership in the club is opening up though. White male lawyers trade

"war stories" with black lawyers around the courthouse (maybe more than they do with white female lawyers). There is even some status in haVing female associates and vigorous competition for the best ones. This phenomenon has made the tough, divorce-handling loner among women lawyers an anachronism. However, it is my perception that a number of the more experienced "lady lawyers" welcome the new attitudes wholeheartedly and the resultant chance to let down their own guards a little. The broadening of membership has certainly not reduced the club's conviviality or sense of cooperation. Lawyers are even discovering that female associates can laugh at locker room jokes and hardly ever blush. At any1hing. However, perhaps we should not consider ourselves truly open until there are more black lawyers active in the Arkansas Bar Association than in the black lawyers association, and the Arkansas Association of Women Lawyers has trouble remembering why it was founded in the first place. ~

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LEGAL ECONOMICS By: Mary Ann Altman @1980 Altman & Weil, Inc. Ardmore, Pennsylvania

A TIMETABLE FOR AN OFFICE RELOCATION Most of the pressures before, and regrets following, any law office relocation are caused by the failure to plan within a proper timetable. A relocation timetable should provide a law firm with sufficient time for careful analysis of systems, growth patterns, and future equipment decisions, to allow thoughtful planning and attention to details. Without these elements, furniture may not be in place on the day of the move, accounting facilities may not be provided with the necessary wiring or ventilation for computerized equipment, or the telephone equipment may not fit in the room provided for it. Most serious of all, growth requirements may not have received proper consideration, and this inadequate planning may cause continuing construction or additional renovations after the initial move to new space. A suggested timetable for the major decisions which should be made by a medium-sized law firm, which is moving to existing office space in another building follows. The checklist may vary for those firms trying to renovate space which they occupy or for those which are preparing to build their own building. Larger firms will find that more time will have to be allocated between the first and second steps, and smaller firms may be able to speed up the entire process somewhat. If at all possible, however, one full year should be allowed for the planning process, even in the four or five lawyer firm.

made. Only with the most accurate growth projections can a firm be reasonably assured that it will not be faced with additional construction, or that it will not be out of expansion space immediately after it moves in. 2.

In addition to projecting existing kinds of personnel growth, possible future use of word processing/computer equipment, file expansion, library growth, expansion in new kinds of support personnel (paralegals, office managers, etc.) must be considered and included in the final growth projections.

3.

Using the growth projection, the firm should attempt to locate adequate space in a desirable office building at an affordable rental rate. An initial general commitment should be secured. The firm should receive a thorough explanation of the way in which the proposed landlord computes the amount of "usable" space he is offering to the law firm.

4.

STEP ONE-12 MONTHS PRIOR TO MOVING DATE 1.

The firm must first determine how much space it will require during the initial occupancy term and during any future option terms. To do this, past growth and current growth trends must be evaluated and intelligent projections must be 140/Arkansas Lawyer/July 1980

5.

The firm should consider employing a space expert or consultant to assist in planning, unless one of the lawyers is experienced in this specialized area and has the time to spare from his/her practice over the next twelve months. The costs of renovation should then be estimated. These costs may range from that required for a new coat of paint and new carpet, to complete gutting of the space and construction of new partitions, ceilings, and the redecoration of the offices.

Costs for office renovations may range from $20 to $55 per square foot, mainly depending on the amount of heating, ventilating, and air conditioning work required. 6.

Negotiations with the landlord must include how much of the costs of construction will be borne by him. Actually, the tenant will be paying for all renovation costs over the term of the lease, but having the landlord pick up the payments initially and amortize them in the rental figure will ease the initial financial burden on the firm.

7.

A complete, accurate copy of all permanent partitions, pipes, water sources, columns, and the like must be secured. If the landlord cannot furnish such a drawing, hire an engineer or an architect to prepare one.

8.

A maximum, reasonable budget for the moving project must be adopted, and available financing methods investigated.

STEP TWQ-11 MONTHS PRIOR TO MOVING DATE 1.

If it is anticipated that the planned expansion space will need to be occupied by subtenants, begin a search for subtenants.

2.

Analyze individual office size requirements, clerical space needs, and special room requirements, i.e., lunch rooms, file storage areas, conference rooms, etc.

3.

Determine the style which the offices shOUld project to visitors, i.e., "first class," or a reasona-


(I) specific details in such areas as library, kitchen facilities, etc.

bly attractive functional office scheme. 4.

5.

Review all current office systems for handling: (a) files, (b) word processing and office typing, (c) accounting, (d) timekeeping and billing, and (e) telephone, to determine whether future changes in these areas will be required and should be considered in the planning of the space. It is important that space not be planned to house old closed files and that other office systems be reviewed and updated so that the layout which is designated meets work flow requirements of the practice. Finalize a program for development, including all features the firm would like to have in the final layout, realizing that some of these features may have to be changed or cut because of budget or space limitations.

2.

Begin sending initial furniture orders to vendors to assure delivery in time for the move. Arrange for storage locally for any furniture received prior to the moving date. (Note: some vendors require even more advance notice.)

3.

Notify the phone company of the planned move and get cost estimates for movement of telephone equipment and instruments.

4.

If necessary, have engineering drawings done, architectural construction drawings prepared, and construction specifications developed by an architect. In some cases a trusted contractor can do these himself, but it is wise to provide a system of checks and balances through the use of an independent architect.

5.

STEP THREE-9 MONTHS PRIOR TO MOVE

1.

2.

3.

4.

Begin to develop, or have an outside specialist develop, schematic layout drawings for the space. These layouts should take into consideration all major portions of the program developed in Steps One and Two. By this time arrangements with the landlord should be finalized and final lease agreements signed, including all tenant specifications and allocations of construction costs between the tenant and the landlord. Review in more detail the projected costs for the total renovation package and begin to cut out items as needed to meet the budget. Between Step Three and Four, refinements in the schematic layouts will take place.

STEP FOUR~ MONTHS PRIOR TO MOVE

1.

Agree on final layouts for space and plans for: (a) heating, ventilating, and air conditioning, (b) electrical outlets, (c) telephone outlets, (d) furniture locations, (e) ceiling lighting locations, and

Send final sets of plans to contractors for construction bids or estimates.

STEP FIVE-S MONTHS PRIOR TO MOVE

1. Receive bids and negotiate with contractor. 2.

Review the budget again.

3.

Finalize carpet orders and be sure that orders for special building materials or finishes, which may take a long time, are sent.

4. 5.

Order window coverings or drapes. Be sure that all furniture orders have been placed and acknowledged with expected delivery dates.

STEP SIX-3 MONTHS PRIOR TO MOVE 1. Begin to clean out office items which should not be moved. 2. Select, hire and schedule moving company; get estimate of cost for moving. 3. Check and revise budget again. 4. Arrange for disposal of furniture and equipment not being moved. Some can be sold or traded in, some may be given to charities and some will have to be junked..

5.

Begin preparation of change of address announcements. STEP SEVEN-1 MONTH PRIOR TO MOVE 1. Plan for moving "teams" of employees. This will limit the number of persons on the floor at the time of the move. Nonteam members should arrive only after the movers have left. 2.

Recheck with moving company on packing requirements, times for moving, crews to be assigned, methods for marking furniture to be relocated, etc.

3.

Schedule bUilding elevators to assure speedy service during the move. Also, be sure all items to be moved in will fit in or on the freight elevators. Recheck with phone company on moving commitment to assure prompt moving of phone equipment and non-interruption of service. See whether concurrent service in your new and old locations can be set up on moving day.

4.

5.

Engage cleaning crew to remove packing and clean up damage after the move, if needed. 6. Engage security guards to watch furniture and equipment while it is sitting outside the new building waiting to be moved in, if necessary.

7.

Arrange for excess moving insurance, if needed.

8.

Order change of address notices from a printer.

STEP EIGHT-1 WEEK PRIOR TO MOVING DAY

1.

Mail change of address notices to insurance companies, banks, regular vendors of supplies, books and magazines; send out client announcements.

2.

Review all plans with moving teams and moving company representatives.

If these general guideline dates and steps are followed, a law firm's moving day should be relatively routine. Friday evening is a favorite time to begin a move, since it gives a firm two days for moving and clean-up, enabling a firm to open for business on Monday morning with the least interruption of services. Good luck........ July 1980/Arkansas Lawyer/141


In memoriam He that keepeth the law, happy is he. Proverbs 29: 18

Henry B. Means Former Circuit Judge Henry B. Means, Jr. aged 50, of Malvern, died Tuesday, January 15, 1980. He retired January 1, 1979, after serving 20 years as circuit judge, a position once held by his father. After serving as prosecuting attomey for four years, Mr. Means won his first judicial term in 1959, and never drew an opponent after that race. Mr. Means was born at Malvem and practiced law there. He was a World War II veteran, a trustee of First Presby1e路 rian Church, a member of the Board of Directors of First Federal SaVings and Loan of Hot Springs County, a Mason and a member of the Arkansas Bar Association. Survivors include his wife, Mrs. Mary D. Brady Means, a son, a daughter two brothers, two sisters and live grandchildren.

Frank H. Cox, Sr. Little Rock lawyer Frank Holmes Cox, Sr., aged 64, died January 29, 1980. He had been in private law practice since 1951 and was a former chairman of the Uttle Rock Planning Commission. He also was attomey for the Little Rock Sewer Committee. Mr. Cox was the son of James Frank and Mary Alice Perkins Cox. He graduated from Uttte Rock Junior College and received a law degree in 1937 from the Arkansas Law School. He was assistant librarian of the Arkansas Supreme Court from 1937 to 1940 and was deputy court clerk from 1940 to 1942. He served in the Army infantry from 1942 to 1946, and was discharged as a captain. From 1946 to 1951 he was an assistant city attomey at Little Rock. He taught municipal law at the Arkansas Law School from 1950 to 1960. Mr. Cox served on the Little Rock Planning Commission from 1960 to 1969 and was chairman from 1964 to 1966. He was a member of the Arkansas Bar Association, the American Bar Association and the Country Club of Uttle Rock, and was a 32d-degree Mason and a member of the Scimitar Shrine Temple. Mr. Cox was a charter member of

142iArkansas LawyeriJuly 1980

the St. Mark's Episcopal Church and was a sunday school teacher, clerk of the vestry, lay reader, president of the Markmen men's group and a delegate to the Diocesan convention. Survivors are his wife, Mrs. Virginia Bethell Cox, a son Frank H. Cox, Jr. of Little Rock; a daughter Mrs. Mary Keatts Cox McKinney of Little Rock; a sister Mrs. A. T. McMillin of Hot Springs, and two grandchildren.

Wayne W. Owen Wayne Wray Owen, aged 71, of Uttte Rock, died January

20,1980. Mr. Owen had practiced law 43 years before his retirement. He was recognized as an ou1standing trial lawyer, specializing in personal injury, wage and hour, and land condemnation cases. Bom in Conway, Mr. Owen was the son of the late William Blackstone and OJie Ellen Wray Owen. He attended Arkansas State Teachers College where he was quarterback of the football team, and the University of Missouri School of Law, and was admitted to practice law in both Arkansas and Missouri. During his career, Mr. Owen helped train many young lawyers, including state Senator Max Howell, Dale Price, Judge Dean Morley, Jack Young, Jim Rhodes and federal Bankruptcy Referee Charles Baker. Mr. Owen was a member of the Pulaski County and American Bar Associations and was a Fellow in the Arkansas Bar Foundation. He was also a member of the Accacia Fratemity, Newark Masonic Lodge 248, Cathedral Masonic Lodge 757, the Arkansas Consistory and the Scimitar Shrine Temple. He received a 50 year Masonic membership pen in December 1979. He was a pilot instructor during World War II and was a member of the Quiet Birdmen, an association of pilots. He is survived by two sons, William Leonard Owen and Paul Erwin Owen of Uttle Rock; a sister, Mrs. Dorothy Mae Aoyd of Conway; three brothers, Hugh Owen of Malvern and G. Edd Owen and W. B. Owen Jr. of Conway, and a granddaughter.


David W. Peel David W. Peel, a longtime Bentonville resident, died December 29, at the age 01 88. Mr. Peel was an attorney, politician and civic leader. He served four terms as mayor 01 Bentonville. Mr. Peel spent lour years in Little Rock where he organized and started the State Worker's Compensation Commission. He served on the wellare board lor many years, and is credited with the lounding 01 the American Legion Club in Bentonville in 1919 and the Rotary Club.

Russell C. Roberts Former Circuit Judge Russell C. Roberts, aged 69, 01 Conway, died January 17, 1980. Judge Roberts, who was born in a log cabin near Enola (in Faulkner County) on April 5, 1910, was known statewide during his 12 years as circuit judge 01 the old Filth Judicial District for being a quite colorful personality. Judge Roberts opened a law practice in Conway in 1934, and later was elected to the State House 01 Representatives. In 1966, he was appointed to the second judgeship in the Filth District by Governor Orval E. Faubus. Two years later, when the interim appointment was up, Judge Roberts ran and was elected. He served continuously until he retired in 1978, when his health began to decline. He is survived by his wife, Violet lee Trotten Rogers, a son, two daughters, and eight grandchildren.

Verlln Edward Upton Former Rector City Attorney Verlin Edward Upton, 85, died Tuesday, March 11, at Community Methodist Hospital in ParagoUld. He was a native 01 Philippi, West Virginia, and came to Arkansas in 1924. Mr. Upton practiced law lor one year in Paragould belore coming to Rector in 1925. He was the deputy prosecuting attorney Irom 1939 to 1942 and served as city attorney 01 Rector from 1926 to 1971. He also acted as local counsel lor the Cotton Belt Railroad, ARK-Mo Power Company, The Bank 01 Rector and Central Clay Drainage District. Mr. Upton was a member 01 the Methodist Church 01 Rector. He was also a member 01 the American legion, Chamber of Commerce, Veterans 01 World War I, American Trial lawyers Association, American Bar Association, Arkansas Bar Association, Northeast Arkansas Bar and the Greene and Clay County Bar Associations. He is surviVed by a son, Verlin Upton, Jr. 01 Staten Island, N.Y.; a stepdaughter, Mrs. Neita Watson 01 Kerrville, Texas; a stepson, Jerry Stewart 01 Pensacola, Fla; 11 grandchildren, and 17 great-grandchildren.

James Roy Calhoun James Roy Calhoun, aged 80, 01 little Rock, died Sunday, January 27, 1980. He was a retired lawyer who had worked lor the FBI and the state Worker's Compensation Commission. He was a member 01 the Association 01 Retired FBI Agents and had been a Mason lor 50 years. He was a member olthe Pulaski Heights United Methodist Church. Survivors are his wile, Mrs. Alberta Young Calhoun and two sons, John Calhoun 01 Galesburg, III., and James Calhoun, Jr. 01 Norfork, Va.

Eugene Rolfe Warren Eugene Rolfe Warren, a prominent little Rock lawyer, died at the age 01 69 on March 16, 1980. Mr. Warren was a lounder 01 Pulaski Bank and Trust Company, and general counsel lor the Arkansas Medical Society and the Arkansas Education Association. He was a native 01 Forrest City, and an active participant in many of the state's most important legal battles during the last 25 years. He drew national attention in the mid-1960's when he helped the Education Association and a lormer Central High School teacher challenge the constitutionality 01 the 1928 state law which lorbid the teaching 01 the theory 01 evolution in public schools. Mr. Warren was born September 29, 1910 and was educated in Forrest City public SChools. In 1933, he graduated with a law degree Irom the University 01 Arkansas at FayetteVille. He practiced private law with the Robinson, House and Warren firm at little Rock belore entering the United States Navy in 1944 as a gunnery ollicer in World War II. In 1946, Mr. Warren lormed a partnership with Carl E. Bailey, a lormer Arkansas governor, and in 1950 joined with Bruce T. Bullion until he was elected a Pulaski County Chancellor in 19n. He then became senior counsel with the Cearley, Gitchel, Bogard, Mitchell and Bryant firm, a position he held at the time 01 his death. He was also attorney lor the state Medical and Pharmacy Boards. Mr. Warren was a member 01 the Arkansas Bar Association, American Bar Association and the American law Institute, the American Medical Association, Arkansas Education Association, the National Health lawyers Association, the American Society 01 law and Medicine, the National Association 01 Teacher Attorneys and the National Association on legal Problems 01 Education. He was first president 01 the Arkansas Junior Bar Association and he served on the Board 01 Directors at the Pulaski Bank and Trust Company. Mr. Warren, a member 01 St. Mark's Episcopal Church, served during 1957 and 1958 as president 01 the Episcopal Churchmen 01 Arkansas. His hobby was cultivating camellias, and he was past president 01 the Central Arkansas Camellia Society. Mr. Warren is survived by his wile, Mrs. Betty Selph Warren; one daughter, a stepdaughter, and lour grandchildren.

"

July 1980/Arkansas Lawyer/l43


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IIII

JURIS DICTUM By: Jean Langford Research Coordinator, Arkansas Judicial Department

The retirements of Chief Justice Carleton Harris and Associate Justice Conley Byrd of the Arkansas Supreme Court and C. R. Huie, Executive Secretary of the Arkansas Judicial Department, signal the passing of an era in the Arkansas Court system. Chief Justice Carleton Harris, who retired effective January 2, 1980, due to ill health, had the longest tenure of a chief justice in Arkansas history. Harris, who assumed the duties of Chief Justice on January 1, 1957, served twenty-three years and, at the time of his retirement, was the senior chief justice in years of service among the 51 chief justices on the courts of last resort throughout the United States. Chief Justice Harris, a native of Pine Bluff, received his law degree from Cumberland University at Lebanon, Tennessee, and was licensed to practice law in Arkansas in 1932. Harris served three terms as a State Representative from Jefferson County, one term as Prosecuting Attorney of the 11 th Judicial Circuit, and eight years as Chancery Judge of the 4th Chancery Circuit, before his elevation to the Arkansas Supreme Court. A distinguished jurist, Chief Justice Harris has been the recipient of numerous awards and honors, but two of these deserve special mention. In 1966, Harris was elected National Chairman of the Conference of Chief Justices, which is composed of the Chief Justices of the 50 states and Puerto Rico. He has been the only Justice from Arkansas to serve in that position. Chief Justice Harris is the only judge to receive the "Outstanding Lawyer Award," given him by the Arkansas Bar Association and Arkansas Bar Foundation in 1973-1974. 144/Arkansas Lawyer/July 1980

During Harris' tenure and under his leadership as Chief Justice of the Arkansas Supreme Court, sweeping changes have effected the Arkansas Court system. In 1965, a partial unification of the Arkansas Court system occurred with the passage of Act 496 of 1965. That Act designated the Chief Justice as administrative head of the entire court system and the administrative director of the Arkansas Judicial Department, thereby increasing Harris' duties as Chief Justice. The work of the Supreme Court's Committee on Jury Instructions resulted in the publication of AMI that year as well. In 1969, the Supreme Court created the Committee on Professional Conduct to investigate alleged misconduct complaints against Arkansas attorneys. The Supreme Court in its continuing concern over assuring legal representation of indigents promulgated Model Student Practice rules in 1970 to allow supervised senior law students to represent indigents (for no compensation) in criminal and civil cases. 1971 saw the creation of the Arkansas Criminal Code Revision Commission. Criminal procedure rules I and II for all courts in the state were promulgated by the court to give precedence to criminal felony cases over other matters. The office of Criminal Justice Coordinator was established by the Supreme Court in 1973 to provide administrative and research relief to the Supreme Court for all criminal post-conviction relief proceedings before the court for consideration. America's Bicentennial Year, 1976, was celebrated in Arkansas with the dedication of the new Supreme Courtroom, providing the court with its first

"permanent" courtroom since 1957. Arkansas' new Criminal Code and Rules of Criminal Procedure became effective on January 1 of that year as a result of the efforts of the Criminal Code Revision Commission. As one method to deal with its growing workload, the Supreme Court began sitting in divisions in September of 1976. In December the Supreme Court established the Judicial Planning Committee to engage in both long and short range planning for improving the Arkansas Judicial system, marking the first attempt at formalized planning for the entire court system. In 1978, Arkansas voters passed Constitutional Amendment 58 to provide for the establishment of the Court of Appeals. Chief Justice Harris and the Supreme Court, as well as others, were instrumental in notitying Arkansas' voters of the pressing need for the new court to relieve the burgeoning caseload of the Supreme Court. The Judicial Ethics Committee and the Judicial Qualifications Commission were established to investigate alleged misconduct charges against Arkansas jUdges. In 1978 the Judicial Planning Committee established the Judicial Article Task Force to study the present court system and prepare a proposed judicial article for presentation to the State's Constitutional Convention. In the final full year of Harris' service, 1979, the Court of Appeals became operational. The Supreme Court promulgated RUle 29 outlining the respective jurisdictions of the Supreme Court and Court of Appeals. Arkansas' new Rules of Civil Procedure with Rules of Procedure for Appellate and Inferior Courts were promulgated by

,


the Court. Arkansas Model Criminal Instructions were also published by the Court's AMCI Committee to augment the 1976 Criminal Code. Effective January 1 was the realignment of Arkansas' Judicial Circuits. For the first time in the history of the court system, Chancery Court Circuits are now coterminous with Judicial Court Circuits. The Supreme Court established the Unauthorized Practice of Law Committee this past year as well. These significant accomplishments may be attributed to the dedicated commitment of Chief Justice Harris and his fellow members on the Supreme Court to the administration of justice in Arkansas. Harris' contributions to the people of Arkansas throughout his career in public service have been outstanding and will not fade through the passage of time. No finer tribute can be paid to Chief Justice Harris than that stated by his feliow jurist, Associate Justice Frank Holt, who called Harris' retirement after 23 years "a distinct loss to the judiciary and the people of Arkansas." Associate Justice Conley Byrd served thirteen years on the Arkansas Supreme Court before his retirement on January 2, 1980, due to ill health. Justice Byrd was born in Poughkeepsie, Arkansas, on January 14, 1925. In 1943, Justice Byrd graduated from Poughkeepsie High School as the Valedictorian of his class. Byrd served in the U.S. Navy from 1943-1945, and attended Arkansas State College in Jonesboro and Arkansas State Teachers College in Conway following his military service. In 1950, he received his L.L.B. from the University of Arkansas School of Law, and was subsequently admitted to the practice of law in Arkansas. After practicing law in Evening Shade for a year, Byrd moved to Washington, D.C., and assumed a position in the Labor Department, followed by sometime with the company of Babcock and Wilcox. In 1952 Byrd served as Assistant Attorney for the Revenue Department under Governor Sid McMath and then set up practice in Pine Bluff. From 1954 to 1960, he served as Reporter for the Arkansas Supreme Court. Byrd then resumed his law practice and in 1963 accepted the position of Law Clerk to the late Gordon Young, Federai District Court JUdge. FollOWing his clerking service, he set up practice in Little Rock

with partners William R. Butler and Omar Greene. In 1966, Byrd ran for a position on the Arkansas Supreme Court, was elected, and began serving on January 1, 1967. Associate Justice Byrd served on the State-Federal Judicial Council in 1975 and 1976. Justice Byrd is a member of the American, Arkansas, and Pulaski County Bar Associations and has been an active member of the Church of Christ in Little Rock and Redfield. He and his wife, the former Frances Hardin of Redfield, have four children. Justice Byrd's immediate plans on his retirement are to recuperate from the disabilities he suffers resulting from traffic accident injuries which forced him to take disability retirement. As Associate Justice John I. Purtle stated in his tribute to Justice Byrd, "Most people do not realize that he dissents more than any member of the court. Whether he dissents, concurs, or writes the majority opinion, he does so based solely upon his conviction and his understanding of the law . . . He repeatedly proved that he knew what he was talking about when he entered upon the discussion of a case ... We will indeed miss the service of an outstanding Justice." Tributes were paid to Justices Harris and Byrd and Executive Secretary Huie at a special ceremony of the Arkansas Supreme Court on January 3, 1980. The Supreme Court Justices each commented on the accomplishments and abilities of the three retirants. The January 3rd ceremony was the occasion of the swearing-in of Justice John A. Fogleman as Chief Justice and Richard L. Mays and John F. Stroud, Jr., as Associate Justices. Chief Justice Fogleman had previousiy served on the court for thirteen years as Associate Justice. A native of Marion, Arkansas, Chief Justice Fogieman is a graduate of the University of Arkansas and the University of Memphis Law School (now Memphis State University). He has served as Deputy Circuit Court Clerk and Deputy Prosecuting Attorney for Crittenden County and as a member of the State Board of Law Examiners, Arkansas Judiciary Commission, the Arkansas Constitutional Revision Study Commission (1968), and the Arkansas Criminal Code Revision Commission.

In addition, Chief Justice Fogleman has served on the Executive Committee of the State Judicial Council and on the State-Federal Judicial Council. He has also served as President of the Arkansas Bar Association and as a fellow in the American College of Trial Lawyers. Chief Justice Fogleman will serve in his appointed term until December 31, 1980. Richard L. Mays was appointed to the position on the court created by the retirement of Associate Justice Conley Byrd. A graduate of Howard University at Washington and the University of Arkansas Law School, Mays has served as a Deputy Prosecuting Attorney and two terms in the early 1970's as a state representative. Justice Mays has engaged in a private practice in Little Rock, has worked as an Earl Warren Fellow with the NAACP Legal Defense Fund at New York and in the old civil rights firm of Walker, Kaplan and Mays at Little Rock and once served as a special circuit judge. Justice Mays' contributions to community affairs include service with the Urban League of Greater Little Rock, the Legal Aid Bureau of Central Arkansas, and the Arkansas Council on Human Relations. Justice Mays, a lawyer with a deep commitment to the constitutional issues of civil rights and equity, will make an outstanding addition to the Arkansas Supreme Court. Justice Mays will serve on the high court until December 31, 1980. The elevation of Associate Justice John A. Fogleman to the position of Chief Justice left a second vacancy on the Supreme Court. Appointed to serve in ihat position until December 31, 1980, is Texarkana attorney John F. Stroud, Jr. Justice Stroud, who grew up in Little Rock, received his bachelor's and law degrees from the University of Arkansas at Fayetteville. Stroud is a former City Attorney at Texarkana and spent 18 months on the staff of the late United States Senator John L. McClellan. Engaged in private practice in Texarkana, Stroud has served as Chairman of the Executive Council of the Arkansas Bar Association. He is past president of the Texarkana Chamber of Commerce and Rotary Club and has engaged in numerous civic activities. Justice Stroud has been characterized as a conservative, and will be a stellar addition to the highest court in the state.

f......

July 1980/Arkansas Lawyer/145


ARKANSAS BAR ASSOCIATION 82D ANNUAL MEETING "LAW OFFICE ECONOMICS AND MANAGEMENT" JUNE 4-7, 1980 ARLINGTON HOTEL HOT SPRINGS, ARKANSAS


PROGRAM CONCURRENT "ECONOMICS OF LAW PRACTICE" SEMINARS SOME PROPOSED DISCUSSION TOPICS 1. EQUIPMENT Automatic typewriters Computers Combining the above Dictation 2. PERSONNEL Legal assistants Word processors Secretaries Team Concept Training 3. TIMEKEEPING AND BILLING Procedures. Hourly rates v. fixed fee Billing for nonlawyers Statements Expenses

4. FINANCIAL CONTROLS Budget Distribution 5. SHARING PROFITS Formulas Subjective approach 6. WORK FLOW AND SYSTEMS 7. ASSOCIATES Recruiting Training Compensating 8. PARTNERSHIP OR P.A.

9. PLANNING FOR THE FUTURE Growth Retirement 10. CALENDAR AND DOCKET 11. LIBRARY 12. ADVERTISING 13. INSURANCE 14. PHYSICAL PLANT Own or lease Work area v. office 15. QUALITY OF LIFE

DISCUSSION GROUP I (for solo practitioner, and members of smaller law firms-3 lawyers or fewer) GROUP LEADER: MODERATOR:

PANELISTS:

JAMES E. BRILL-Editor, Texas Probate Systems; ABA Economics of Law Practice Section officer; twice recipient of Award of Merit from State Bar of Texas. SAMUEL S. SMITH-Chairman, ABA Economics of Law Practice Section; Managing Officer, Miami Beach law firm; Past Chairman, Florida Bar's Economics of Law Practice Committee WILLIAM I. PREWETI JAMES D. CYPERT Arkansas WILLIAM S. ARNOLD Practitioners

DISCUSSION GROUP II (for members of larger law firms- 4 lawyers or more) GROUP LEADER:

MODERATOR: PANELISTS:

ALBERT L. MOSES-Noted legal author and lecturer on management practices and office equipment; Chairman, Committee on Word Processing, ABA Economics of Law Practice Section. RICHARD A. WILLIAMS-First Chairman, ABA Economics of Law Practice Section; Editor of Legal Economics; frequent lecturer at tax institutes. JOHN G. L1LE, III Arkansas PHILIP K. LYON JAMES E. WEST Practitioners

IMPORTANT: Attend the Discussion Group of your interest. Come to find solutions to the problems "nagging" you at the office. Be prepared to ask "the experts" related questions.

ALSO "ARKANSAS LAW OFFICE MANUAL" by Author Fran Shellenberger, regular Legal Economics columnist for The Arkansas Lawyer and other legal publications.This fine handbook-published in April, 1980 as a part of the continuing systems effort of the Arkansas Bar Association-will be made available to registrants for $15 (cost). Otherwise, the price will be $30. The author will discuss the use of the manual. Little Rock lawyer George Plastiras will discuss "Professional Incorporation, Retirement Plans, and Trends Towards Partnership of Professional Corporations". Author Ralph G. Brodie of "The Uitimate Law Office TM" series that adapts MIL systems to display word processing equipment, will talk on "Into the Computer Age with the 'Total System' for Document Production-MIL Word Processing." Dean Emeritus Robert A. Leflar will review the "New Arkansas Constitution." July 1980/Arkansas Lawyer/147


QUESTIONS AND ANSWERS ABOUT THE PERFORMANCE OF MUSIC UNDER THE NEW COPYRIGHT LAW by Jack C. Goldstein INTRODUCTION After more than twenty years of study, public hearings, and debate,' a new federal copyright law was enacted in 1976' and became effective on January 1, 1978.' The 1976 Act was the first general revision of the United States copyright law since the Copyright Act of 1909.' Long before it was superseded, the 1909 Act had become outmoded as a result of numerous technological advances which had had a profound impact upon various classes of copyrighted works, including musical compositions. Many developments and refinements-such as those in the recording, jukebox, radio, and television industries-had spawned vast new enterprises which not only thrived on the use of copyrighted music but also shifted the songwriter's economic interests. Even before 1976, royalties based upon the public performance of music had become the major source of income for the songwriter;' royalties on recordings had remained limited because of statutory compulsory licensing at 2 cents per recording;' and royalties on the sale of sheet music had dwindled with the decline of the sheet music industry.' The nondramatic performing rights in essentially all copyrighted music have been in the past, and are today, licensed in the United States through three organizations, each of which offers a different collection of music. The oldest of these licensing organizations, the American Society of Composers, Authors & Publishers, known by the acronym "ASCAP," was formed in 1914. Broadcast Music, Inc., known by its initials, "BMI," was not formed until 1939-40 but is today the largest of the three licensing organizations, at least insofar as the popularity of its repertoire is concerned. BMI and ASCAP are nonprofit organizations in that all of the license fees which they receive, less operating expenses and reserve, 148/Arkansas Lawyer/July 1980

are distributed to affiliated songwriters and music publishers. The third organization, SESAC, Inc., formerly the Society of European Stage Authors & Composers, licenses a smaller, more specialized collection of music compared with the collections licensed by either BMI or ASCAP. The copyright statute expressly recognizes ASCAP, BMI, and SESAC as organizations which license the nondramatic pUblic performance of musical works.' Since BMI's and ASCAP's vast repertoires include inter alia around 65% and 35%, respectively, of the top 100 songs in recent years according to the musical trade pUblications such as Bill board, most establishments must be licensed by both BMI and ASCAP to avoid wholesale copyright infringement. BMI and ASCAP grant nondiscriminatory licenses at modest fees which depend on such things as the licensee's annual entertainment costs, the room capacity, the number of days (or nights) per week that the establishment is open, and whether there is a cover charge. The typical BMI or ASCAP license provides that, upon the payment of an annual fee, the licensee is given permission to make an unlimited number of nondramatic performances of all of the licensing organization's music, without the licensee's having to keep any records as to the actual music used. Thus, BMI and ASCAP serve as conduits between the masses of songwriters and music users for the exchange of performing rights and license fees. The licensing organizations are clearinghouses which make it feasible not only for the typical music user to obtain permission to perform all of the copyrighted music he or she actually uses but also for the typical songwriter to deal with the multitude of places where his or her music is being used. If a music user refuses to take a license from either BMI or ASCAP, the music user will be "logged," or monitored, to garner reliable, accessible,

and admissible evidence that infringing performances are occurring. An infringing musi6 user may be sued in federal court' and subjected to substantial liability in the form of statutory damages," which may be far greater than the license fees would have been." BM I's and ASCAP's vigorous copyright policing and enforcement procedures provide an additional, compelling incentive for music users to become licensed instead of permitting unlicensed, infringing performances to continue. It is by this system that the typical songwriter makes the major portion of his or her living from performance royalties-and has done so for many years. Cognizant of this practice, Congress passed the 1976 Act, which expanded the copyright owner's public performance right with respect to copyrighted music in the following three ways: (1) by expressly defining "perform" and "perform publicly" more broadly than those terms had previously been construed by the courts," (2) by eliminating the limitation that an infringing pUblic performance must be "for profit,"" and (3) by eliminating the so-called "jukebox exemption."" In addition, the duration of copyright protection was enlarged from (a) a 28year initial term plus a 28-year renewal term to (b) life of the author plus 50 years as a general rule." Particularly in view of the new copyright law, the follOWing questions and answers may be helpful to music users and to attorneys who represent music users. In some instances, the questions and answers relate to unchanged aspects of the old copyright law of which such persons may not be fUlly aware.

.J


IN WHAT KINDS OF PLACES DOES THE PERFORMANCE OF COPYRIGHTED MUSIC, WITHOUT THE COPYRIGHT OWNER'S PERMISSION, CONSTITUTE AN INFRINGEMENT? Under the 1909 Act, the owner of the copyright in a musical composition was granted the exclusive right to perform the musical composition "publicly for profit."" In other words, under the old law, the public performance for profit of copyrighted music-if done without a license (that is, without the copyright owner's permission)---{;onstituted an infringement. However, since the 1909 Act did not expressly define "for profit," the courts frequentiy had to construe that limitation in deciding what was, and what was not, a copyright infringement under the old law. In 1917, two cases involving the unlicensed performance of copyrighted music were simultaneously decided in a single opinion by the Supreme Court." Live musical performances in those cases took place in a restaurant and in a hotel dining room. The proprietors of the restaurant and hotel argued that the performances were not "for profit" because there had been no charge for admission to hearthe music. The Supreme Court rejected that argument, noting that the music was part of a total price which the pUblic paid through increased prices of the food, and that the proprietors' purpose in employing the music was profit. SUbsequent to the restaurant and hotel dining room cases, copyright infringement suits were successfUlly maintained on the basis of musical performances at theaters," dance pavilions," dance halls,'路 roller skating

rinks," night clubs," cabarets," and raceways." Eventually, it became well established, even under the old law, that the unlicensed performance of copyrighted music at virtually any kind of place of business constituted an infringement. Because Congress was aware that the line between commercial and nonprofit organizations was becoming increasingly difficult to draw and that many nonprofit organizations were being highly subsidized and were capable of paying royalties," the 1976 Act eliminated the "for profit" limitation in favor of a limited list of exempt performances." Thus, under the new law, any public performance of copyrighted music, except one that has been either specifically exempted by the statute or licensed, constitutes an infringement; and, as will be explained below, "public" really means "semipublic."

ARE "PRIVATE" CLUBS AND OTHER PLACES WHICH ARE NOT Or>EN TO THE PUBLIC AT LARGE EXEMPT FROM THE COPYRIGHT LAW? No, semipublic places are not exempt from the copyright law. To the contrary, the new law is perfectly clear that performances at clubs, lodges, factories, summer camps, schools, and the like are clearly subject to copyright control. As previously mentioned, the 1909 Act granted the exciusive right to perform copyrighted music "publicly for

profit."" Since the term "publicly," like "for profit," was not expressly defined in the 1909 Act, the courts also had to construe that term in the context of copyright infringement cases.

With respect to so-called "private" clubs, the courts uniformly held that musicai performances in a club might be "public" performances insofar as the federal copyright law was concerned even though the club was considered "private" for other purposes, such as state liquor laws. Thus, even under the 1909 Act, "public" performances of copyrighted music were held to have occurred in so-called "private" clubs in Massachusetts," Texas," Minnesota,'路 and Oklahoma."

A significantly broader scope of protection exists under the 1976 Actwhich grants to the copyright owner the exclusive right to perform copyrighted music publicly"--because an express definition in the statute makes it clear that a performance is considered to be "public" for purposes of the copyright law if the performance occurs "at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered."" Moreover, the relevant legislative history of the 1976 Act is expressed in both the Senate and House reports as follows: "One of the principal purposes of the definition was to make [it] clear that. .. performances in 'semipublic' places, such as clubs, lodges, factories, summer camps and schools, are 'public performances' subject to copyright controL"" Thus, the 1976 Act extends to musical performances at some places which may have been outside the 1909

ACt. 35

(Editor's Note: We normally will not publish legal articles of the length of "Questions and Answers About the Performance of Music under the New Copyright Law" by Author Jack C. Goldstein. However, in view of the article's excellence and novelty, readers should find it most interesting. If a case of its nature comes into one's office, the article will provide a law review type of research and reference. Aiso, our Regular Feature contributor Robert Keegan is moving his office and was unable to furnish the copy of his "Advising Innovators" column for this issue.) Mr. Goldstein is a member of the Arnold, White & Durkee law firm of Houston. He specializes in practice before the U.S. Patent and Trade Office. He is member: Advisory Board, Patent, Trademark and Copyright Journal; Board of Trustees, Copyright Society of the U.S.A.; American Patent Law Association; Houston Patent Law Association (President-Elect, 1978-); and various bar associations.) Juiy 1980/Arkansas Lawyer/149


CAN COPYRIGHTED MUSIC BE INFRINGED IF IT IS NOT PERFORMED LIVE? IF SO, WHAT MANNER OF PERFORMANCE WILL CONSTITUTE AN INFRINGEMENT? The early cases did involve only live performances, but that was because recorded music was of such poor quality that it was not used commercially and because jukeboxes, radios, and televisions were not then in existence. As various mechanical means for performing music came into widespread commercial use, copyright ininfringement suits were successfully maintained under the old law on the basis of unlicensed musical performances by means of player pianos,'路 phonographs," master radio sets for receiving and retransmitting radio broadcasts through amplifiers and multiple loudspeakers," music services provided over telephone wires," and jukeboxes." The 1976 Act includes the following all-encompassing definition: "To 'perform' a work means to recite, render, play, dance, or act it, either directly or by means of any device or process ..."" Thus, the public performance of copyrighted music by virtually any means is subject to the new copyright law." AREN'T JUKE BOXES EXEMPT FROM THE COPYRIGHT LAW? No. Jukeboxes were never wholly exempt from the copyright law, even under the old law. In any event, the limited "jukebox exemption" of the 150/Arkansas Lawyer/July 1980

1909 Act was eliminated by the 1976 Act.

list can be readily examined by the public, or

In 1909, there were no jukeboxes as we know them today. However, some penny arcades used to provide earphones through which patrons might, by inserting coins in slots, hear something that resembled music. Since that practice was more of a novelty than a viable commercial use of music, the copyright owners of the 1909 era were not concerned that the 1909 Act Included a limited exemption for the rendition of music by means of "coinoperated machines."" It was not until later, when the jukebox became a significant factor in the music industry, that that provision became known as the "jukebox exemption" and became controversial. Even under the old law, the "jukebox exemption" was limited: it was inapplicable if the jukebox (1) was located in a place where an admission fee was charged" or (2) was wired to be activated without the use of a coin.,.

(4) the patrons are not permitted to make the choices as to the music to be played.

Thus, the 1976 Copyright Act merely rectified a historical accident by eliminating the limited "jukebox exemption." For most circumstances, however, the new law provides for an inexpensive compulsory license which the jukebox operator may obtain through the Copyright Office.'路 Nevertheless, if one does not obtain either a compulsory license through the Copyright Office or licenses from the licensing organizations (or directly from copyright owners), the public performance of copyrighted music by means of a jukebox constitutes an infringement under the new law." Some jUkebox performances must be licensed through the performing rights licensing organizations (or through the copyright owners) to avoid infringement. Under anyone or more of the following circumstances, the statutory compulsory license for jukeboxes is of no avail:" (1) the jukebox is not activated by the insertion of coins, currency, or other monetary units, (2) a direct or indirect admission charge is made, (3) a list of the music is not affixed to the jukebox or posted where the

In any event, jukeboxes are no longer exempt from the copyright law; and a public performance of copyrighted music by means of a jukebox, if not licensed or exempted, constitutes an infringement. IF THE MUSICIANS ARE INDEPENDENT CONTRACTORS OVER WHOM THE PROPRIETOR HAS NO CONTROL, IS THE PROPRIETOR OF THE PLACE OF BUSINESS NEVERTHELESS LIABLE FOR THE MUSICIANS' PERFORMANCE OF COpyRIGHTED MUSIC? Yes. The proprietor of a place of business must bear the legal responsibility for the unlicensed performance of copyrighted music by musicians hired by the proprietor, even if the musicians are independent contractors over whom the proprietor has no control." The legislative history of the 1976 Act, as expressed in both the Senate and House reports, makes it clear that Congress intended that that rule be continued under the new copyright law: The committee has actively considered and rejected an amendment. .. intended to exempt the proprietors of an establishment, such as a ballroom or night club, from liability for copyright infringement committed by an independent contractor, such as an orchestra leader." [Emphasis added.) In addition, when the proprietor of an establishment rents the establishment with knOWledge that music is to be played, the proprietor is liable for the unlicensed performance of copyrighted music by musicians hired by the renter-if the proprietor has a financial interest, direct or indirect, which is related to, or contingent upon, the event at which the music is played. In one recent case, a catering hall and night club proprietor had (1) rented its ballroom with knowledge that It was to be used for a dinner dance and show featuring music and' (2) supplied the food and liquor which was served by


the proprietor's employees." Based upon those facts, the proprietor was held liable for copyright infringement arising from the unlicensed performance of copyrighted music by musicians hired by the renter. In another, older case, a corporation which had merely rented its premises for a fixed amount was held not liable for the unlicensed performance of copyrighted music by the renter's musician; however, the court indicated that the situation would have been quite different if the corporation had received or derived a profit from the performance."

IF THE PROPRIETOR OF A PLACE OF BUSINESS INSTRUCTS THE MUSICIANS NOT TO PLAY CERTAIN MUSIC, IS THE PROPRIETOR LIABLE IF THE MUSICIANS NEVERTHELESS PLAY THE MUSIC? Yes. The proprietor of a place of business may be held liable for copyright infringement even though the musicians performed the copyrighted music against the proprietor's orders. 53 In one old case, the proprietor of a night club in Louisiana had written contracts with orchestra leaders who had agreed, at the proprietor's request, not to play certain music." Moreover, the proprietor had prominently posted notices stating that he objected to certain music being played. In another, more recent case, suit was brought against the proprietors of a South Carolina night club; similarly, the band had been instructed not to play certain music." In both of those cases, the proprietors were held liable for copyright infringement when the musicians played the copyrighted songs against the proprietors' orders.

IF THE PROPRIETOR OF THE PLACE OF BUSINESS DOES NOT PAY THE MUSICIANS, BUT RATHER MERELY ALLOWS THE MUSICIANS TO COME IN, PLAY, AND COLLECT TIPS, IS THE PROPRIETOR NEVERTHELESS LIABLE? Yes. Several cases have held the proprietor of a place of business liable for copyright infringement even though the proprietor did not pay the musicians, but merely allowed them to come in, play, and collect tips."

In the first reported case (which later cases followed), the proprietor of a barbecue stand in Missouri was sued for infringement; and the proprietor's defense was that the musicians had not been employed or paid by the proprietor, although he had permitted the musicians to come to his place of business, furnished them with a place to play, and permitted them to collect tips from his customers." The court rejected the defense, concluding (1) that the proprietor had allowed the musicians to play with the view that the performance would be of benefit to his business, (2) that the performance had been advantageous to the proprietor, and (3) that the proprietor had paid the musicians indirectly by furnishing them space in his place of business.

IF MUSICIANS PLAY FROM SHEET MUSIC ON WHICH A ROYALTY HAS BEEN PAID OR IF MUSIC IS PERFORMED BY MEANS OF A RECORDING ON WHICH A ROYALTY HAS BEEN PAID, DOESN'T SUCH A ROYALTY PAYMENT EXHAUST THE COPYRIGHT OWNER'S RIGHT? No. As applied to musical composition copyrights, the law grants different kinds of protection in three separate and distinct areas, namely: (1) sheet music, (2) recordings, and (3) public performances. When one purchases sheet music or a recording, the purchaser certainly may use the sheet music or recording to render either a performance which is not pUblic" or a public performance which is specifically exempted under the new law." However, the portion of the very modest sheet music royalty or statutory recording royalty (i.e., now 2-3/4 cents per recording") which may ultimately find its way from the purchaser to the songwriter does not entitle the purchaser to render an otherwise infringing public performance."

WHAT SANCTIONS MAY BE IMPOSED AGAINST A COPYRIGHT INFRINGER? A copyright infringer is subject to a civil action in federal court'" for an injunction" and the copyright owner's ac-

tual damages," the infringer's profits," or statutory damages"-plus court costs" and attorney's fees."

In copyright infringement cases involving the performance of music, the copyright owner will generally obtain a judgment for statutory damages, rather than actual damages or profits. Statutory damages ordinarily will not be less than $250 or more than $10,000" for each copyrighted song performed publicly without a Iicense.'o The 1976 Act doubled the maximum statutory damages from the $5,000 upper limit of the 1909 Act." Damages for copyright infringement are not measured by the modest amount which the infringer might have paid under a performing rights license." A copyright infringement suit simply is not a suit for breach of a license agreement which the copyright infringer refused to accept when it was offered. If the license fees were the sole measure of damages for copyright infringement, there would be little or no financial incentive for any music user to take a license since it would not cost any more to infringe than to take a license. In addition to civil liability for copyright infringement, the copyright law also includes the following criminal sanctions: "Any person who infringes a copyright willfully and for purposes of commercial advantage or private financial gain shall be fined not more than $10,000 or imprisoned for not more than one year, or both.. :'n

MAY AN INDIVIDUAL WHO CONTROLS THE AFFAIRS OF A CORPORATION BE HELD PERSONALLY LIABLE FOR COPYRIGHT INFRINGEMENTS OCCURRING AT A PLACE OF BUSINESS OWNED AND OPERATED BY THAT CORPORATION? Yes, the individual may be held personally liable. There are many circumstances under which an individual will not be shielded from personal liability by the existence of a corporation which the individual controls, manages, and operates. For example, if an officer, diJuly 1980/Arkansas Lawyer/151


FOOTNOTES 'See Goldstein, Outline of the legislative History of Copyright Law Revision from 1955

to 1976, 6 Am. Pat. L.A.O.J. 74 (1978). 'Act of Oct. 19, 1976, Pub. L. No. 94-553, § 101,90 Stat. 2541, which amended 17 U.S.C. in

its entirely. The new copyright code, which appears as an appendix immediately after the old copyright code in the 1976 edition of the official United States Code, will be cited hereinafter as "17 U.S.C. app. § _ _ (1976)." The new copyright code also appears in 17 U.S.C.A.

(1977). 'Act of Oct. 19, 1976, Pub. L. No. 94-553, § 102, 90 Stal. 2541, 2598-99. 'Act of Mar. 4, 1909, ch. 320, 35 Stat. 1075 (as amended, codified in 17 U.S.C., which was enacted into positive law by Act of July 30,1947, ch. 391, § 1, 61 Stat. 652). The old copyright code, which appears in the 1976 edition of the official United Slates Code, will be cited hereinafter as "17 U.S.C. § _ _ (1976)." The old copyright code also appears as an appendix in the pocket part of 17 U.S.C.A. (1977 & Supp.

rector, or stockholder of a corporation participates in the actual infringement of a copyright, then that person is subject to liability along with the corporation." Similarly, a corporate officer and principal stockholder, who is the dominant influence in and who determines the policy of the corporation, is equally liable with the corporation for its infringements."

CONCLUSION Our forefathers regarded the encouragement of the work of authors to be so important that the original Constitution specifically provided for copyrights." Indeed, as stated by the Supreme Court: The economic philosophy behind the [constitutional] clause empowering Congress to grant patents and copyrights is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors... Sacrificial days devoted to such creative activities deserve rewards commensurate with the services rendered." The songwriter must eat, as well as make music. The copyright system is the legal mechanism which enables the songwriter to make a living out of his or her creativity and genius. Music is not "free as the air." To the contrary, music users must pay for their use of the songwriter's only product, music. When music is played publicly, one must pay the songwriter, as well as the piper. 152/Arkansas Lawyer/July 1980

1979). ~Shemel & Krasilovsky, This Business of Music 135 (rev. ed. 1971). '17 U.S.C. § l(e) (1976). Thus, under the old law the statutory royalties paid on a "million seiler" recording was $20,000. Of that, by custom in the trade, half went to the publisher, who served as a promoter. The other half often had to be divided between or among two or more songwriters, particularly since the composers who supply the music are often different from the authors who supply the lyrics. 7Shemel & Krasilovsky, This Business of Music 124 (rev. ed. 1971). '17 U.S.C. app. § 116(e) (3) (1976). '28 U.S.C. §§ 1338(a), 14oo(a) (1976). "Compare 17 U.S.C. § 101(b) (1976) with 17 U.S.C. app. § 504(c) (1976). See also JewellLaSalle Realty Co. v. Buck, 283 U.S. 202

(1931). llWidenski v. Shapiro, Bernstein & Co., 147 F.2d 909 (1st Cir. 1945). "17 U.S.C. app. ! 101 (1976). "Compare 17 U.S.C. § l(e) (1976) with 17 U.S.C. app. § 106(4) (1976). But see 17 U.S.C. app. § § 110, 111(a) (1976). "17 U.S.C. § l(e) (1976). "Compare 17 U.S.C. § 24 (1976) with 17 U.S.C. app. § 302(a) (1977). "17 U.S.C. § 1(e) (1976). 17Herbert v. Shanley Co., 242 U.S.C. 591

U.S. 766 (1944), in which the court practically wrote the "for profit" limitation out of the 1909 Act. HCompare 17 U.S.C. § l(e) (1976) with 17 U.S.C. app. §§ 106(4), 110, 111(a) (1976). Pursuantto 17 U.S.C. app. § 110(1976), the musical performances exempted by the statute are those made in the course of (1) face-to-face teaching activities of a nonprofit educational institution, (2) certain systematic instructional broadcasting or telecasting activities of a governmental body or a nonprofit educational institution, (3) religious services, (4) certain nonprofit performances as to which the performers, promoters and organizers are not compensated, (5) the mere public reception of a broadcast or telecast on a home-type receiver, (6) agricultural or horticultural fairs (insofar as any governmental body or nonprofit agricultural or horticultural organization is concerned), and (7) the mere promotion of retail sales of recordings of the music. Certain secondary transmissions in hotels, apartments, or similar establishments are also exempted, pursuant to 17 U.S.C. app. § 111(a) (1976). "17 U.S.C. § l(e) (1976). z8Lerner v. Club Wander In, Inc., 174 F.

Supp, 731 (D. Mass. 1959); M, Witmark & Sons v. Tremont Social & Athletic Club, 188 F. Supp. 787 (D. Mass. 1960). HPorter v. Marriott Motor Hotels. Inc., 137

U.S.P.O. 473 (N.D. Tex. 1962). )OLerner v. Schectman, 228 F. Supp. 354 (D.

Minn. 1964). "'Broadcast Music, Inc. v. Walters, 181

U.S.P.O. 327 (N.D. Okla. 1973). "17 U.S.C. app. § 106(4) (1976). "17 U.S.C. app. § 101 (1976) (emphasis ad· ded). "·S. Rep. No. 94-473, 94th Cong., 1st Sess. 60

(1975); H.R. Rep. No. 94-1476, 94th Cong., 2d Sess. 64 (1976). )'For example, the first copyright infringement suit against a college or university based upon the unlicensed performance of copyrighted music has been filed by 8M!. Broadcast Music, Inc. v. President & Fellows of Harvard College d/b/al Harvard University, Civil No. 79-467~G (D. Mass. filed Mar. 8,1979) (dismissed by stipulation filed July 25, 1979, pursuant to the parties' settlement which included Harvard's taking a 8MI license). U M. Witmark & Sons v. Calloway, 22 F.2d

412 (E.D. Tenn. 1927): Buck v. Lester, 24 F.2d 877 (E.D.S.C. 1928). )7Buck v. Heretis, 24 F.2d 876 (E.D.S.C.

(1917).

1928).

"M. Witmark & Sons v. Pastime Amusement Co., 298 F. 470, 472 (ED.S.C.), aff'd, 2

U.S. 191 (1931). But see Fortnightly Corp. v.

uBuck v. Jewell-LaSalle Realty Co., 283

uFamous Music Corp. v. Bay State Harness Horse Racing & Breeding Association, 554

United Artists Television, Inc., 392 U.S. 390 (1968); Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U.S. 394 (1974); and Twentieth Century Music Corp. v. Aiken, 422 U.S. 151 (1975). which all but over· ruled much of Buck v. Jewell-LaSalle. However, the broad definition of "perform" in the new law, 17 U.S.C. app. § 101 (1976), overrules the Fortnightly, Teleprompter, and Aiken cases; but 17 U.S.C. app. § 110(5) (1976) exempts certain receptions "on a single receiving apparatus of a kind commonly used in private homes," and 17 U.S.C. app. § 111(a) (1976) exempts certain secondary transmissions in a hotel, apartment, or similar establishment. 3IHarms, Inc. v. Sansom House Enter~

F.2d 1213 (1st Cir. 1977).

prises, Inc" 162 F. Supp. 129 (ED. Pa. 1958),

F.2d 1020 (4th Cir. 1924) (live musical accompaniment during silent movies). lllirving Berlin, Inc. v. Daigle, 31 F.2d 832

(5th Cir. 1929). 20Dreamland Ball Room, Inc. v. Shapiro,

Bernstein & Co., 36 F.2d 354 (7th Cir. 1929). z'Remlck Music Corp. v. Interstate Hotel

Co" 58 F. Supp. 523, 533 (D. Neb. 1944), aff'd, 157 F.2d 744 (8th Cir. 1946), cert. denied, 329 U.S. 809 (1947). uEdwin H. Morris & Co. v. Burton, 201 F. Supp. 36 (EO. La. 1961). UMCA, Inc. v. Wilson, 425 F. Supp. 443, 446 (S.D.N.Y. 1976).

uS. Rep. No. 94-473, 94th Cong., 1st Sess. 59

(1975); H.R. Rep. No. 94-1476, 94th Cong., 2d Sess. 62 (1976). See Associated Music Publishers, Inc. v. Debs Memorial Radio Fund,

Inc., 141 F.2d 852 (2d Cir.), cert. denied, 323

aff'd per curiam sub nom., Leo Feist, Inc. v. Lew Tendler Tavern, Inc., 267 F.2d 494 (3rd

Cir. 1959). .oQuackenbush Music,·Ltd. v. Wood, 381 F. Supp. 904 (M.D. Tenn. 1974); Warner Bros.,


Inc. v. O'Keefe, 468 F. Supp. 16,20 (S.D. Iowa 1978). "17 U.S.C. app. § 101 (1976). .2There are, however, exemptions for the mere pUblic reception of a broadcast or telecast "on a single receiving apparatus of a kind commonly used in private homes" provided that there is no direct charge to see or hear the broadcast or

lelecasl, 17 U.S.C. app. § 110(5) (1976), and for certain secondary transmissions in hotels, apartments, or similar establishments. 17 U.S.C. app. § 111(a) (1976). "17 U.S.C. § l(e) (1976). "17 U.S.C. § l(e) (1976); Quackenbush Music, Ltd. v. Wood, 381 F. Supp. 904 (M.D. Tenn. 1974); Warner Bros., Inc., v. O'Keefe, 468 F. Supp. 16,20 (S.D. Iowa 1978). "Buck v. Kelly, 7 U.S. P.O. 164 (D. Mass. 1930) (dictum). "17 U.S.C. app. §§ 116(a)(2), 116(b)(1) (1976). "17 U.S.C. app. § 116(b)(2) (1976). ASCAP and 8MI have begun to bring copyright infringement suits under the new law alleging unlicensed pUblic performances of copyrighted music by means of jukeboxes. Senor Music v. Paramount Automatic Machines Corp. Civil No. 78 Civ. 3449 (S.D.N. Y. filed July 29, 1978); Broadcast Music, Inc. v. Mark IV Club, Civil No. H-79-306 (S.D. Tex. filed Feb. 20, 1979). ~17 U.S.C. app. § 116(e)(1) (1976) . •DM. Witmark & Sons v. Pastime Amusement Co., 298 F. 470, 475 (E.D.S.C.), aff'd, 2 F.2d 1020 (41h Cir. 1924); Irving Berlin,lnc. v. Daigle, 26 F.2d 149 (E.D. La. 1928), modified astotheamountofdamagesonly, 31 F.2d 832 (5th Cir. 1929); Dreamland Ball Room, Inc. v. Shapiro, Bernstein & Co., 36 F.2d 354 (7th Cir. 1929); Remick Music Corp. v. Interstate Hotel Co., 58 F. Supp. 523, 533 (D. Neb. 1944), aff'd, 157 F.2d 744 (8th Cir. 1946), cert. denied, 329 U.S. 809 (1947); Famous Music Corp. v. Bay State Harness Horse Racing & Breeding Association, 554 F.2d 1213,1215 (1st Cir. 1977). S(! S. Rep. No. 94-473, 94th Cong., 1st Sess. 141 (1975); H.R. Rep. No. 94-1476, 941h Cong., 2d Sess. 159 (1976). s'ltallan Book Corp. v. Palms Sheepshead Country Club, Inc., 186 U.S. P.O. 326 (E.D.N. Y. 1975). see atso MCA, Inc. v. Wilson, 425 F. Supp. 443, 456 (S.D.N.Y. 1976); Buck v. Cre... cent Gardens Operating Co., 28 F. Supp. 576, 577-78 (D. Mass. 1939). S2Fromont v. Aeolian Co., 254 F. 592, 593, (S.D.N.Y.1918). USee Buck v. Cecere, 45 F. Supp. 441 (W.O.N.Y. 1942); Famous Music Corp. v. Bay State Harness Horse Racing & Breeding Association, 554 F.2d 1213 (151 Cir. 1977); KECA Music. Inc. v. Dingus McGee's Co., 432 F. Supp. 72 (W.O. Mo. 1977); Warner Bros., Inc. v. O'Keefe, 468 F. Supp. 16, 19-20 (S.D. Iowa

1978). s·Shapiro, Bernstein & Co. v. Veltln, 47 F. Supp. 648 (W.o. La. 1942). s&Bourne v. Fouche, 238 F. Supp. 745 (E.D.S.C. 1965). MBuck v. Rogers, 17 U.S.P.O. 434 (E.D. Mo. 1933); Donaldson, Douglas & Gumble, Inc. v. Terris, 37 U.S. P.O. 39 (M.D. Pa. 1938); Buck v. Pettijohn, 34 F. Supp. 968 (E.D. Tenn. 1940). uBuck v. Rogers, 17 U.S.P.O. 434 (E.D. Mo. 1933). saSee text accompanying n.32, supra. USee n.25. supra. ~17 U.S.C. app. § 115(c)(2) (1976). ·'Remick Music Corp. v. Interstate Hotel Co., 58 F. Supp. 523, 534-35 (D. Neb. 1944), aff'd, 157 F.2d 744 (8thCir. 1946), cert. denied, 329 U.S. 809 (1947); Irving Berlin, Inc. v. Daigle,31 F.2d 832, 834·35 (51h Cir. 1929). "28 U.S.C. §§ 1338{a), 14oo(a) (1976). "17 U.S.C. app. § 502(a) (1976). see M. Witmark & Sons v. Calloway, 22 F.2d 412, 414 (E.D. Tenn. 1927). "17 U.S.C. app. § 504(b) (1976). "17 U.S.C. app. § 504(b) (1976). "17 U.S.C. app. § 504(c) (1976). "17 U.S.C. app. § 505 (1976). "17 U.S.C. app. § 505 (1976). see Alfred Bell & Co. v. Catalda Fine Arts, Inc., 75 U.S.P.O. 283 (S.O.N. Y. 1947) (awarding attorney's fees to the prevailing plaintiff, notwithstanding the de· fendants' good-faith belief in the existence of a valid defense); Warner Bros., Inc. v. O'Keefe, 468 F. Supp. 16, 21 (S.D. Iowa (1978)(awardin9 attorney's fees to the prevailing plaintiffs, in an

amount greater than the statutory damages awarded). "17 U.S.C. app. § 504(c) (1) (1976). 7°Jewell-laSalle Realty Co. v. Buck, 283 U.S. 202 (1931). "17 U.S.C. § 101(b) (1976). see Douglas v. Cunningham, 294 U.S. 207 (1935); F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228 (1952).

72Widenskl v. Shapiro, Bernstein & Co., 147 F.2d 909 (1st Cir. 1945). "17 U.S.C. app. § 506(a) (1976). HWarner Bros.-Seven Arts, Inc. v. Kalantzakls, 326 F. Supp. 80, 82 (S.D. Tex. 1971). See also Buck v. Crescent Gardens Operating Co., 28 F. Supp. 576, 577·78 (D. Mass. 1939). 7sTempo Music, Inc. v. International Good Music, Inc., 143 U.S.P.O. 67, 69 (W.D. Wash. 1964) aff'd sub nom., K-91, Inc. v. Gershwin Publishing Corp., 372 F.2d 1 (9th Cir. 1967), cert. denied, 389 U.S. 1045 (1968); Warner Bros., Inc. v. O'Keefe, 468 F. Supp. 16,20 (S.D. Iowa 1978). 7eu.s. Const. art. I, § 8. cL 8. 77Mazer v. Stein, 347 U.S. 201, 219 (1954).

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~ July 1980/Arkansas Lawyer/153


~anon.s

of american ~itizen.ship

• eveRy ameRican citizen shoulO RecoCjnlZe the Outy to: •

upholb the laws of the umteb states, anb the states Anb commuOltles.

• befenb OUR countRY fRom inVASIOn Anb OUR GoveRnment fRom oveRthRow 8y foRce, violence, OR sU8veRslon. •

enCOURaGe Respect fOR law Anb ORbeR AnO inSist upon solutIons of OlffeRences anO GRieVAnces 8y pRocesses of law anb neveR 8y ResoRt to vIolence OR otheR unlawful means.

• suppoRt those chaRGeo wIth the enfORcement ano aOmlnIStRatlon of OUR laws; voluntaRily ACt AS A wItness anO seRve AS a JUROR. • hARIlOR no pReJuOlce A'fAlnst Anyone 8eCAuse o~ RAce, ReliGIon OR national ORIGin. •

maintain PRlbe In famIly, heRItaGe Anb ChURch AS well as In commuOlty, state Anb nation.

keep InfoRmeo on Issues anb CAnOIOAtes, AnO vote In eveRy electIon.

Respect the RIGhts anO opinions of otheRS.

paRtICIpAte In RelIGIOUS, ChARlta8le. CIVIC, eOucAtlonAl OR <nheR ACtIVIties to pRomote the welfaRe o~ the community.

acknowleOGe that 'ResponsIBilitIes' ARe AS ImpORtAnt AS 'RIGhts' In the pReseRVAtion o~ ~ReeOom anO Justice. PRESENTED BY ARKANSAS BAR ASSOCIATION

154/Arkansas Lawyer/July 1980

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OYEZ 路 OYEZ II by Barbara Tarkington Membership Secretary

HARRY E. MEEK, lillie Rock, has retired as attorney for the state Bank Department. SHERRY PERKINS BARTLEY, Little Rock, is assistant U.S. Attorney. DONALD R. BENNETT, formerly of Rogers, and CHARLES R. SINGLETON are now with the ABC Board in Little Rock. LARRY WALLACE, N. lillie Rock, has been elected 1980 chairman of the Board of Directors of the Greater-lillie Rock Chamber of Commerce. GUY AMSLER, JR., lillie Rock, is the new president of the Arkansas Children's Hospital Board of Trustees and JAMES T. DYKE, Little Rock, is the new vice-president. DAN DANE, Forrest City, has been named to fill an at-large position on the 3-member St. Francis County Election Commission. DAIL STILES, Lillie Rock, has been appointed as prosecutor co-ordinator by the Arkansas Prosecuting Attorney's Assn. KENNETH SUGGS, N. little Rock, has received the Greaterlillie Rock Chamber of Commerce Annual William J. Smith Award for the Outstanding Jaycee of the year. REED W. THOMPSON, previously in the Philippines, has been named director of the state Law Enforcement Standards Commission. MIKE GIBSON, Osceola, is Mississippi District chairman for the Boy Scouts of America. WOODSON W. WALKER, lillie Rock, has been appointed by Gov. Clinton to a 5-year term on the state Correction Board. LOUIS B. JONES, JR., Forrest City, has been appointed to a term on the Crime Laboratory Commission. JAMES CARFAGNO, JR., formerly of Pine Bluff, is now with the Human Service Providers Assn of Arkansas, Inc. JAY ELDRIDGE, Augusta, has been named deputy prosecuting allorney for Woodruff County. NOYL HOUSTON, Trumann, succeeded MIKE EVERETT as deputy prosecuting attorney for Poinsell County. PAUL K. LANCASTER, Benton, succeeds DAN MOUDY as deputy prosecuting allorney for the 7th Judicial District. THOMAS E. 156/Arkansas Lawyer/July 1980

BROWN, Pine Bluff, is a new deputy prosecuting allorney for the 11 th Judicial District. JAMES McHANEY, JR., lillie Rock, one of the four deputy prosecutors at the Nuremberg trials, attended the 30th anniversary held at Washington. JAMES SPROTT, Brinkley, spoke to the students at the Brinkley High School on Arkansas Law and the court system. DR. ROBERT R. WRIGHT, lillie Rock, was a speaker at a UALR Distinguished Professor Lecture Series sponsored by UALR Div of Continuing Education. STEVE ELLEDGE, Brinkley, was instructor for a 10-week course on income tax preparation. An 8-week class on Law for Women was taught by JANET BURTNESS of Hot Springs. SAM LASER, lillie Rock, was a speaker at the March meeting of the Full Gospel Business Men's Fellowship International. KENNETH R. SMITH, Yellville, spoke to the N. Arkansas Community College journalism class on the FOI Act of 1967. LARRY WALLACE, N. Little Rock, spoke at the 11th annual Lonoke Area Chamber of Commerce. JOYCE WIL-

L1AM WARREN, lillie Rock, spoke at the 22nd annual Reunion Dinner of the Blue Triangle Branch YMCA. JOSEPH P. JAMES, Newport, has a branch office in Newark that is open on Wednesdays. RICHARD NELSON, formerly of Springdale, is now located in Mtn. Home. SAM HEUER and BILL E. BRACEY, JR. have joined Springdale attorney CHARLES E. DAVIS and formed the law firm of Davis, Bracey & Heuer. ROBERT F. ANDREWS and STEVE WESTERFIELD of Walnut Ridge have formed a partnership. NED A. STEWART, JR., formerly of Texarkana, AR, is now with the U.S. Magistrate's office in Fort Smith. JAMES W. RICHARDSON, formerly of Sherwood, is in Arizona. WAYNE TIMMONS, formerly of Magnolia, is now in Texas. DAVID HOPKINS, formerly of Hot Springs, is in Pennsylvania. LES EVITTS, formerly of Little Rock, has moved to Tennessee. JOHN PETERSON, Mt. Ida, has announced the closing of his law practice and returning to labor law. A new law firm has been formed in Pine Bluff by BART MULLIS,

NEW LOCAL BAR OFFICERS Southeast Arkansas Bar Assn Jefferson County Bar Assn Pres. TED DRAKE President DON H. ROSS V-Pres. KENNETH BAlM Garland County Bar Assn L. RUSH Sec.{Treas. JOHN Pres. GEORGE CALLAHAN SBA UofA School of Law V-Pres. LOUIS LONGINOTTI, III Pres. GEORGE VAUGHT Sec.{Treas. BRUCE MacPHEE 1st V-Pres. TIM COX North Pulaski County Bar Assn 2nd V-Pres. MARK ROBENS Pres. STEVE MORLEY Sec. MARY ANN GUNN V-Pres. BASIL HICKS Treas. RON HOPE Sec. MORGAN CHIP WELCH 1st year Treas. BILL ROBINSON Rep MARTHA MORGAN Union County Bar Assn 2nd year Pres. BILL McLEAN Rep BEN CARUTH V-Pres. DAVID F. GUTHRIE 3rd year Sec.{Treas. BOBBY E. SHEPHERD Rep BILL MEEKS Student-Faculty Lawrence-Randolph Bar Assn Rep LAURA HENSLEY President MURREY GRIDER


FRED D. DAVIS, III and MARK B. CHADICK with offices at 402 E. 5th Ave. LANE H. STROTHER has joined Osmon & Wilber of Mtn. Home. MARSHA YOWELL, formerly with Legal Aid Bureau of Central Ark., is now with the UALR Law School's Legal Clinic. PAT HAYS, formerly of Little Rock, is now located in the TCB Bldg., N. Little Rock. DARRYL BAKER, formerly of N. Little Rock, is now with Gary Eubanks & Assoc. in Little Rock. MICHAEL O'MALLY, formerly with the Attorney General's office, is now with Mitchell, Williams, Gill & Selig, Little Rock. JAMES E. DICKSON, formerly of Jonesboro, is in Little Rock. TERRY F. WYNNE, Pine Bluff, has joined Bridges, Young, Matthews, Holmes & Drake. WILLIAM L. BUFFALO has joined a Little Rock law firm and its name changed to Pope, Shamburger, Buffalo & Ross. ROBERT D. SMITH III, GEORGE O. JERNIGAN, JR. and H. VANN SMITH, Little Rock, have formed the law firm Smith, Jernigan & Smith. FRANK 6". WHITBECK has relocated his office in the new Savers Federal Savings & Loan Bldg., Little Rock. MICHAEL H. MASHBURN has joined a Springdale law firm and its name changed to Blair, Cypert, Waters & Roy. P. DOUGLAS MAYS, Little Rock, is now a member in the law firm Gunter, Mays & Lamb. RONNY J, BELL has become a partner in a Magnolia law firm and its name changed to Anderson, Crumpler & Bell. STEVE BAUMAN, Little Rock, is now associated with Eichenbaum, Scott, Miller, Crockett, Darr & Hawk, PA. DAN E. MOUDY has become a partner in a Benton law firm and its name changed to Hall, Tucker, Lovell, Alsobrook & Moudy. JOHN MATTHEWS, Little Rock, has joined JAMES H. AKINS and formed the firm of Akins & Matthews. OVERTON S. ANDERSON and JOSEPH E. KILPATRICK, JR., Little Rock, has formed the partnership of Anderson & Kilpatrick with offices at #One Spring St. The law firm of Kincaid, Horne & Trumbo of Fayetteville have moved their offices to 207 W. Center. FRANK B. SEWALL, formerly with the Arkansas Insurance Dept., is now with National Old Line in the Legal Dept. CARL A. CROW, JR., formerly with the Attorney General's office, is now associated with the Hot Springs law firm Glover, Sanders, Parkerson & Hargraves. FLOYD CLARDY, III, formerly of Nashville, has become associated with Ted Boswell, PA of Bryant. ARBY FRIEDLANDER, Little

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Rock, is with the Attorney General's office in the Litigation Division. WILLIAM F. LAMBRIGHT, Little Rock, has moved his office to the Worthen Bk Bldg. ROBERT R. KEEGAN, Fayetteville, is now located at #7 N. Block Street. JACK HOLT, JR., Little Rock, has been awarded the Meritorius Service Medal for service as a colonel, USAF Reserve, from 1972-79.1..

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July 1980/Arkansas Lawyer/157


LAW SCHOOL NEWS Assistant Dean James K. Miller Assistant Dean Ellen Brantley

/1 SCHOOL OF LAW, UNIVERSITY OF ARKANSAS, FAYETTEVILLE Dean David Epstein has been elected to membership in the American Law Institute, has accepted an appointment as one of nine members of the Editorial Advisory Board of West Publishing Company, and has been appointed as one of nine members of the American Association of Law Schools Committee on Accreditation. He also served on an American Bar Association Inspection Team that inspected Wake Forest University School of Law. Newly elected officers of the Arkansas Law Review are: Leo "Buck" Farrow, Editor-in-Ohief; Ann Faford, Managing Editor; Randall Lamb, Comments Editor; Jacki Morgan, Casenote Editor; Randy Sandifer, Citations Editor; Bob Topping, Business Manager; Beverly Stites and Mike Smith, Articles Editors; and Jim Goldie, Research Editor. Law Librarian George Skinner, Associate Librarian Maurice Pope, and Reference Librarian David Cowan recently attended the Southwest Association of Law Librarians meeting in Houston. Dean David Epstein and Professor Steve Nickles have signed a contract with West Publishing Company as coauthors of a hornbook on Creditors Rights.

Second year students Marian Wagner and Vicki Elder were winners of the Spring Moot Court Competition. JUdges for the competition were Judge J. Smith Henley, Attorney General Steve Clark, and Dean David Epstein. Ms. Wagner and Ms. Elder then participated in regional competition in Denver, Colorado where they reached the semifinals. Professor Steve Pepper, moot court faculty advisor, also attended the Denver regionals. The University of Arkansas Board of Trustees has approved Steve Nickles' promotion to full professor. Professor Nickles also has received his J.S.D. from Columbia University. Professor Phillip Norvell and Visiting Professor Frank Skillern were speakers at the National Resources Law Institute held in Hot Springs. Professor Mort Gitelman has signed a contract with West Publishing Company for a new edition of his Land Use casebook. Dean David Epstein was one of six speakers at the Southeastern Bankruptcy Law Institute in Atlanta on February 21-23, spoke in Dallas on March 26 on Bankruptcy to the Southwestern Legal Foundation Symposium on Developments in Banking law, was keynote speaker at the Washburn Law Journal Banquet on April 8 and deli-

vered the Foulson, Sierfkin Lecture at Washburn on April 9. Second-year student Mark Robens has been elected Governor, 10th Circuit, Law Student Division of the American Bar Association. Professor Tom Robinson has spoken to estate planning groups in Fort Smith, Tulsa, and Joplin. The UA client counseling tearn, composed of third-year students John Arens and David Vanderzwaag, placed second in a field of twelve tearns that competed in the Southwest Client Competition held in Waco, Texas. Governor Bill Clinton spoke at the law school in March. Ms. Sarah Weddington, a member of President Carter's senior White House staff, spoke at the law school April 2. At age 25, Ms. Weddington successfUlly argued Roe v. Wade before the U.S. Supreme Court. A Red Cross blood drive at the law school netted a 1DO-pint donation from law school students, faCUlty, and staff. Student Bar Association officers George Vaught and Mary Ann Gunn coordinated the drive. Dr. Hoyt Gardner, President of the American Medical Association, spoke to law students on April 2. His topic was "The AMA Today and Tomorrow with a View of Malpractice".

SCHOOL OF LAW, UNIVERSITY OF ARKANSAS AT LITTLE ROCK ALUMNI DAY OF VISITATION On Thursday, April 10, alumni of the UALR School of Law were on campus to visit classes, talk with faculty and students, tour the law school, and participate in other activities. The morning was devoted to class visitation; in the afternoon the alumni heard a report from the Dean, faCUlty presentations on the law school curriculum, continuing legal education, the Law Journal, and placement. Later in the day, alumni 158/Arkansas Lawyer/July 1980

were special guests at the finals of the Moot Court Competition. Judges for the competition were Chief Justice John Fogleman of the Arkansas Supreme Court, Judge Richard Arnold of the U.S. Court of Appeals for the Eighth Circuit, and Dean Roger Cramton of Cornell Law School. Following the Moot Court, a reception was held at the Arkansas Bar Center. The day of visitation concluded with the Spring 1980

Altheimer lecture, which is described below. ALTHEIMER LECTURE Dean Roger Cramton of the Cornell Law School delivered the Spring 1980 Altheimer lecture on Thursday evening, April 10. His topic was Lawyer Competency and Legal Education. Dean Cramton was chairman of the Task Force on LawyerCompetency of the American Bar Association Section


on Legal Education and Admission to the Bar. The report issued by the task force, "Lawyer Competency: The Role of the Law School," (more frequently referred to as the "Cramton Report") was published iast August and has been widely discussed in the bar and among legal educators.

WESTLAW TRAINING BEGINS The WESTLAW Computer Terminal has been installed in the library, and several training programs have been begun. Students in the Research, Writing, and Advocacy course receive WESTLAW instruction as part of the course. Other students may join faculty and members of the bar in twice weekly training sessions. These sessions are led by UALR staff members who have received extensive training in WESTLAW use. Any attorney who wishes to be trained may sign up for the training sessions, which are free, and which are held each Tuesday and Thursday afternoon from 3:30 until 5:00 by calling reference librarian Karen Stitsworth. The WESTLAW computer is available to attorneys for $37.50 for up to V2 hour, and $1.25 per minute thereafter. Members of the Research Pool will do research on the WESTLAWterminal at the same rate in addition to their normal research fee.

Hogue, on provisions relating to local government. Professor Hogue served as a panel member in a workshop on "Physicians Extenders: Their Ability to Prescribe" held during the National Conference on Rural Health Care held in Little Rock, March 3-5. Professor Hogue was elected SecretaryTreasurer of the Section on Legal History of the Association of American Law Schools at the Association's Annual Meeting in Phoenix, January 3-8. Professor O. Fred Harris was cochairperson of the Third Annual Labor Law Institute of the Arkansas Bar Association held February 29 and March 1. He presided at one of the Institute's sessions. Professor Harris spoke at Little Rock Central High School in conjunction with the Pulaski County Bar Association's Youth Awareness of Law Program, and at Hall High School as part of the Vocation Seminar Series sponsored by the Volunteers in Public Schools. On February 3, 1980, Professor Harris spoke on "Service to Humanity: A Bridge to a Better World in the 1980's" at the Founders Day Program at the Little Rock chapter of Phi Beta Sigma. Professor Frederic K. Spies was presented with the Certificate of Award

of Merit by the American Academy of Forensic Sciences at its 32nd Annual Meeting in New Orleans. He received the award for his service as Secretary and Chairman of the Jurisprudence Section, and as a member of the Executive Committee of the Academy for 1979-80. An article by Professor Fred W. Peel, "Definition of a Partnership: New Suggestions on an Old Issue," was recently published in the Wisconsin Law Review. Assistant Dean Ellen Brantley spoke to the Women's Caucus of the Arkansas Education Association on Saturday, February 16. Her topic was "ERA: What It Will (And Won't) Do." She spoke on the same topic to a meeting of Equal Rights Arkansas on Saturday, March 22. Professor L. Lynn Hogue has submitted the manuscript of his forthcoming book PUBLIC HEALTH AND THE LAW: ISSUES AND TRENDS which will be published in the summer of 1980 by Aspen Systems Corporation. The work of Assistant Dean Claibourne Patty with the Arkansas institute for Continuing Legal Education is discussed in his separate article in this issue. ' "

HOUSE, HOLMES AND JEWELL SCHOLARSHIPS The Little Rock law firm of House, Holmes, and Jewell has donated a $500 scholarship to the School of Law. The scholarship was awarded for the first time for the Spring 1980 semester. The scholarship is for second year students and is awarded each semester. The firm will select the recipients from nominees submitted by the School of Law.

FACULTV NOTES Dean Robert K. Walsh continued his appearances before bar and civic organizations throughout the state. On January 24, he addressed the Texarkana Bar, on February 15 he spoke to the North Pulaski Bar Association at North Little Rock, and on March 28, he spoke at the Newport Rotary Club. Articles by Dean Walsh and Professor L. Lynn Hogue recently appeared in the Gazette as parts of a series on the proposed constitution. Dean Walsh wrote on the judicial article; Professor

Charles Eichenbaum (third from left), senior partner of the Little Rock law firm of Eichenbaum, Scott, Miller, Crockett, Darr and Hawk, presents $300 checks to Thomas DeMarco (second from left) and Steve Nilsson (fourth from left), the first two recipients from a $15,000 scholarship fund established with the Arkansas Bar Foundation by the law firm for students at the UALR School. Members of the firm raised the money to honor Eichenbaum for his 50th year of practice in 1979. Others present for the ceremony included Robert K. Walsh (left), Dean of the Law School, and William Miller (second from right) and Leonard Scott of the law firm. July 1980/Arkansas Lawyer/159


AICLE NEWS by Claibourne W. Patly, Jr. Executive Director Arkansas Institute of Continuing Legal Education

MIDYEAR MEETING FIRST FOR CONCURRENT PROGRAMMING The Midyear Meeting of the Arkansas Bar Association held at the Camelot Inn, Little Rock, Arkansas, January 17-18, 1980, was a "first" in that a program of two rather diverse subjects was run concurrently Friday, January 18, following a general session of recent federal and Arkansas developments in criminal law and procedure presented by Professors Raphael Guzman and Steven H. Goldberg and William B. Howard, Esq. on Thursday the 17th. Specifically on Friday morning a panel consisting of Professor Raphael Guzman, Judge William H. Enfield, Prosecuting Attorney Wayne Matthews and attorney John Calhoon presented the Model Criminal Jury Instructions adopted for Arkansas. in a separate session, Messrs. Richard A. Williams, Byron M. Eiseman, Ted N. Drake, and F.H. Martin presented an estate planning update using typical examples of the businessman, the professional person, and the farm family. On Friday afternoon there was a general session devoted to revisions in the Arkansas Probate System presented by William D. Haught along with practical aspects of administration of decedents' estates presented by Maurice Cathey and postmortem estate and income tax problems presented by Robert H. Holmes. In addition the Friday proceedings on the Model Criminal Jury Instructions and the Probate Law update were videotaped in color, and the cassettes of this videotaping are available for use by law firms and local bar associations at no charge. With the exception of some minor 160/Arkansas Lawyer/July 1980

crowding in the area designated for the estate planning update, the 262 registrants were in favor of presenting two or more diverse subjects at one large meeting when the subjects are of current interest, and it would not be practical to have separate meetings for each subject.

THIRD ANNUAL LABOR LAW INSTITUTE ATTENDANCE INCREASED 25% The Third Annual Labor Law Institute, jointly sponsored with the Labor Law Section of the Arkansas Bar Association, was conducted February 29 and March 1, 1980, at DeGray Lodge. This year's institute was conducted on a workshop format which proved to be so successful at the Second Annual Labor Law institute held last year. The paid registration consisting of labor law attorneys, paralegals and personnel managers totaled 56, which was a good turnout considering the highly specialized nature of the subject matter. The program concentrated in such diverse topics as class actions and Title VII cases presented by the Honorable Richard S. Arnold, U.S. District Judge to arbitration of employment discrimination complaints by Pete Gregan, coordinator of labor education program, U of A Industrial Research and Extension Center. Within this range of topics various representatives of federal governmental agencies presented the following topics: new EEOC guidelines and procedures, arnendments to the National Labor Relations Act with emphasis on section 8gHealth Care, Freedorn of Information Act problems in the area of EEO and

proposed changes in the office of Federal Contract Compliance Program Regulations, Freedom of Information Act in the NLRB and finding an "affected class". A final topic which provided lively discussion was that of public sector bargaining presented jointly by Jeanie Lambie, President of the Association of State, County and Municipal Employees; and Ron Lloyd, Director of Personnel, City of Little Rock. I anticipate in future years the reputation of this fine presentation on current developments in the vast area of labor law will attract more general practitioners whose clients find themselves involved in the multitude of cases arising in this area as well as business agents and presidents of local labor unions whose attendance has been thin in recent years. The overall purpose of this program as presented by the Labor Law Section is to present both sides (or in some cases three sides) of each issue and not to present a "promanagement," "pro-union" or "proclaimant" bias.

SECOND ANNUAL TAX AWARENESS INSTITUTE A Tax Awareness Institute jointly sponsored by AICLE and the Taxation, Trusts and Estate Planning Section of the Arkansas Bar Association will already have been presented in Little Rock, on April 25-26, by the time the Arkansas Lawyer reaches the membership. Randall W. Ishmael presided as chairman of the program which was billed as a "nuts and bolts workshop" concerned with the use of trusts in estate planning for non-tax-oriented lawyers. The subjects discussed under


this general topic were selected in the areas in which most practitioners are involved at some time such as: marital deduction trusts, generation-skipping trusts, life insurance trusts-revocable and irrevocable, trusts for minors, Clifford trust arrangements, property lease-back trusts, revocable trusts in general as well as a panel discussion of the statutory power of fiduciaries, practical aspects of trust administration, selection of trustees and income taxation of trusts. It is the purpose of these nuts and bolts workshops for non-tax-oriented lawyers to provide "awareness" of the tax aspects of various areas in which most attorneys practice which are affected by the tax law in some way. The objective is to give the participants in this program an idea of the tax aspects involved, some of the general theory behind the tax law applicable and points to consider in representing their clients without trying to make tax specialists out of them. So far these programs have been well received and it is felt that they have been a material factor in the increased lawyer attendance at the Annual Federal Tax Institute conducted jointly with the CPA's.

SECOND ARKANSAS COLLEGE OF TRIAL ADVOCACY The Second Annual Arkansas College of Trial Advocacy, jointly sponsored by AICLE, the UALR School of Law, and the Arkansas Trial Lawyers Association will be conducted in Little Rock at the Old Federal Building for five days beginning May 11 and ending May 15. Once again this program will be limited to thirty-six registrants, and it is designed primarily for practicing attorneys with zero to five years of trial practice experience. This trial advocacy program will stress techniques and information designed to enhance the practical knowledge and to sharpen the courtroom skills of those attorneys who attend. Lectures, demonstrations and workshops will be conducted by highly qualified teams of experienced trial practitioners and law professors. The topics covered will include, but not be limited to, direct and cross examination of witnesses (expert and lay), adverse examination, opening statement and closing argument, use of demonstrative evidence and foundationsimpeachment. There will be three concurrent workshops, each consisting of a leader and

workshop faculty of two seasoned practilioners (one plaintiff oriented, one defendant oriented) with twelve participants. By the use of lectures, demonstrations, and videotaping of the performance by the participants, the workshops will focus on improvement of the participants' trial skills. The workshop leaders will be Thomas J. McNamara, Esq., Grand Rapids, Michigan; Professor Steven H. Goldberg, UALR School of Law; and James A. George, Esq., Baton Rouge, Louisiana. A partial list of workshop and demonstration faCUlty includes: Scott Baldwin, Esq., Marshall, Texas; Phillip Carroll, Esq., Little Rock, Arkansas; Robert C. Compton, Esq., EI Dorado, Arkansas; Winslow Drummond, Esq., Little Rock, Arkansas; Stephen Engstrom, Esq., Little Rock, Arkansas; Professor James Jeans, University of Missouri at Kansas City School of Law; Phillip E. Kaplan, Esq., Little Rock, Arkansas; Boyce R. Love, Esq., Little Rock, Arkansas; Sidney S. McMath, Esq., Little Rock, Arkansas; Walter R. Niblock, Esq., Fayetteville, Arkansas; Samuel A. Perroni, Esq., little Rock, Arkansas; George Procter, Esq., U.S. District Attorney; Hillary Rodham, Esq., Little Rock, Arkansas; William R. Wilson, Esq., Little Rock, Arkansas; and Honorable Henry Woods, U.S. District Judge. By the time this issue of The Arkansas Lawyer has been published the general bar membership will have already received an initial flyer along with a more complete follow-up brochure announcing the details of the Arkansas College of Trial Advocacy program for 1980.

ANTITRUST-A FIRST FOR ARKANSAS A program entitled "Antitrust: An Overview for the General Practitioner"

jointly sponsored by AICLE and the Committee on Antitrust and Trade Regulation of the Arkansas Bar Association will be presented at the Camelot Inn in Little Rock on Friday, May 23. James M. Simpson, Jr. is the program chairman and the program will include such topics as an introduction and scope of the program; a videotape entitled "The Name of the Game is P & L", the statutory scheme, agreements between competitors and monopolization, antitrust problems in the distribution of goods and services, pricing under Robinson-Patman, and concluding with a panel discussion of a variety of nuts and bolts type subjects. The program chairman states in the forward that subjects discussed within these general topics will be those which the general practitioner will encounter while representing business clients as well as an individual who might be interested in filing a class action.

PROGRAMS IN PROGRESS Please mark your calendars for the following annual programs: the Fall Legal Institute in Little Rock on September 18-19, devoted to the introduction of the new family law system, jointly sponsored by the Family Law Section of the Arkansas Bar Association; the Twenty-first Annual Practice Skills course in Little Rock, on October 2, 3 and 4, jointly sponsored by the Young Lawyers Section of the Arkansas Bar Association; the Arkansas Federal Tax Institute in Little Rock on November 13-14, jointly sponsored with the Arkansas Society of CPA's and the Midyear Meeling, January .15-16, 1981, devoted to the introduction of the creditors and debtors law system and jointly sponsored by the Creditors Rights Committee of the Arkansas Bar Association.

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july 1980/Arkansas Lawyer/161


ARKANSAS BAR fOUNDA TION by Boyce Love Chairman

This is the last report of the Foundation year, and I want to tell you a little about what has been accomplished during the year and what the future appears to hold for the Arkansas Bar Foundation. The strength of the Foundation comes from our Fellows program. It all began back in 1959 when the first pledges were made toward acquiring property and constructing a building. Much work was done over a long period of years as solicitations were made around the state by many volunteers. It got into high gear, however, in the late '60s and early '70s leading up to the construction of the building in 1973. There has been no membership drive since, but new Fellows have continued to trickle in. We felt, however, that since the completion of the building and the gradual cessation of efforts to enlist new Fellows, a number of lawyers had reached the stage in their lives and practice that they should be Fellows. Further, we felt that many of these lawyers would have already joined the Fellows' rolls if they had been given the opportunity. Therefore, a committee was appointed, under the leadership of Bill Eldredge, to scan the Bar directory and approach those people who seemed to fit in that category. This is presently being done, and our predictions have turned out to be true. A number of new Fellows have already been enlisted, many paid in full, and others have the matter under serious consideration. Our Oral History Committee has been active. There will come a time when the tapes of these interviews with the "elders" of our profession will be regularly sought out and listened to by students, researchers and the history conscious. 162/Arkansas Lawyer/July 1980

In the fall, the Foundation sponsored a seminar at the University of Arkansas School of Law in Fayetteville, which was devoted to a critique of the lawyers by judges. A crowd of about 100 lawyers heard Chancellor Tom Butt, Circuit Judge Tom Digby, Justice John Fogleman and U.S. District Judge Tom Eisele discuss the everyday errors seen in court from the other side of the "bench." The Foundation Trust Funds have continued to grow, making more income available for law scholarships, public education programs, law school awards, law review subsidies and numerous other worthwhile efforts. In addition to the funds provided by new Fellows and payments on Fellow pledges, the Foundation has received several gifts and contributions to designated Scholarship funds. The Rose Law Firm has recently put $15,000.00 in trust with the proceeds to be used for Foundation scholarships. Friday, Eldredge & Clark has established a scholarship fund in the name of ~s deceased members. Additions have been made to the Charles Eichenbaum scholarship fund, making it the largest fund honoring one individual. Rather, Beyer & Harper has added another $1,000.00 to its scholarship fund making a total of $6,000.00 it has donated for this purpose. A number of other donations and contributions have been made, including several to honor deceased members by placing their names on the Memorial Border at the Law Center. Our Foundation has been recognized as the leading Foundation in the United States. Other states are seeking to duplicate what has been done here. It has all been accomplished by the lawyers of Arkansas, but credit

must be given to Col. C. E. Ransick who has been a strong and innovative Director, never tiring and always having our Foundation and Association as the number one priority in his life. Sid McCollum of Bentonville will become Chairman of the Foundation in June by virtue of the automatic elevation provision of our by-laws. He is currently Vice-Chairman. Sid has been a loyal and ever energetic leader of the Bar for a number of years. He has many good ideas for the Foundation's coming year and will make an excellent Chairman. I have enjoyed serving as Chairman during the past year. Thank you for the opportunity. Boyce Love, Chairman ADDENDUM

In line with Foundation Chairman Boyce Love's comments above, the following lawyers should be added to the Fellows' list and to the Sustaining Members' list, published in The Arkansas Lawyer, April 1980: FELLOW Judge J. Frank Holt, whose name was inadvertently left off the pUblished Fellows' list. NEW FELLOWS Robert Batton Jacksonville, James H. McKenzie Prescott, A. Glenn Vasser Prescott, Searcy W. Harrell, Jr. Camden,

AR AR AR AR

NEW SUSTAINING MEMBERSHIP J. L. Shaver, Jr. Wynne, AR

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CODE Of PROfESSIONAL RESPONSIBILITY COMMINGLING FUNDS Many complaints involving the manner in which lawyers have handled funds for their clients are caused by poor law office management rather than by misappropriation or misuse of clients' funds, Often, the lawyer knows that the funds or property of the client have been properly preserved, but, due to poor office management, he is unable to demonstrate this fact or make prompt disposition of funds or property. Further, regardless of good intentions, if in fact the client's funds or other property have been commingled with those of the lawyer, there would be a violation of the Code of Professional Responsibility. The handling of funds by a lawyer is governed by Disciplinary rule 9-102(A) as follows: "All funds of clients paid to a lawyer or law firm, other than advances for costs and expenses, shall be depo-

sited in one or more identifiable bank accounts... and no funds belonging to the lawyer or law firm shall be deposited therein except as follows: (1) Funds reasonably sufficient to pay bank charges may be deposited therein ... [and] (2) Funds belonging in part to a client and in part presently or potentially to the lawyer or law firm must be deposited therein, but the portion belonging to the lawyer or law firm may be withdrawn when due unless the right of the lawyer or law firm to receive it is disputed by the client, in which event the disputed portion shall not be withdrawn until the dispute is finally resolved." Every lawyer and law firm should establish office management procedures designed to insure clear accountability for all funds and other property of each client.

Refusing To Be Discharged By A Client A related complaint is that the lawyer, who has been informed of his client's desire to retain other counsel, refuses to withdraw from the representation when requested to do so by the client. This refusal is often predicated on the erroneous assumption that it is justified by an existing lawyer's lien for his fee. There is no authority for such a position under the Code of Professional Responsibility. Disciplinary Rule 2-11 O(S) states: "A lawyer representing a client before a tribunal, ... and a lawyer representing a client in other matters shall withdraw from employment, if:... (4) He is discharged by his client." Withdrawal from representation is mandatory upon discharge by a client.

Disciplinary Rule 2-11 0(A)(2) further sets forth the duties of a lawyer upon withdrawal from employment, and Disciplinary Rule 2-11 0(A)(3) provides: "A lawyer who withdraws from employment shall refund promptly any part of a fee paid in advance that has not been earned." A lawyer can avoid this type of complaint by promptly taking the necessary steps to withdraw from employment as soon as a client has indicated to him that his services are no longer desired. If the lawyer wishes to assert a statutory or common law lien or recover any unpaid portion of his fee, he must rely on the civil procedures available for assertion of such rights.

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July 1980/Arkansas Lawyer/163


EXECUTIVE COUNCIL NOTES by James A. Buttry Secretary-Treasurer

At its meeting of December 15, 1979, the Executive Council acted on a number of matters which have been of interest to the Association for some time and many of which presaged action by the House of Delegates at its January meeting. The Judicial Poll surfaced again. Judge Dean Morley reported for the Judicial Poll Committee. Judge Morley reported that the Judicial Council was generally in favor of the Poll and seemed to find it helpful. On motion by President Cox the recommendations of the Committee regarding procedure and format for the Poll were unanimously approved. (As you know, the House did not take action and the Poll has been mailed to the membership, and the results are being tabulated.) A discussion ensued regarding whether there existed a "gag rule." President Cox stated that the Association ought to oppose a gag rule and, if it continues, should develop some method whereby information developed by the Poll could be made available to the public. Robert Serio moved that it be recorded as the sense of the Council that the purpose of the Poll be regarded primarily as educational, as opposed to political (as set forth in the Smith letter). The motion passed unanimously. Web Hubbell moved that it be recommended to the House of Delegates that the Judicial Poll Committee prepare, for exposure and review, a poll of the type that should be made, with its results, available to the public. The motion passed unanimously. President Cox reported that he had advised the Arkansas Supreme Court of the recommendations of the Association, as approved by the House, regarding changes in the procedures and responsibilities of the Court and 164/Arkansas Lawyer/July 1980

the Court's Committee on Professional Conduct regarding professional ethics and discipline matters. The recommendations approved by the House specifically deal with publication of actions taken by the Committee on Professional Conduct, the adoption of procedures for the handling of client matters for lawyers who die, become incapacitated or become disabled, the rendering of advisory opinions, the restructuring of the Committee on Professional Conduct and the issuance of guidelines regarding the handling of client trust funds. (The Court recently announced changes in its policy regarding publication of proceedings.) President Cox introduced Mr. Don Hollingsworth who described the goal of the Legal Services Corporation with regard to Arkansas, the goal being to provide legal services to poor persons in every county in Arkansas by the end of 1981. Tom Overbey appeared before the Council and reported on the Supreme Court's rejection of the Association's specialization plan. He reported that the rejection of the Court appeared to be on two grounds: (1) The type of plan. The Court indicated that it would prefer a certification plan over a designation plan. (2) Timing. The Court indicated that the Arkansas Bar was not yet ready for specialization. President Cox recommended that the Court be made aware of the problems and the need for some kind of specialization plan. Wayne Boyce pointed out that the Association's Committee had worked long and well to produce the plan and the petition which was presented to the Court, and a spirited ovation was given Tom Overbey and the Committee. It is becoming more and more apparent

that specialization has become another issue that will not go away until it is resolved in some way. Don Schnipper reported on activity in the federal district courts in Arkansas with regard to the recommendations of the American Bar Association Devitt Committee. He referred to the proposal accepted by the judges for the Eastern District of Arkansas. There was some discussion of whether there would be an attempt to implement a rule that an inexperienced lawyer could not try a case in federal district court unless he was assisted by a more experienced lawyer. The question was raised whether this was intended by the judges and whether the federal courts had the power to implement this type rule. On motion by Bill Bridgforth, it was unanimously agreed that the "judicial critique" portion of the recommendations would be recommended to the House of Delegates for approval. President Cox moved that the Legal Education Committee speak out and ask 100 lawyers in the State to assist as assistants in the program. That motion passed unanimously. (The House approved the recommendations in their entirety at its January meeting.) John Gill reported on Lawpac. Lawpac is an independent organization which: (1) supports candidates for office and (2) sponsors and supports legislation of interest to practicing lawyers. Gill stated that there is no federal income tax reason for having an organization like Lawpac unless the organization is involved in the support of candidates for office and that the support of candidates for office is a bad idea. He recommended, therefore, that Lawpac be permanently tabled. Bill Wilson pointed out that the Association did not have the influence in the Legis-


lature that it ought to have and that if lawyers are to have a full time lobbyist Lawpac, or something like Lawpac, would probably be necessary. Pres,dent Cox stated that he agreed with Bill Wilson. A motion by Gus Walton was accepted to the effect that the Political Action Commillee make specific recommendations to the House of Delegates at its next meeting with regard to the retention of a lobbyist and how that effort might best be funded. That motion passed unanimously. (And the House, at its January meeting, approved the idea of monthly contributions to a special fund for the support of a lobbyist.) Tom Ledbetter reported on Bar related title insurance. He described the concept: that the lawyer should be involved in every aspect of a real estate transaction. He stated that the trend was away from title opinions and in the direction of title insurance. He pro-' posed: (1) that a title insurance company be formed. (2) that the title insurance company be a separate corporation, (3) that membership in the company be limited to members of the Association, and (4) that there be assessed a membership fee of $50, with the purchase of subordinated debentures for $200 each, with a ten-year payout on the debentures. He stated that premiums for Bar related title insurance would be less than premiums for a commercial company and that Bar related title insurance is different from commercial title insurance in that with Bar related title insurance title opinions are prepared and are prepared by lawyers. He stated that it was appropriate that the Executive Council give its approval to go forward. Tom Ledbetter moved that upon approval by the House of Delegates (which approval was given in January) a committee be authorized to prepare articles of incorporation for a Bar related title insurance company and that it be authorized to solicit membership from among the members of the Association. His motion passed unanimously.

has done a "180 degree turn" and now believes that the Association should begin to develop some kind of mandatory CLE program. Wayne Boyce pointed out that the approach must be made through the Arkansas Supreme Court and moved that it be recommended to the House of Delegates that the Legal Education Committee pursue the matter of mandatory CLE with the Arkansas Supreme Court. The motion passed unanimously. (This recommendation was also approved by the House at its January meeting.) Regarding the most highly publicized maller to come before the Council in some time, President Cox pointed out that, particularly in view of the resolution presented for consideration by the House of Delegates regarding the recent events in Federal District Court for the Eastem District of Arkansas, regarding charges of racism and JUdge Elsijane Roy's disqualification, he had invited Mr. John Walker and Mr. Eugene Hunt to appear before the Executive Council. The resolution involved was referred to as Resolution No. 80-1. A transcript or partial transcript of the proceedings in Judge Roy's court was presented. Mr. Walker offered to read the transcript and did so, discussing the ci rcumstances preceding and surrounding the hearing and the colloquy which took place. Bill Wilson suggested that a resolution be adopted generally in support of Judge Roy and without reference to John Walker or to a particular case. Robert Serio moved that Resolution No. 80-1 receive from the Executive Council a "do not" pass, and that motion passed unanimously. Wayne Boyce moved that the Council express its confidence in Judge Roy as a jurist qualified and without bias or the appearance of bias. Sid McCollum, a member of the Resolutions Committee in attendance, suggested the Council ought perhaps to allow further facts to develop. A general discussion took place and ultimately the Council adopted unanimously a motion by President-Elect Phil Carroll which stated:

Don Schnipper reported that the matter of mandatory CLE may be temporarally moot due to the decision of the Arkansas Supreme Court to reject the specialization rules. There are serious reservations about attempting to carry out mandatory CLE without specialization. President Cox referred to his remark in the last addition of the Arkansas Lawyer. He stated that he

It is the considered judgment of the House of Delegates of the Arkansas Bar Association that the federal judiciary in the Eastem District of Arkansas, including Judge Elsijane T. Roy, are fully dedicated to the principles of equal justice under law for all citizens without regard to race, color, sex or creed; and it is the judgment of the House that statements made against

Judge Roy and the federal courts in Arkansas were whOlly unjustified; and the House of Delegates commends the judiciary of the Eastern District of Arkansas for its unswerving dedication to the principles of the United States Constitution and statutes enacted pursuantthereto designed to protect equal justice under law, and that it deplores intemperate and ill-advised conduct on the part of any attorney which would undermine the public trust in the fairness and impartiality of the federal judicial system in Arkansas. As is well known, the House tabled the matter at its January meeting.

Sign Off This is my last column as Secretary-Treasurer of the Association, and I sign off with deep regret. It has been a stimulating and rewarding experience and an opportunity for which I shall always be grateful. The Association deals continually with matters that are of great importance to the Bar and the public-of greater importance, one suspects, than is realized by many members of the Bar. Decisions involving advertizing, specialization, the availability of legal representation, ethics and continuing legal education, for example, will have great impact on the Bar and the public, perhaps for all time, and it is essential that the organized Bar be involved in those decisions. In my opinion, the active, and sometimes aggressive, involvement of the Bar in these and other decisions is necessary if the practice of law is to continue to develop in ways that are in the interest of lawyers and the pUblic. And an informed and well-led Association is the only effective means whereby the Bar can be represented. One cannot but conclude that having an informed and growing membership and continually growing support of the law schools in the State provide the key to the Association's power to act in leading the Bar through the 1980's. The aspect of my tenure that I will recall with the strongest feelings is that of association with those lawyers who have worked hard and effectively to serve the Association. The memories of common effort with two outstanding Presidents, two outstanding Chairmen of the Executive Council and an outstanding Director will always be warm and rich. We have been blessed by leadership beyond any1hing that we could have claimed by right. ~ July 1980/Arkansas Lawyer/165


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HORST FISCHER WELCOMES THE LAWYERS OF ARKANSAS TO ARKANSAS BAR ASSOCIATION'S 82nd ANNUAL MEETING JUNE 4-7, 1980 ARLINGTON HOTEL, HOT SPRINGS

NEW GENERAL MANAGER AT THE ARLINGTON HOTEL Horst H. Fischer, previous general manager of the Water Tower Hyatt House in Chicago, is the new general manager of the Arlington Hotel, according to Houston Burford, general manager of Southwest Hotels. Fischer succeeded Edgar A. May who retired as general manager after 27 years of continuous service. May will remain at the Arlington as a consultant through Dec. 31, 1979. His successor, Fischer, has been affiliated in managerial positions with the Hyatt Hotel organization for the past four years in Dearborn, Mich., and Chicago. Prior to that affiliation, Fischer served as food and beverage director of the Chase-Park Plaza Hotel in SI. Louis, and l66/Arkansas Lawyer/July 1980

as general manager, food and beverage director of the famous Sea Pines Plantation Club Resort at Hilton Head Island, S.C. Born in Berlin, Germany, in 1939, Fischer received his food and beverage managerial training in leading hotels throughout Switzerland in Geneva, Burgenstock, Locarno, Flims and Vulpera. When asked what brought him to the Arlington Hotel, Fischer replied, "My family and I have fallen in love with the beautiful mountains, lakes, and forests of Arkansas. "We want to do all we can to share with guests of the Arlington the many special food and beverage services we have presented around the world."


ADDENDA by C. E. Ransick Editor

Cover Story

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July 4th We have tried to come up with a cover for the July issue of the Arkansas Lawyer-a cover which remembers the heritage of the United States. Few remember that Thomas Jefferson died at Monticello on July 4, 1826--the 50th anniversary of the adoption of the Declaration of Independence-murmuring "This is the Fourth". With his last breath, he remembered. With this painting, "Nine Very Human Men", artist Dan F. Howard of Lincoln, Nebraska, fittingly shows the American flag in the background. With the theme of Country and Court, we remember the Fourth of JUly. This painting is another from West '79/The Law, the national art competition and exhibition of contemporary art reflecting aspects of the Law, sponsored by the West Publishing Company in cooperation with the Minnesota Museum of Art. We are privileged to have the permission of the West Publishing Company to highlight the artworks from West '79/The Law.

YOUNG LAWYERS SECTION The Young Lawyers Section of the Arkansas Bar Association has received from the American Bar Association's Young Lawyers Division $2500 to undertake a public information project on the proposed Arkansas Constitution. The YLD's Affiliate Outreach Public Service Grant Program is a national competition. Our YLS is to be congratulated. Basis for the award is a planned YLS Speakers Bureau, which will provide speakers on the Constitution upon request. Presentations will be non-partisan and informational in nature. The speakers will be given an advance orientation. A mailout to all members of the Arkansas Bar Association will solicit volunteers for the Speakers Bureau. As stated in the award announcement, the project "promises to provide a great service to the people of Arkansas". The project will also provide our members a great opportunity for pUblic service.

CAVEAT The Association's House of Delegates, at its September 15, 1979 meeting, voted unanimously to have Association President E. Harley Cox, Jr. request the Arkansas Supreme Court to issue guidelines for lawyers' trust accounts. See

Code of Responsibility, this issue of The Arkansas Lawyer, for a related decision on "Commingling Funds" under Disciplinary Rule 9-102(A). In an informal decision, the Court indicated "The Court does not think it appropriate to issue guidelines to lawyers regarding the handling of client's trust funds. The law governing that aspect of a fiduciary's duties does not seem to need clarification". However, as pointed out in Mr. Cox's letter of Novemb,;,r 19, 1979 to the Court, the Executive Secretary of the Court s Committee on Professional Conduct and a member of the Committee have indicated that the mishandling of clients' funds is "probably the largest single basis for complaints made against lawyers of a serious nature". In fact, the Court's client Security Fund Committee paid out at least seven (7) claims for misappropriation of clients' funds by lawyers in 1978; and four (4) members of the Arkansas Bar gave up their licenses to practice law as a result. The Court has requested that the "difficulties and suggested corrective measures be sUbmitt.ed to the Court". The Association's Committee on ProfeSSional EthiCS and Grievances is working on the matter. Arkansas is not alone with this problem. In the Illinois Bar Journal (September 1979), General Counsel of the Illinois State Bar Association Howard H. Braverman published an article, "On A Frequently Misunderstood Ethic". He wrote, "One Disciplinary Rule' of the Illinois Code of ProfeSSional Responsibility which is being overlooked with alarming frequency, or is misunderstood by an alarming number of lawyers, reads in pertinent part: "DR 9-102 Preserving Identity of Funds and Property of a Client. (A) All funds of clients paid to a lawyer or law firm shall be deposited in one or more identifiable bank accounts maintained in the state in which the law office is situated and no funds belonging to the lawyer or law firm shall be deposited therein ...." Two exceptions are usually appended to the rules, I.e. provisions that a lawyer may deposit funds of his own to maintain or open a special account, and provisions that a lawyer may withdraw funds held in a trust which are due to him. What the Rule really says is that lawyers should segregate, and not commingle, client funds with their personal funds, and that the clients' account should be Identifiable as a fiduciary account, for that is truly the relationship. of the attorney to his client when he is holding funds to which the client has a right. . We live in a society where words have meaning and such terms as "client account" or "trust account" clearly indicate to a third party that the funds therein are trusteed funds and not the personal funds of the individual lawyer. However, all July 1980/Arkansas Lawyer/167


too frequently funds from those accounts are used to pay personal debts or expenses of a lawyer or law firm. Such action courts the charge by a third person-it could be a client, a bank, a realtor or someone else-that the lawyer, did in fact, commingle funds. Of course, in addition to professional embarrassment and Internal Revenue problems which may arise, the unauthorized use of someone else's money can incur criminal sanctions. The prevalance of this mislabeling of accounts prompted the Professional Ethics Committee of the ISBA to issue Opinion 534 (March 9, 1976) wherein it said: "The distinction between a general deposit and a special deposit is well recognized ... (A) trust account implies that the deposit is a special deposit, requiring the bank to keep the deposit separate from its general deposits (Citing 10 Am Jur 2d, Banks, Sec. 363, et seq.)." Continuing, the opinion says, the use of the term "Trust Account" by the lawyer, " implies that the funds therein are solely those of a client DR 2-102(A) expressly prohibits commingling of the lawyer's funds with the funds of his clients." The Supreme Court of California dealt succinctly with the issue in a 1962 decision' when it stated, "(C)ommingling is committed when a client's money is interminglec with that of his attorney and its separate identity lost so that is may be used for the attorney's personal expenses or subjected to claims of his creditors... (T)he rule against commingling was adopted to provide against the probability in some cases, the possibility in many cases and the danger in all cases that such commingling will result in the loss of client's money." (Citing Clark v. State Bar, 39 Cal. 2d 161,246 p. 211) That someone will rightfully or wrongfully assume that debts and personal expenses paid out of a "trust account" or "client account" is commingling should be avoided at all costs and those members of the Bar of Illinois who mistakenly utilize such titles for personal or firm accounts should take heed and make prompt changes. Certainly the need exists for a iawyer to have a personal account and an office account but they should be properly labeled so that there is no room for misinterpretation by anyone. "Separation of the funds of a client from those of his lawyer not only serves to protect the client but also avoids even the appearance of impropriety." (E.C.9-5, ISBA and ABA Codes of Professional Responsibility) The unfortunate aspect of this problem is that, while members of the Arkansas Bar Association have been oriented about DR 9-1 02(A), other members of the Arkansas Bar have not been so fortunate. While the subject of Ethics is not a bread-winner for lawyers and is not well received as a subject, a series of local institutes around Arkansas is being planned for coverage of Ethics and Malpractice. All lawyers will be encouraged to attend these seminars. ~

1. The same or language of similar ifDport appears in DR 9-1 02(A) of the ABA Code of Professional Responsibility and DR 9-1 02(A) of the Committee on Professional Responsibility Illinois Supreme Court, December, 1978

(Stanley Report). 2. Black v. State Bar, 57 Cal. 2d 219, 368 P.2d 118 (1962). 168/Arkansas Lawyer/July 1980

TAX TIPS by Paul D. Williams Director, Little Rock District Internal Revenue Service

Collection Policies And Practices I am sure that my concern regarding the collection of tax is shared by you and your clients, especially in view of the availability of funds in the State of Arkansas. In order to get a handle on the economic conditions, the availability of funds, and the lending procedures of institutions throughout the State, I engaged the services of a financial expert from the University of Arkansas at Fayetteville to make a study of these concerns. By and large, the study was very favorable and predicted a strong economic posture in the State. However, as you probably have concluded, it showed the lack of availability of funds in some sections of the State. You and I realize that quite often when someone is having difficully in paying his/her Federal income taxes, as well as withholding and social security taxes, they are also experiencing financial diffiCUlty in other facets of their business operations and personal life. I would like to share with you some cautions, as well as provisions for assisting your clients in satisfying their tax liabilities. There are specific policies and practices for collection of delinquent taxes on different types of delinquencies. Small dollar income tax delinquencies on a taxpayer who has not been delinquent before and is current on withholding or estimated tax payments can normally be granted an installment agreement. However, once a taxpayer repeats his delinquencies more stringent enforcement action must be taken. I have had several inquiries and requests not to file tax liens when taxpayers owed Federal Taxes. I can appreciate your client not wanting a tax lien filed but it is necessary to protect the priority of the Government position. The alternatives are to file a lien, be furnished a letter of credit from an approved institution, a surety bond, or the pledge of assets approved for at least one and one-half times the amount of tax owed. Now as a word of caution-there sometimes is a tendency on the part of taxpayers who are experiencing financial difficulties, to "stretch" their ability to pay to the extent that they pay net salaries to their employers and do not pay the social security or withholding tax to the Federal Government. The failure to withhold and pay over trust fund tax is a misdemeanor under Section 7215 of the Internal Revenue Code. We will work with you and your clients in any way legally possible to prevent this type of action. II is my responsibility to ensure that, to the extent possible, taxes owing to the Federal Government will be timely paid or other appropriate arrangements made. Enforced collection action is a costly process. Be assured that my Collection Division people will work with you and your clients to avoid this type of situation whereever possible. Paul D. Williams District Director

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