Page 1

A SYtnbolof

PROTECTION for the nation's Legal Profession For nearly a century the First American eagle has been a symbol of reliable protection and dedicated service to the nations legal profession. For title expertise, experience, and a keen understanding of the needs of the legal profession, call on First American. There is an office or agent near you ready to serve. .\~1~·1{1



First American Title Insurance Company ofMid-America REGIONAL OFFICE: 100 North Main Building, Memphis, Tennessee 38173·0073' (901) 525-4343 ARKANSAS TOLL·FREE NUMBER: (800) 238·6321

SERVING TITLE INSURANCE NEEDS THROUGHOUT MID-AMERICA ABilinted !"iill The Fi,·,.. ' Amer;('on F'inan("ial Corpomtion

October 1983 Vol. 7, NO.4



Arkansas Lawyer SPECIAL FEATURES Tax-Savings Opportunities in the Purchase or Sale of a Corporate Business John B. Peace 152


Organizational Directory 1983-84

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

A Practical Introduction to International Business and Commercial Law for the Non-Specialist Mark W. Grobmyer 167


Cases and Materials on American Conflicts Law: A Book Review Lawrence H. Averill 178

Norwood Phillips W. Kelvin Wyrick Gary Nutter Robert M. Cearley Kaye S. Oberlag Tom Overbey Marcia Mcivor

Robert Hornberger Joe Reed Tommy Womack Julian Fogleman James A. McLarty EX-OFFICIO

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

C. E. Ransick


REGULAR FEATURES President's Report Dennis L. Shackleford Arkansas Bar Foundation Report Cyril Hollingsworth Executive Council Notes Annabelle Clinton Young Lawyers' Update Carl A Crow, Jr. Law School News Juris Dictum . . . . . . . . . . . . . . . . .. Robert L. Lowery In Memoriam To Wit ..............................•.............. Code of Professional Responsibility . . . . . . . . . . . . . . .. Oyez-Oyez . . . .. Carol Utley Methods and Means Bernard Sternin Legal Economics Kline D. Strong AICLE News . .•.•..... Claibourne W. Patty, Jr. Fall Legal Institute ...•.•............................ Service Directory ....................•...•.•........

142 143 144 146 148 150 158 171 172 174 176 180 182 184 IBC


The Arkansas Lawyer (USPS 546-040) is published quarterly by the Arkansas Bar

Association, 4()() West Markham, Little Rock, Arkansas 72201. Second class postage paid at Little Rock, Arkansas. Subscription price to non·members of the Arkansas Bar Association $6.00 per year and to members $3.00 per year included in annual dues. Any opinion expressed herein is that of the author, and not necessarily that of the Arkansas Bar Association, The Arkansas Lawyer, or the

Editorial Committee. Contributions to The Arkansas Lawyer are welcome and should be sent in two copies to the Arkansas Bar Center, 400 West Markham, Little Rock, Arkansas 72201. All inquiries regarding advertising should be sent to The Arkansas Lawyer above address.

October 1983/Arkansas Lawyer/141


On June 11, 1983, the House of Delegates of the Arkansas Bar Association unanimously approved the report of the Special Planning Committee. By this action the House of Delegates affirmed its commitment to planning as a way of life in the Association. This is my first report to the members of the Association as president. I intend to inform you of the work of the Special Planning Committee, its report, and the short-range future of long-range planning within the Association. In September, 1978, then Association President Wayne Boyce called the Arkansas Bar's first long-range planning conference. It was thought this approach would overcome deficiencies that result from the short-term year-to-year planning occurring with the annual change of Bar presidents. The foremost topic on the minds of the conferees was "lawyer competence." In mid-April, 1982, members of the House of Delegates and other Bar leaders were called to meet by Association President Phillip Carroll for the purpose of deciding projects, both short and long range, which should be given priority for the Arkansas Bar Association. SUbjects discussed included mandatory continuing legal education, law reform through aggressive promotion of Bar legislative package, reducing the cost of legal services, providing financial support to improve the judicial system, access to lawyers and meeting the need for legal services, and the economic delivery of quality legal services. President James D. Cypert named the first Special Planning Committee to function during his 1981-82 term. This committee conducted the longrange planning conference in late April, 1982. From that conference came the framework of a five-year plan for the Association. President Jim Shaver appointed Robert K. Walsh chairman of the SPC and charged him to organize the planning retreat in the 142/Arkansas Lawyer/October 1983

spring of 1983. The product of the retreat was the report of the SPC which has now been approved by the House of Delegates. There were seven planning topics at the conference and included in the report. Some of the immediate activities to implement the plan during this Bar year are set forth as follows: Access Of The Public To Lawyers And Allocation Of Legal Resources The Association is to assist the recruiting activities of the Young Lawyers Section for pro bono lawyers in the representation of the lowincome elderly. The Committee on Interest on Lawyer Trust Accounts under the able guidance of Herman L. Hamilton is charged with the responsibility to pursue this plan to obtain approval by the Arkansas Supreme Court. In spite of the denial of an earlier petition, it is believed the program has such great merit that a new petition would be favorably received by the Court. The funding and structure of a defense to indigents in criminal cases is a matter to be studied by an Association committee. The necessary legislation is to be prepared for inclusion in the 1985 Association-sponsored legislation. Professional Competence And Accountability And Lawyers' Responsibility To The Community An important recommendation of the report is the implementation of a program for mandatory continuing legal education. A committee will be appointed to study and propose a plan in the Arkansas Supreme Court. Specialization is in the formative stages. Lawyer discipline has been studied and a petition is to be filed with the Arkansas Supreme Court to revamp the present method of handling grievances and discipline. Clearly

there is a strong interplay between mandatory continuing legal education, specialization, and lawyer discipline, all coming together under the broad umbrella of professional competence. The Association is asked to study the present system of recompensing the client through the client security fund. This would include a review and evaluation of the need and purpose of any changes, or whether a recommendation should be made to drop the program. Future Of The Organized Bar The Association is urged to continue its activities of public information and youth education. These programs of the Association have met with good success. The work of the Public Information Committee under Sam Perroni is commended, as is the videotape program produced by David Malone. There is available to Association members advisory ethical opinions and other research on ethical problems through the Association's Professional Ethics and Grievance Committee. The information comes from In-House Services of the American Bar Association. Legislation And The Lawyer This was the most comprehensive report coming out of the conference. It deals with such subjects as Lawpac, limitation on the number of bills sponsored by the Association in the Legislature, and effective lobbying. The report of the Legislative Oversite Committee was extensively reviewed. Changes were recommended. There is a recommendation that Barsponsored bills be limited to ten for each legislative session. It is recommended that a legislative board be established with authority to act for the Association in approving amendments to Bar-sponsored bills, or to oppose other legislation. continued on page 173

ARKANSAS BAR fOUNDA TION by: Cyril Hollingsworth

Each year the Arkansas Bar Foundation looks forward to a new year, mindful of its origins and history and the sacrifices of lawyers who gave generously of money and time in the past. This is true particularly this year. The service of Randy Ishmael last year as Chairman of the Foundation reminds us of all those lawyers who have served in various capacities to make the Foundation a reality. The retirement of Colonel C. E. Ransick as Executive Secretary of the Foundation is a signal event. Colonel Ransick has been untiring in his efforts to build a solid financial base for the Foundation, and he leaves the Foundation in excellent financial condition. The Foundation is participating in the establishment of a scholarship at each of our two Arkansas law schools in the name of Colonel Ransick. In addition, in recognition of his outstanding contributions and service, the Board of Directors has designated Colonel Ransick a Fellow of the Foundation and has also established the Colonel C. E. Ransick Award of Excellence to be awarded for exceptional service to the legal profession. A plaque bearing the names of the recipients will hang in the Arkansas Bar Center. /

The Foundation has revised its Constitution and By-Laws. The new Constitution and By-Laws contain no major changes, and continue a Trust Committee composed of seventeen persons, twelve serving six-year terms, to be responsible for the property and assets of the Foundation and

to have the final approval for allocation of income and resources. The Trust Committee and the Board of Directors are to communicate so that the ongoing work of the Foundation and the allocation of funds are coordinated for the maximum effectiveness of the Foundation's programs. The President, Vice-President, and Treasurer of the Foundation, who are Board Members, serve on the Trust Committee. In addition, three members of the Board of Directors will serve on the Special Projects Committee, which is a committee created by the Trust Committee to consider various proposals and projects. The amendments to the Constitution and By-Laws also provide for the rotation of the offices of President and Vice-President among the four bar districts in the state, which has been the custom prior to the amendment. As we look to the future, and recall the purposes of the Foundation, the issue for me is where can the Foundation furnish needed support that makes a difference. The answer to that question will not always be easy and will change from time to time. The Foundation nevertheless welcomes the opportunity to consider such issues and looks forward to the same continuing support of lawyers throughout the state as we go forward. Our goal this year is to increase communication of what the Foundation is doing and to increase the involvement of Arkansas lawyers. We seek to keep members of the Founda-

tion informed and to encourage other Arkansas lawyers to join us as members of the Foundation. We will use this column as one way of informing Arkansas lawyers about the Foundation. One of the ways the Foundation recognizes contributions to the administration of justice and the legal profession is through the presentation of awards. Two awards which the Foundation can make as often as annually, if there are deserving recipients, are the Outstanding Lawyer Award and the Outstanding LawyerCitizen Award. The remarks made about the two persons receiving this year's awards call to mind the past and the future and the type of example the Foundation hopes to foster. Each recipient is recognized' as an exceptional practitioner of law and each recipient has been strongly involved in community affairs. It was pointed out that each of them shuns accolades and the spotlight. In describing one recipient, Foundation Chairman Randy Ishmael noted that lawyers often would ask themselves when facing a particular situation or difficulty what the recipient would do in that situation. The two recipients, David Walker of Jonesboro as Outstanding Lawyer, and Robert Lindsey of Little Rock as Outstanding Lawyer-Citizen, are representative of many other lawyers who promote the system of justice and the legal profession on a daily basis by way of personal example. ~ ~,

October 1983/Arkansas Lawyer/143


By Annabelle Clinton Secretary-Treasurer



Minutes Of The Annual Meeting Of House Of Delegates The House of Delegates of the Arkansas Bar Association met at 9:30 a.m. in the Arlin9ton Hotel in Hot Springs on June 11, 1983. President Jim Shaver, Jr., presided. Jim Shaver gave his President's Report. The House of Delegates accepted the minutes of the last executive counsel meeting; the membership report; the financial report; and the budget for 1983. James R. Rhodes, III reported that the Association did not fair well in the last legislative session. Specifically, all four proposed uniform bills did not get passed. The Association's replevin bill, attorney ad litem expenses for indigents bill, juvenile bill, and proposed constitutional amendment for a four-year term for executive officers, all failed to get passed. Herman Hamilton reported that the Arkansas Supreme Court denied the Association's petition asking the Court to adopt a program establishing and governing interest on lawyer's trust accounts. The House directed the Committee on Interest on Lawyer's Trust Accounts to proceed with the application to the ABA for grant money to finance an educational campaign on the validity of an IOLTA plan, and authorized the expenditure of $1,500.00 as a matching fund for the grant. Clay Patty reported on the Arkansas Institute of Continuing Legal Education. The number of CLE programs grew from 11 to 16 during the past year and attendance grew from 1,678 to 1,900 registrations. However, based upon a review of all the registrations, it appears that between 700 and 900 individuals attend CLE events out of a total Association membership of 3,000. Attendance at regional pro144/Arkansas Lawyer/October 1983

grams was lower this year than in previous years. Mr. Patty reviewed the roster of seminars presented during the past year, including the Association Section sponsoring each seminar. Finally, Mr. Patty noted that.. to the extent there may be a CLE requirement with the advent of specialization, the Association has the organization and means to adequately promote CLE programming. Mr. William S. Arnold, Chairman of the Arkansas Statute Revision Committee, reported that the Arkansas Legislature passed bills in the last session which expand the authority of the Statute Revision Commission and provide funding whereby that Commission can employ an executive director. The objective of the Commission will be to prepare a computerized index of the statutory laws of the State of Arkansas within two years. John P. Gill reported on the work of his committee in developing proposed rules of the Supreme Court regulating the professional conduct of attorneys. The House passed a motion authorizing the filing of a petition with the Arkansas Supreme Court, including the payrnent of filing fee, for the adoption of the committee's proposed rules of the Arkansas Supreme Court regulating professional conduct of attorneys at law. One of the rules provides that the disciplinary hearing will be conducted in private and that, if discipline is awarded, the results of the discipline and the record of the disciplinary proceedings will be made public. There was a lengthy discussion regarding this provision of the proposed rules. The House of Delegates voted in favor of a resolution endorsing the enactment of additional bankruptcy

judges who are qualified to exercise the federal judicial power under Articie III of the Constitution of the United States. The House also voted to adopt a resolution favoring minimum compensation to attorneys for services to indigent people involved in the criminal system, and to adopt a resolution that law professors who have taught law in an accredited school for three years be admitted on motion to the practice of law in the State of Arkansas. Richard F. Hatfield, Chairman of the Supreme Court Committee on Specialization, reported that a notice will be published in the Arkansas Advance Sheets for those persons or or9anizations interested in applying for a specialty to present proposals. The House of Delegates approved the appropriation of $60,000.00 for the acquisition of a computer system, hardware and related other expenses necessary to the installation of a system. The House also voted to enter into a contract with UALR to provide the UALR Law Journal to each member of the Association, just as each member is entitled to a copy of the Arkansas Law Review. The Section of Taxation and Estate Planning will now be called the Section of Taxation and the Probate Law Section will now be called the Section on Probate and Trust Law. The Economics of Law Practice Committee was accorded Section status with a proposed $10 membership fee. Two proposals relating to the Association's group plan of rnajor medical insurance and group disability insurance were approved by the House. The House voted to adopt the following amendments to the Associacontinued on page 177



For Complete Protection... Select --~,-~ OccurrenceBasis Professional f Liability :拢. Insurance.

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

purchased on your last policy. Yet, this limit must be adequate to cover the claims which may be made from all prior years of practice. With the Arkansas Bar-sponsored occurrence program, you don't have these problems because you are purchasing a set of limits for each year of practice-giving you complete protection. That's just one reason why your association has sponsored the Lawyers Professional and Business Liability Program for the past 20 years. For more information on what occurrence coverage can mean for you, contact the program administrator. Arkansas Bar Association Administrator Rather, Beyer & Harper

362 Prospect Building Little Rock, Arkansas 72207 (501) 664-8791 The Arkansas Bar Association-sponsored Lawyers Professional and Business Lability Insurance Program is underwritten by O:mtinental Casually Company and Valley Forge Insurance Company. two of the CNA Insurance Companies.

October 1983/Arkansas Lawyer/145

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

YLS By-Laws Revised The Young Lawyers Section adopted significant revisions to its bylaws during the annual meeting in Hot Springs June 9. The changes are designed to encourage more participation in section activities and to increase opportunities for service. The new by-laws expand section membership to include not only association members under the age of 36, but also all those who have been admitted to practice five years or less. The revisions also provide for election of the Chair-Elect during the annual meeting on a bar district rotation basis, beginning in 1984 with the Southern District, followed in order by the Central, Northeast and Northwest Districts. A candidate must have served on the YLS Executive Committee or as a committee chair and must be nominated by a petition signed by five members of the candidate's bar district, to be submitted prior to the annual meeting. These revisions assure broad geographical representation in YLS activities and continued effective leadership, which are essential to maintaining the YLS' highly successful public service programs while providing the resources necessary to increase services to YLS members. This is the section's principal goal for 1983-84.

Evidence and Trial Tactics In Cancun, Mexico Cancun, Mexico, was the site of a seminar on evidence and trial tactics sponsored by the Young Lawyers Section July 18-21. Featured were Irving Younger tapes on hearsay, trial evidence and trial techniques, together with panel discussions. The seminar was very successful, due largely to the efforts of Phillip Raley and Rick Ramsay of Pine Bluff and Frank Elcan of 146/Arkansas Lawyer/October 1983

Harrison and the assistance of the University of Arkansas at Fayetteville Law School, which provided the video tapes. Participants included both YLS members and other members of the Association. The section plans to sponsor more such educational opportunities in attractive locations in the future.

Officers, Executive Council And Committee Chairmen Named Martha McCaskill of Little Rock was elected Chair-Elect and Rick Ramsay was elected Secretary-Treasurer of the section at the annual meeting. They will also serve as Chair and Vice Chair, respectively, of the YLS Long Range Planning Committee, which assures continuity of leadership within the section. Members of the YLS Executive Council for 1983-84 are: Southern District, Phillip Raley (1984) and Patrick Burrow of Pine Bluff (1985); Central District, Kaye Oberlag of Little Rock (1984) and Ann Henderson of North Little Rock (1985); Northwest District, Morse Gist (1984) and Mike Crawford (1985), both of Hot Springs; and Northeast District, Jesse (Rusty) Porter of West Helena (1984) and John Fogleman of West Memphis (1985). The Executive Council is the representative body of the section and meets at least quarterly to consider matters of policy concerning the YLS. Among the YLS committee chairs and vice chairs appointed for 1983-84 are the following: Economics of Law Practice, Kaye Oberlag, Chair; Pro Bono, Rick Ramsay, Chair, and Walter Paulson of Little Rock, Vice Chair; Legal Services to the Elderly, Bryan Tilley of Heber Springs, Chair, and Bob Depper of EI Dorado, Vice Chair, and Senior Citizens Handbook Revision Subcommittee, Lucky Crumpler

of EI Dorado, Chair; National Law Week, Marcie Hearnsberger of Hot Springs, Chair, and Tom Ray of Little Rock, Vice Chair; Practice Skills Seminar, Bob Lambert of Springdale, Chair, and Elizabeth Robben of Little Rock, Vice Chair; Swearing-In Ceremonies, Bob Ridgeway, Jr., of Hot Springs, Chair, and Sammye Taylor of Little Rock, Vice Chair; Disaster Relief, John Moore of Mountain Home, Chair, and Jim Burton of Jonesboro, Vice Chair; Ways of the Law (Law Explorers), Jesse (Rusty) Porter, Chair, and Mike Crawford, Vice Chair; and Hot Springs CLE Meeting, Morse Gist, Chair. In addition, potential projects are being studied by ad hoc groups chaired by Sam Perroni of Little Rock (criminal defense handbook), Sam Jones of Little Rock (federal practice), and Jim Crouch of Springdale Uury instructions).

Executive Council Meeting, September 9 The YLS Executive Council will meet September 9 at 8:30 a.m. in conjunction with the Fall Legal Institute at the Fayetteville Hilton. Committee chairs will report and other matters regarding YLS projects will be considered. You are encouraged to attend and participate.

Opportunities For Service If you are interested in YLS projects, you can participate immediately by notifying me or Judith Gray at the Arkansas Bar Center. YLS activities are expanding rapidly and there are outstanding opportunities for service. The chance to join with other young lawyers in rewarding bar activities is yours for the asking, and I encourage you to do so.

f..... .

Its an Index. Its aCase Finder. Its aTime Saver. IT'S ARKANSAS DIGEST Arkansas Digest can serve you well in many ways. As an index, it classifies virtually every reported Arkansas case as well as all reported U.S. Supreme Court and federal cases originating in Arkansas. As a case finder, Arkansas Digest has the Key Number System to help you find your case law answers wherever they might be. As a time saver, Arkansas Digest is systematically organized and indexed to speed your case law search. Arkansas Digest. Get complete details from West Publishing Co. or your West representative. Rodney P. Durkee 9 Johnnycake Lane lillie Rock, AR 72211 Phone: (res) 501/225-3652 Little Rock 501/378-4676 Springfield 417/887-3093


LAW SCHOOL NEWS Dean J. W. Looney Dean Lawrence H. Averill, Jr.

SCHOOLOFLAW, UNIVERSITYOFARKANSASATLITILE ROCK Report To The Arkansas Lawyer Special Remarks As my first year as Dean has come to an end and I begin the second year, I thought it would be appropriate to be the author of the Report from the Law School. It has been an exciting and challenging year for me. I want to express my sincere appreciation to the many people who are a part of the Arkansas Bar Association for their outstanding assistance and support during this last year. Clearly, the Bar support is one of the pluses for the law schools in Arkansas, and I want to compliment all those involved for their efforts. I especially want to express my appreciation to Colonel Ransick for his kindness and assistance during this year. I wish him well in his retirement and hope that he will be able to remain active in Bar Association work. It is also appropriate to express my appreciation to Ellen Brantley who has served so outstandingly as Assistant and Associate Dean of the Law School. At her request, Ellen, after five years of service in this capacity, returns to a full time teaching position without administrative responsibilities. Ellen has performed in an excellent manner and I know the Law School is going to miss her wise administration. Fortunately, an excellent replacement has been found. Associate Professor John M. Sheffey has been appointed Associate Dean. John will carry on, I am sure, in the same high level manner that his predecessor Ellen Brantley did. Justice Rehnquist To Be Altheimer Lecturer Justice William Rehnquist of the United States Supreme Court will give 148/Arkansas Lawyer/October 1983

the fall 1983 Ben J. Altheimer Lecture. Justice Rehnquist was appointed to the Supreme Court by President Nixon in 1971. Prior to his appointment, he practiced law in Arizona and served as an Assistant Attorney Generai of the United States. Justice Rehnquist received B.A., MA, and LL.B. degrees from Stanford University. The lecture will be given on Friday, September 23. All members of the Association will receive an invitation to attend the lecture and a reception to be held following. Commencement The School of Law conferred degrees on 102 students at Commencement ceremonies on Sunday, May 15. Degree candidates were presented their J.D. hoods by Dean Lawrence H. Averill, Jr., at a law school convocation Sunday morning. Former Dean Robert K. Walsh addressed the graduates and their families at this ceremony. Degrees were awarded by President James Martin and Chancellor James H. Young at UALR's Commencement Sunday afternoon. Law Week Law Week activities at the School of Law began with a softball game and picnic on Saturday, April 2. During the week of April 2-9, members of the Student Bar Association visited local elementary schools and conducted mock trials. Luncheon speakers at the law school included Douglas Buford of Wright, Lindsey, and Jennings, who spoke on interviewing and Sheriff Tommy Robinson who discussed the penal system. On Friday, April 8, a panel of attorneys from around the state participated in a program on "Law Practice Far From the Civilizing Influence of Central Arkansas." Participants were Kandy Webb of Harrison, Raymond Abramson of Holiy

Grove, Tom Russell of Paragould, and Tom Wynne of Fordyce. The program was sponsored by the Young Lawyers Section of the Arkansas Bar Association. Mike Crawford of Hot Springs, Chairman of the YLS Law Student Liaison Committee, organized the program. Walsh Portrait A portrait of former Dean Robert K. Walsh was formally presented to the Law School on Friday; April 29. The presentation was made by Professor D. Fenton Adams who served as Acting Dean in 1981-82 and the portrait, which was painted by Vena McAnnich of Little Rock, will hang in the Law School's courtroom. The portrait was given to the school by friends and colleagues of former Dean Walsh. The unveiling took place at the home of Sheffield and Mary Lynn Nelson, who were hosts for a party for Law School Alumni and friends following the presentation of the portrait. Mr. Nelson is a graduate of the Little Rock Division of the University of Arkansas School of Law and former president of the UALR Law School Association. Alumni Meet At Hot Springs The annual meeting of the UALR Law School Association was held in conjunction with the annual meeting of the Arkansas Bar Association in Hot Springs on Thursday, June 9. After breakfast, alumni heard reports from the outgoing president, Mike Bearden and Dean Lawrence H. Averill, Jr. A movie, "The Law School That Time Forgot," which was produced by law student Jeff Hogue of Weiner gave alumni a look at the school through student eyes. Officers for 1983-84 are Dianne Mackey, President; Hermann Ivester, President-Elect; Mary Davies Scott, Vice President; James Spears, Secretary; and Clay Patty, Treasurer.

Faculty News Associate Professor Ellen Brantley has been named to the Civil Service Commission of the City of Little Rock. Professor Brantley attended a conference on the Recruitment and Retention of Minority Students in SI. Louis on April 26 and 27. On May 16 she spoke on Pitfalls to Avoid in Federal Practice at a Seminar on Federal Practice for Newly Admitted Attorneys sponsored by the Arkansas Institute of Continuing Legal Education and the Arkansas Association of Women Lawyers. Associate Professor O. Fred Harris, Jr., spoke to a class of gifted and

talented students at Rose City Junior High School on Friday, May 13. His topic was "Civil Rights Under the U.S. Constitution of Students." Assistant Dean Claibourne W. Patty, Jr., lectured at the 1983 Trust School sponsored by the Arkansas Bankers Association at the University of Central Arkansas. His topics were "History of Trusts" and "Trust Terminology." Dean Patty spoke to the lawyers admitted to the bar on April 18 at an orientation program sponsored by the Young Lawyers Section of the Arkansas Bar Association. He discussed continuing legal education in Arkansas. Dean Patty addressed the

Texarkana Bar Association. He talked about continuing legal education in Arkansas and developments at the law school. Dean Patty's work with the Arkansas Institute of Continuing Legal Education is discussed in his separate article in this issue. Professor Glenn Pasvogel has completed the update of the DebtorCreditor System. The Update will be the subject of the Fall Legal Institute, September 8-19, 1983, at the Fayetteville Hilton. Associate Dean Sheffey attended the Annual Convention of the National Association of Law Placement in San Antonio on April 16-19.

SCHOOL OF LAW, UNIVERSITY OF ARKANSAS, FAYETIEVILLE Graduation News Joe C. Barrett Commercial Law Award Scott Ransick was selected as the recipient of the Joe C. Barrett Commercial Law Award in recognition of his accomplishments in commercial law. This award is sponsored by a bequest in the will of Mr. Barrett to the Arkansas Bar Foundation. Craig Stearne Award In Estate Planning And Taxation Pati Hoffmann was selected as the recipient of the Craig Stearne Award in recognition of her accomplishments in taxation and estate planning courses. Outstanding Graduates James W. Cherry, Jr., Richard Timothy Donovan, Robert M. Honea, Michael F. Lax, Danny P. Richey and Gary N. Speed were recognized as honor graduates. Pati L. Hoffmann, James Leon Holmes, Bobby G. Pryor, and Scott E. Ransick were recognized as high honor graduates. FaCUlty Articles Professor Joan Hartman's article "Racial Vote Diiution and Separation of Powers: An Exploration of the Conflict Between the Judicial 'Intent' and the Legislative 'Results' Standards" appeared in the George Washington Law Review. Dr. Robert A. Leflar's article "Quality in Judicial Opinions" appears in the Spring issue of the Pace Law Review. Lonnie Beard and Jake Looney have an article in Trusts and Estates entitled "Retirement Planning for Farmers." LL.M. graduate Karin Littie-

john of Winston-Salem, NC, and Jake Looney have an article in the Journal of Taxation entitled "Handling the Special Tax Treatments for Fisherman and Fish Farmers." Jake Looney also has an article in Law Notes for the General Practitioner, "Farmers and the Law; A Survey of Exemptions and Exceptions. " Howard Brill's article "The Citizen's Action Against Inactive Federal Officials" has been accepted for publication by the Akron Law Review.

Robert B. Leflar spoke to the Arkansas Public Health Association in Hot Springs. He helped plan and organize the CLE program on Health Law sponsored by the Health Law Committee of the Arkansas Bar and is serving as co-chairman of the planning committee for the 1984 mid-year bar meeting. Ellen Liebman spent the summer at the University of Chicago School of Law conducting research on two constitutional law projects.

FaCUlty Activities Charles Carnes taught during the summer at the Judge Advocate General's School, Charlottesville, VA and prepared a chapter for a teaching manual on "Grievance and Arbitration in the Federal Sector". Mort Gitelman was recipient of the "Civil Libertarian of the Year" award for 1983 from the A.C.L.U. of Arkansas. Joan Duc. Chapman was selected as a member of the People-to-People International Mental Health Delegation which visited six European cities to discuss mental health law subjects with European academic and government specialists. Carlton Bailey was selected as "Professor of the Year" by the Student Bar Association in recognition of his significant contributions in the law school's teaching program. Phil Norvell taught at Baylor Law School during the first summer session. Wylie Davis taught at Texas Tech during the first summer session. Robert Laurence taught at the American Indian Law Center in New Mexico during the summer term.

New Faculty Six new faCUlty members have joined the law school commencing in the fall. Chauncey Brummer, who visited at the law school during 1982-83 will remain as a permanent faculty member to teach Torts, Juvenile Law and Domestic Relations. Lonnie Beard, who visited during the spring semester of last year has accepted a permanent position to teach tax courses both in the J.D. curriculum and in the LL.M. program. Linda Malone, who is completing an LL.M. at the University of Illinois will teach Environmental Law and International Law in the J.D. curriculum and courses in the LL.M. program. Rodney Smolla, previously on the faculty at the University of Illinois will teach Constitutional Law, Torts and Jurisprudence. John Watkins previously at Baylor, will teach Civil Procedure, Administrative Law and Mass Communications Law. Don Pedersen, previously at Capital University, has assumed duties as the new Director of the Graduate Program in Agricultural Law. _


October 1983/Arkansas Lawyer/149



JURIS DICTUM by Robert L. Lowery Executive Secretary, Judicial Department

UNIFORM COURT COSTS: SOME ARE, SOME AREN'T The issue of court costs seems to arise at every session of the General Assembly. While there is some degree of uniformity for general jurisdiction court costs, the limited jurisdiction courts are not as fortunate. Eighteen (18) Acts of 1983 apply to costs in municipal courts. These are in addition to those already in effect for purposes such as the state police retirement fund, the legal education fund, the municipal judges and clerks retirement fund, the purchase and maintenance of alcohol testing devices, the prosecuting attorney fees, the city attorney fees, the small claims courts and the criminal justice funds. The 1983 Acts provide for costs ran9in9 from $.25 to $250.00 for such matters as county jail revenue bond funds, counsel for indigents being criminally committed, judicial retirement benefits, deputy prosecuting attorney salary and expenses, prosecuting attorney fees, services to victims of crimes and to witnesses of crimes, public defenders, statute revision fund, jail renovation and expansion, administration of justice, and highway safety special funds. Most of these eighteen acts are either permissive in that they permit quorum courts to levy the costs or limited in that they appiy to certain named counties or to certain counties by population. An example of the permissive acts is Act 226 of 1983 providing for the levy by quorum courts of a court cost not to exceed $10.00 per conviction for felonies and misdemeanors. This cost is to be used for the "County Jail Revenue Bond Fund." Act 526 of 1983 provides that any prosecuting attorney 150/Arkansas Lawyer/October 1983

may request the quorum court of his county to provide an additional employee for his office to be known as the "victim of crimes case coordinator." The salary will be determined by the quorum court. This position will be in addition to any other position available by the office of the prosecuting attorney. The quorum court may provide for an additional cost, not to exceed $5.00, upon each case filed in all courts in the county for the purpose of defraying the expenses of this position. An example of Acts limited is that they apply to named counties in Act 335 of 1983, providing that the NineWest Judicial District (counties of Howard, Little River and Sevier) may, by quorum court ordinance. levy a $10.00 cost on each criminal action and traffic violation filed in any court within the county. The proceeds are to be used to help defray the salary and expenses of the deputy prosecuting attorney within the county.

1983 (Third Judicial District consisting of Jackson, Lawrence, Randolph, and Sharp Counties and Sixteenth Judicial District consisting of Cleburne, Fulton, Independence, Izard and Stone Counties); Act 485 of 1983 (Fifth Judicial District consisting of Franklin, Johnson and Pope Counties); Act 610 of 1983 (Sixth Judicial District consisting of Perry and Pulaski Counties); and Act 803 of 1983 (Craighead County Municipal Court). The Legislative Council, through a joint interim committee, is presently studying the issue of court costs and their lack of uniformity under a resolution adopted during the regular session. The Judicial Department is surveying the counties to determine the costs which have been enacted at the local level. This will enable us to have a current list of court costs in each jurisdiction.


Other acts referring to specific counties or judicial districts are Act 299 of

HANDWRITING EXPERT Scientific examination of Handwritten, Typewritten, Printed, Altered, Obliterated. Charred and Office Copier Documents; Ink and Paper Analysis. Dating and other document related problems. Diplomate of

the American Board of Forensic Document Examiners, Inc. Member of the American Society of Ouestioned Document Examiners and the

American Academy of Forensic Sciences.


Qualified and Experienced Expert Witness in Federal,

State, Municipal and Military Courts.


September 12-15 . . . . . . .. Plaza of the Americas September 19-22 Four Seasons Hotel





-- \f;j\~.



o~" ,,~O .... ~V~ • o<~\~ ,.()~ ~ • 4~l.)'-' ·


We have applications for

Professional Word Processing legal Time Accounting and Billing Docket and Calendar Scheduling


Business Accounting • Tax and Estate Planning • Spread Sheet Planning


Horizon'" Systems Available • Expandable to 72 Mb Hard Disc.




Panasonic 'tR.OllOAl COIiIIIf'VlAr-..


I .. L I


SHARP __ . and more!

See our full line of Hewlett·Packard calculators, too.

Multiple Terminal Capacity.

5800 ·R· Street Pulaski Bank £, Trust Bldg. P.O. Box 56142 Little Rock, AR 7221 5

5011663-4199 TOLL FREE: 1-800-632-2949 October 1983/Arkansas Lawyer/151

TAX-SAVING OPPORTUNITIES IN THE PURCHASE OR SALE OF A CORPORATE BUSINESS By John B. Peace are certain advantages to a sale of stock:

You have a unique opportunity to structure the sale of a corporate business to give your client-whether the buyer or the seller-the maximum tax benefit. Here are some of the alternative planning techniques and the resulting tax consequences.

In the sale of a corporate business, form often prevails over substance. Therefore, practitioners have great flexibility in choosing the form of transaction that provides the greatest advantage to their clients-but only if they are thoroughly familiar with all of the alternatives and know which party will benefit most under each. This article will explore the various alternatives and their tax consequences, first from the seller's standpoint and then from the buyer's. Although a corporate business can be sold in either a taxable or a tax-free transaction, we will concentrate on taxable sales. Stock Or Assets The initial question in planning the sale of a corporate business is whether the transaction is to be a sale of stock or a sale of assets. The Seller's Standpoint From the seller's standpoint, there 152/Arkansas LawyerlOctober 1983

1. The transaction is simpler. The parties usually enter into a stock purchase agreement, with the seller simply transferring the stock certificates to the buyer at the closing. 2. The tax considerations and the computation of gain or loss are also simpler. The recognized gain or loss normally is the difference between the selling price and the seIler's adjusted basis for the stock (normally cost). 3. Gain is generally taxed as capital gain. 4. There is no expense in liquidating the corporation, since only the stock is sold. 5. The seller is relieved of the corporation's contingent liabilities (unless he agrees to indemnify the buyer). 6. Since the corporate entity remains intact, there is no recapture of depreciation or investment tax credit (with certain exceptions for SUbchapter S corporations discussed below). 7. A sale of assets generally requires shareholder approval and may entail appraisal rights of dissenting shareholders. ' 8. A sale of assets is generally a more complicated transaction, requiring an appraisal of assets, allocation of the purchase price to each asset, compliance with the state's bulk sales law, possible recapture problems and more paperwork. All of this results in increased legal and accounting fees. 9. On the sale of assets followed by a liquidation, the seller may face a double tax, one at the corporate

level when the assets are sold and another at the shareholder level when the corporation is liquidated. However, Section 337 can alleviate much of this problem, as we will see. The Buyer's Standpoint From the buyer's point of view, there are certain advantages to a purchase of assets: 1. The purchase price of the assets becomes the basis for depreciation, which generally is higher than the corporation's basis. 2. The investment tax credit applies to the used tangible personal property purchased, up to a maximum purchase price of $125,000 ($150,000 for taxable years beginning after 1984).' 3. New Section 179 can be used to expense (in lieu of ACRS) up to $5,000 of qualifying capital expenditures in 1982 and 1983, $7,500 in 1984 and 1985, and $10,000 after 1985. 4. There is no carryover of the old corporation's unfavorable tax attributes (e.g., earnings and profits, accounting methods, taxable year, etc.). 5. There is no responsibility for contingent liabilities of the corporation. Notwithstanding a buyer's general preference for a purchase of assets, there are certain circumstances in which a buyer might prefer to purchase stock: 1. Where there is a carryover of favorable tax attributes, such as net operating losses and investment tax credit carryovers, which the buyer can utilize. 2. Where there are certain non-tax

attributes, such as nonassignable patents or contract rights, which the buyer may want. If the only viable method is a purchase of stock, some of the tax disadvantages to the buyer can be alleviated by using Section 338 to obtain a stepped-up basis in the assets to reflect the cost of the stock purchased. We will discuss this in greater detail later. Weighing the Factors The weight which each party places on the above factors will vary with each transaction. One factor often is so important as to sway the decision. However, in most cases, several or all of the factors will influence both the stock-or-assets decision and the negotiated price. Now that we have outlined the basic factors, let's look at some of them in greater detail to see how to advise our clients about them. Advising The SelJer While sellers normally opt for a sale of stock to get long-term capital gain,' ordinary income will result if the corporation is collapsible.' In addition, any portion of the sales price allocated to a covenant-not-to-compete or to a consulting agreement will be taxed as ordinary income' (and is deductible by the buyer). From a negotiating standpoint, then, the seller should try to minimize the portion of the sales price allocated to a covenant-not-to-compete or to a consulting agreement. If assets are being sold, the parties generally will want to allocate the purchase price to each specific asset. The seller should seek the lowest possible allocation to assets that, when sold, will generate ordinary income or

recapture of depreciation or investment credit. EXAMPLE: A corporation will sell all its assets (basis $225,000) for $500,000. The corporation is not going to be liquidated under Section 337. Exhibit 1 shows the adjusted basis of the corporation's assets and the tax results of two different purchase allocations-one with goodwill and the other without. As can be seen, the allocation with goodwill favors the seller (and the allocation without goodwill favors the buyer). With goodwill, the seller is able to allocate $100,000 to capital assets that would otherwise go to ordinary-income assets, thus limiting the tax on this $100,000 to the alternative corporate tax rate of 28%.' (This leaves the buyer with a lower basis for the ordinary-income assets, Le., accounts receivable, inventory and depreciable equipment, and a higher basis for nondepreciable goodwill.) While it may seem strange that the IRS allows the parties such wide flexibility in allocating the purchase price, these allocations will usually be accepted since they are determined in arm's-length negotiations by parties with adverse interests. "Strong proof" is generally necessary to overcome the negotiated allocations between the parties.' Therefore, it is extremely important in a sale of assets for the allocation agreement to be written. Liquidation Under Section 337 When planning a sale of assets, the seller must decide whether to liquidate the corporation after the sale. Since shareholders usually want the sales

proceeds, most corporations will be liquidated. By using Section 337, these corporations can sell their assets and not recognize gain or loss at the corporate level, with certain exceptions. The principal tax occurs at the shareholder level, and normally is at the more favorable capital gains rates.' To qualify under Section 337, the corporation must adopt a plan of complete liquidation before the actual sale of assets and distribute to its shareholders all of its assets, less those retained to meet claims against the corporation, within 12 months after adoption of the plan.' However, Section 337 will not always eliminate the entire tax at the corporate level. Sales of the following types of assets will result in ordinary income (or loss) to the corporation: 1. Inventory, unless substantially all the inventory is sold in bulk to a single purchaser in a single transaction. lo 2. Installment obligations attributable to sales of property before the plan of liquidation was adopted or attributable to non-bulk sales of inventory during the 12 months following adoption of the plan." 3. Accounts receivable on which there is a reserve for doubtful accounts, to the extent that the fair market value of the receivables exceeds their face amount less the reserve (assuming additions to the reserve resulted in tax benefits in prior years)." 4. Depreciable assets, which are subject to depreciation recapture" and investment credit recapture." 5. Expensed items, such as supplies, continued on page 154

John B. Peace, J.D., CPA, is a partner in the Little Rock law firm of Overbey, Peace, McClain and Yancey, and a member of the Arkansas Bar Association's Section on Taxation. He has had many articles on taxation published in various professional publications. This article is reprinted with permission from The Practical Accountant, January 1983.

October 1983/Arkansas Lawyer/153

Tax Saving. .. continued from page 153 small tools, etc., which probably will have to be restored to income under the tax benefit theory." Where installment notes arising from the sale of corporate assets during the 12-month period are distributed to the shareholder, the shareholder is taxed on the payments received under the note, and not on the receipt of the note itself." EXAMPLE: Smith, the sole shareholder of a corporation, has a $10,000 basis in his stock. The corporation adopts a 12-month plan of liquidation under Section 337 and sells all of its assets for $10,000 cash plus a $90,000 tenyear installment note (the first installment being due after the calendar year of sale). Within the 12 months, the corporation liquidates and distributes to Smith the $10,000 cash and the note. Smith will report $9,000 (90% x $10,000) gain in the year of sale and 90% of each principal payment will constitute taxable capital gain. "There are several advantages to an individual using a corporation to acquire stock." Retaining the Corporate Entity The decision to liquidate a corporation and distribute all of its assets to shareholders should not be automatic. There are situations in which the seIling corporation should be maintained as a private investment vehicle for tax reasons. For example, when a corporation has a relatively high basis for its assets (Le., little or no realized gain) and the shareholders have a relatively low basis for their stock (Le., subject to a large capital gain tax), it may be wise not to liquidate the corporation since liquidation will leave the shareholders with only the aftertax proceeds to invest. By not liquidating, the corporation will have more of the proceeds to invest. The corporation could invest the sales proceeds in listed stocks of domestic corporations and take advantage of the 85% dividends received deduction." (The double tax cost of maintaining a corporation in this situation should be relatively insignificant.) Keep in mind, though, that the passive income will be subject to the personal holding company tax" 154/Arkansas Lawyer/October 1983

(i.e., a 50% surtax on undistributed personal holding company income). However, by distributing all of the PHC income, the penalty tax may be avoided. Alternatively, by investing the sales proceeds in tax-free bonds, the corporation would not only avoid income tax, but would be able to accumulate the funds tax-free without exposure either to the accumulated earnings tax or to the personal holding company tax. Where the shareholders are elderly, delaying liquidation of the corporation until after their deaths can be desirable. The stock will acquire a stepped-up basis and a liquidation or redemption could be accomplished without any tax to the estate or beneficiary. " Sate of a Sub S Corporation When the business being sold is a SUbchapter S corporation, there are certain peculiarities and unique opportunities. Whether it is the stock or the assets that are being sold, the individual shareholders will have to recapture any investment tax credit attributable to property held less than the requisite period." Otherwise, the tax consequences turn on whether the sale is one of stock or of assets. Sale of stock. The tax consequences of a sale of stock by a Sub S corporation are not entirely the same as for a regular corporation. The basis for the Sub S seller's stock is not its historical purchase price (as it generally is for stock of a regular corporation) because it is adjusted each year for distributions and items of income and expense." When a corporation has been under Subchapter S from its inception, the shareholders' basis for their stock should approximate the corporation's adjusted basis for its assets. Thus, the shareholders should have no preference for a sale of stock as compared to a sale of assets. Sale of assets. When the assets are being sold, the seller does not have to be concerned with Section 337 if the only gains will be capital gains and the Sub S election has been in effect for the three prior years, since all capital gains are passed through to the shareholders." However, when the assets being sold are ordinary income assets, such as inventory, Section 337 may make a difference since it may convert some of this ordinary income into capital gains. EXAMPLE: The corporation in Exhibit 1 has a valid Sub Selection

and makes no allocation to goodwill. Jones, the sole shareholder, is in the 50% tax bracket and has an adjusted basis of $225,000 in his stock. The corporation is to be liquidated immediately following the sale. Without Section 337, the corporation's gain would flow through to Jones and he would pay a tax of $92,500 ($125,000 x 50% plus $150,000 x 20%). Jones would not recognize any gain from the liquidation, since the basis in his stock is increased by the $275,000 gain passed through from the corporation, giving him a basis of $500,000. If Section 337 is used, the corporation would be subject to tax only on $75,000 ($50,000 of depreciation recapture on the equipment and the $25,000 gain on the sale of expensed supplies). Because of the Sub S election this all passes through to Jones, and his tax is as follows:

Total received upon liquidation Less: Adjusted basis in stock ($225,000 plus $50,000 depreciation recapture on the equipment and $25,000 of expensed supplies) Total gain on liquidation Computation of tax: 50% of $75,000 (corporate income passed through to shareholder) 20% of $200,000 (gain on liquidation) Total tax


300,000 $200,000

$ 37,500 40,000 $ 77,500

By using Section 337, Jones has saved $15,000 in tax ($92,500 less $77,500). Advising The Buyer As we have discussed, most buyers prefer to purchase assets rather than stock since they can choose exactly the assets they want, obtain both a higher basis and the investment tax credit, and minimize the possibility of inheriting any contingent or unknown liabilities. However, in many cases, a purchase of stock is necessary. We will look at some of the ways in which the disadvantages of a stock purchase can be alleviated.


Using Corporation To Buy Stock When a buyer is required to purchase stock, for whatever reason, the use of an intermediary corporation and an election under Section 338 can alleviate many of the disadvantages." To utilize Section 338, the buyer would form a corporation, which would purchase the stock and elect within 75 days of the purchase to obtain a stepped-up basis in its subsidiary's assets equal to the basis in the sub, sidiary's stock. The tax result under a Section 338 election should be approximately the I~ same as if the buying corporation had purchased the assets directly. It will not always be identical, however, for three major reasons (which buyers should consider when negotiating a stock purchase):

1. An election under Section 338 can result in recapture of depreciation and investment tax credit." 2. It is anticipated that IRS regulations will provide that the cost basis in the subsidiary's stock will be allocated to the assets not according to the values negotiated by the parties, but according to fair market values (thus, an appraisal may be required). 3. The tax attributes and tax history of the subsidiary are lost" (including both net operating loss and investment tax credit carryovers, although the subsidiary can probably obtain the investment tax credit on Section 338 property subject to the dollar limits on acquisition of used property)." In addition to obtaining a step-up in the basis of the assets, there are other advantages to using a corporation to acquire stock. When an individual is to buy the business through the purchase of stock, the entire purchase price will be allocated to his basis in the stock, and any withdrawals of funds from the acquired corporation I will be taxable either as dividends or from the sale of the stock. However, \ by forming a corporation to purchase the stock, the buyer has some flexibility to allocate his contributions to the new corporation (which will be equal to the purchase price of the stock of the corporation being purchased) to either equity or debt, subject to the debt-equity regulations" The portion allocated to debt can be recovered by the individual from the parent corporation as a tax-free return of capital. If an outside lender is going to finance part of the purchase price, hav-

the subsidiary's taxable income, thus achieving an overall tax benefit for the controlled group. Buying A Loss Corporation While a buyer of assets cannot obtain the benefit of a purchased corporation's net operating loss carryover, unless there is a "e" reorganization, a buyer of stock may be able to. The carryover can be beneficial when either (1) the buyer believes he can make the business profitable or (2) a corporate buyer will be able to use the purchased corporation's net operating continued on page 156

ing a new corporation borrow the funds to purchase the stock can generate a tax benefit when repaying the loan. Repayment of the loan with after-tax dollars is "cheaper" for a corporation than for an individual since corporate tax rates are lower. Of course, for this transaction to work, the parent corporation must obtain the funds to repay the loan. This can be done by having the subsidiary pay dividends tax-free to the parent." The parent and subsidiary could file consolidated returns, so the interest on the loan paid by the parent will offset



Evaluation of re-employment potential after partial or total permanent disability


Evaluation of Residual Employability including Labor Market Information

Workers' Compensation:

Evaluation of Residual Employability, Medical Coordination, Development of Individualized Rehabilitation Programs, Direct Job Placement

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

QUALIFIED AS EXPERT WITNESS IN ARKANSAS AND OTHER JURISDIOIONS 1501 North University, Suite 764 Little Rock. Arkansas 72207 (501) 666-0304 October 19831Arkansas Lawyer/155

Exhibit 1/Effect of Alternate Allocations on Sale of Assets Gain or Loss

Gain or Loss


Tax Basis

Allocation Without Goodwill


Accounts receivable Inventory Equipment (net of $50,000 SiL depreciation) Land and building (net of $75,000 S/L depreciation) Supplies Goodwill

$ 50,000 75,000

$ 75,000 100,000

$ 25,000 25,000

$ 50,000 75,000





Ordinary Income

1231 or Capital Gain

Allocation W/Goodwill

Ordinary Income

Section 1231 or Capital Gain

\ 50,000


200,000 25,000 $500,000

$150,000 25,000 $125,000



200,000 25,000 100,000




100,000 $250,000

RegUlar corporate tax (1982 rates)



Alternative tax (28%)

$ 79,750

$ 74,000

Tax Saving. continued from page 155 losses to offset future income. For stock sales in taxable years beginning before July 1, 1984, the loss corporation must continue to carry on its same trade or business or it will lose its net operating loss carryovers." For taxable years beginning after June 30, 1984, outright sales of a loss corporation's stock will result in a loss of the NOL carryovers, regardless of whether the same trade or business is carried on after the transfer. Under present law, an acquiring corporation can get the benefit of the carryovers only by liquidating or merging with the subsidiary. However, if an election under Section 338 is made, the net operating losses will be lost." Therefore, the acquiring corporation must decide whether it is more beneficial to have a step-up in basis or the carryovers. if the step-up in basis is more important, the Section 338 election should be made. If the carryovers are more important, the Section 338 election should not be made and the subsidiary should be liquidated or merged into the parent. Bootstrap Acquisitions A purchaser may want to consider a bootstrap acquisition, with the assets or earnings of the acquired business being used to finance part or all of the purchase price. The principal advantage is that the seller is paid for the business with corporate after-tax dollars rather than individual after-tax dollars. Although tax considerations are 156/Arkansas Lawyer/October 1983

important, the motivations for a bootstrap acqUisition generally are more economic, particularly for buyers who are cash poor or unable to secure outside financing. (In the typical bootstrap transaction, the buyer first acquires some of the seller's stock and the acquired corporation then redeems its remaining stock.) In structuring a bootstrap acquisition, keep in mind that (1 ) the seller will want to be assured of capital gain treatment" and (2) the buyer will want to be assured that the corporation's payments to the seller are not constructive distributions to the buyer. Also, the buyer must be confident that the business has long-term value, keeping in mind that the commitment

of earnings to pay the purchase price may adversely affect future liquidity. (By using present or future earnings to acquire the business, the buyer actually acquires 100% of an ultimately smaller business.) Both parties must be careful to structure the purchase price and payments at a level that the business can meet. Moreover, the redemption must comply with state laws dealing with the use of accumulated earnings to redeem stOCk."

••• The purchase or sale of a corporate business presents a unique opportunity for the practitioner to recommend



ED DANIEL 224-4300


the alternatives that will be of greatest tax benefit to his or her client. Of course, each transaction will have its own peculiarities and problems, but there are certain basic considerations in every transaction, e.g., whether the seller should sell stock or assets, whether the corporation should be liquidated or retained after the sale, and whether the buyer should form a corporation to make the purchase. This articie should provide a sound starting point when a client asks for advice.

FOOTNOTES 1. The extent of dissenting shareholders' appraisal rights depends on state law. see, e.g., Section 80 of the Model Business Corporation Act. 2. Section 48(c)(2). 3. If the stock is Section 1244 stock, and its

CreatiVideo your service *Personally Transfer home movies to video casettes Edit and duplicate video tapes Professionally tape special events: weddings, anniversaries, family histories

*Professiona Ily Depositions Wills Home Inventories



Manager Betty Schenck, 376-1784, will assist with scheduling.

sale results in a loss, up 10 $50,000 ($100,000 if a joint return is filed) will be treated as ordinary loss rather than capital

4. 5. 6. 7.


9. 10. 11.

loss. section 341.

Rev. Rul. 69-643. Section 1201. See. e.g .. Danielson. 44 TC 549 (1965); vacated and remanded, 67·1 USTC ~19423, 19 AFTR 2d 67-568 (CA-3. 1967); Johnson. TCM 1966-31. An exception to the general rule is where the corporation is "collapsible" under Section 341. Sectk," 337(a). Sections 337(b)( 1)(A) and 337 (b)(2). Sections 337(b)(1)(B) and 337(b)(2).

12. See Rev. Ru/. 57-482; Bird Management, fnc., 48 TC 586 (1967); Citizens Acceptance Corp.• 72-2 USTC 9510.29 AFTR 2d 72-1441 (DC Del., 1972). Sections 1245 and 1250. Section 47. See Rev. Rul. 77-67. Section 453(h). 17. Section 243(a)(.I). 18. The personal holding company rules come into effect if five or fewer individuals own more than 50% of the corporation's out· standing stock, at any time during the last half of the year and at least 60% of the 13. 14. 15. 16.

19. 20. 21. 22. 23.

24. 25. 26. 27.

28. 29. 30. 31.


corporation's gross income (after certain adjustments) is personal holding company income, as defined by Section 543(a). Personal holding company income generally includes dividends, interest and other types of passive income. See Section 541, et seq. Section 1014. Reg. 1.47-4(a)(1) and (2). Section 1367. Section 1374(c). Section 338 was added to the Code by Section 224 of the Tax Equity and Fiscal Responsibility Act of 1982. Sections 47, 1245 and 1250. Section 338(a)(2). See Section 338(a)(2) and Rev. Ruls. 70-391 and 73-461. The proposed regulations under Section 385, which were scheduled to go into effect several times (most recently on July 1. 1982), have been postponed again. Section 243(a)(3). Section 382(a). Seclion 338(a)(2). See generally, Zenz v. Ouinliven, 54·2 USTC ~ 9445. 45 AFTR 1672 (CA. 6. 1954). See e.g., Section 45 of the Model Business Corporation Act. ~

We do more than print the lawwe put it into perspective... ... both in our law books and our computer data service Whether it's with ALR, Am Jur. USCS. L Ed-or Auto-Cite"', our computer formatted research service-your research will go faster and more efficiently with Lawyers Co-op in your library. Our law books and our computer research service are made to mesh with each other and your needs. Let your LCP representative show you what's possible and affordable in legai research. Here's what the LCP Total Client-Service Library'" offers the Arkansas attorney. Am Jur 2d U.S. Supreme Court Reports. L Ed Am Jur Legal Forms 2d Am Jur Pleading & Practice Forms Am Jur Proof of Facts

Am Jur Trials

USCS Federal Procedural Forms. L Ed Federal Procedure. L Ed Bankruptcy Service, L Ed

ALR System

Contact your LCP representative: North Arkansas Lorraine Hall (501) 378-7038


P.O. Box 56305 Little Rock, ARK 72215

South Arkansas Ed Arnul! (513) 522-0274

THE LAWYERS CO·OPERATIVE PUBLISHING CO. Aqueduct BUlldlfl9 Aochesler New 'lbrk 14694

October 1983/Arkansas Lawyer/157

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

EDWARD C. THACKER Edward C. Thacker, aged 88, of Hot Springs. died April 21. 1983. in a Hot Sprin9s hosp~al. He had lived and practiced law in Hot Springs since

1934. He was a graduate of Cumberland University SChool of Law in Lebanon, Tenn., and was a member and past president of the Garland County Bar Association. He was past state commander of the Veterans of Foreign Wars, the Masonic Order, Sumpter Lodge 419 F & AM. the Sahara Temple. Scottish Rite, and a member of the National Park Christian Church of Hot Springs. He is survived by two daughters. Virginia Tisdale of Harrisburg, Pa.• and June Morgan of Stiltwater, Okla.; four sisters. Ella Harmon of Martinsburg. W. Va., Hazel Self. Nannie Mitz and Pearl Hart. all of Fredericksburg, Va.; five grandchildren and six great-grandchildren.

••• JAMES F. MILLER James Franklin Miller. aged 54, of Fayetteville, Ark.• died June 12. 1983. in a Fayetteville hospital. He was a native of Clarendon. He was graduated from the University of Arkansas w~h a degree in electrical engineering and also received his law degree from the University of Arkansas SChool of Law. He was a member of the American and Arkansas Bar Associations. The American Legion. the Elks Club. the Arkansas Alumni Association. and was a veteran of the Korean War. Survivors are his wife, Marjorie Maxine Rickert Miller of the home; two

158/Arkansas Lawyer/October 1983

brothers, Kenneth Miller and John Miller, both of Wisner, La.; two sisters. Mrs. Audry Bowman of Rolling Heights. Calif.. and Mrs. Alma Reynolds of Springfield, Ore.; and several nieces and nephews.

••• MAJOR J. VICTOR HARVEY Major J. Victor Harvey, aged 59, of 2718 DorChester Drive, Uttle Rock. died June 8. 1983. He was retired from the U.S. Army. He was graduated from the University of Arkansas SChool of Law and was employed by the Arkansas Revenue Department. He was a member of the Arkansas Bar Association and the Retired Officers Association. Survivors are his wile. Martha Jane Sunderland Harvey; two sons, Robert B. Harvey and Christopher Harvey of Washington, D.C.; a daughter, Victoria Harvey Page of Arlington, Va.; four stepdaughters, Mrs. Bobby Minick of Poteau. Okla.. Sunday Sizelove of Garland, Tex., Mrs. Chris Cathey Ketcher of Tulsa, Okla.. and Pam Lema of Kirkwood. N.J., his father and stepmother, Mr. and Mrs. J. V. Harvey of Canton, Tex.; a sister, Mary Obara Kega Curtis of North Little Rock and a grandchild.

••• ARTHUR S. (TODD) HARRISON Former Circuit Judge Arthur S. (Todd) Harrison, aged 62, of Blytheville, died April 6, 1983. He served on the bench 13 years before his retirement in 1gao. Judge Harrison was graduated from the Arkansas Law School, was a

World War II veteran and a member of the First Presby1erian Church. He was a member of the Judicial Council of Arkansas and the Arkansas and Mississippi County Bar Associations. He was chairman of the board of the Mississippi County Union Mission. He is survived by his wife. Lonnie Johnson Harrison; two sons, zal Harrison of BIy1heville and Capt. Arthur S. Harrison. Jr. of Tucson; two daughters. LoNell Tumer of Little Rock and Priscilla Harrison of BIy1heville; three brothers. Dr. William V. Harrison of Folkston, Ga., Dr. Pat E. Harrison of Brinkley and Judge Max Harrison of BIy1heville; a sister, Jeanne H. Carter of Little Rock, and a grandchild.

••• JOE E. RHODES Judge Joe E. Rhodes, aged 85. of Beaumont. Texas. formerly of Little Rock, died April 4, 1983. He was a former circu~ judge for the 6th and 17th Judicial Districts. He was a graduate of Traskwood High SChool and received his law degree from Tyler Commercial College in Tyler, Texas. Judge Rhodes was a court reporter and law clerk for the Pulaski County Circuit Court before his appointment as circuit judge by then Governor Orval Faubus. He was a 5O-year member of the Albert Pike Masonic Lodge and the Arkansas Bar Association. Survivors are his wife. Mrs. Luvenia McGraw Rhodes; a daughter. Mrs. Howard L. Barron of Little Rock; a stepson, Lester L. Fulmer of Beaumont. Texas; a grandchild, three stepchildren and seven step-great-grandchildren.


JUSTICE BRANDEIS idA II'ade aSSOCiation is an organization fOI"

mulual benefit which substitutes knowledge fOI" ib'11on.lllce, l'lImO", guess and sllspicion. It tends to sllbstitute "cscarch and "easoning fOl' gallJ~ bling and pi"HCy, without closing the dool" to ad"enlul"C 01' lessening the value of p"ophetic

. " I路casonmg.

"Every man owes part of his time and money to the profession in which he is engaged."

DANIEL WEBSTER "There are many objects of great value to man which cannot be attained by unconnected individuals, but must be attained, if at all, by association."

Arkansas Bar Association EXECUTIVE COUNCIL President (862-5523) President-Elect (375-6453) Immediate Past President


Dennis L. Shackleford 100 E. Church EI Dorado, AR 71730

Secretary Treasurer

William R. Wilson, Jr. Box 71 lillie Rock, AR 72203

Chairman, YLS ........................ Carl A. Crow, Jr. Box 1620 Hot Springs, AR 71901 (321-1200)

J. L. (Jim) Shaver, Jr. Box 592 Wynne, AR 72396

Chairman, Executive Council

SOUTHERN BAR DISTRICT Norwood Phillips 1984 W. Kelvin Wyrick ......•........1985 Gary Nutter 1986 CENTRAL BAR DISTRICT Robert M. Cearley Kaye S. Oberlag Tom Overbey

1984 1985 1986


.....•............ Annabelle Clinton 2200 Worthen Bldg. lillie Rock, AR 72201

James H. McKenzie Box 599 Prescoll, AR 71857


EI Dorado Texarkana Texarkana

NORTHWESTERN BAR DISTRICT 1984 Marcia Mcivor Robert Hornberger 1985 Joe Reed 1986

Little Rock Little Rock Little Rock

NORTHEASTERN BAR DISTRICT Tommy Womack 1983 ......... Jonesboro Julian Fogleman 1984 ....... W. Memphis James A. McLarty 1985 ........... Newport

Fayetteville Fort Smith Springdale

LIAISON NON-VOTING MEMBERS Chairman, Legal Education Committee

.....•........... Don M. Schnipper 123 Market Hot Springs, AR 71901

President, Arkansas Bar Foundation .........•••.......... Cyril Hollingsworth P.O. Box 3363 Little Rock, AR 72203

Delegate to American Bar Association

Herschel H. Friday 2000 First National Bldg. Little Rock, AR 72201

Arkansas Judicial Representative .......•............. JUdge Henry M. Britt Garland Co. Courthouse Hot Springs, AR 71901

Executive Director

STAFF Executive Director Administrative Assistant Publications Assistant Membership Secretary Section/Committee Secretary Lawyer Referral Service Secretary

160/Arkansas Lawyer/October 1983

William A. Martin Judith Gray Lisa Lewis Patricia Newman Virginia Hardgrave

Arkansas Bar Association 400 West Markham Little Rock, AR 72201 (501-375-4605)


Dennis L. Shackleford 100 E. Church EI Dorado, AR 71730


William A. Wilson, Jr.


(375-6453) Immediate Past President (238-2317)

Box 71 Little Rock, AR 72203 J. L. (Jim) Shaver, Jr. Box 592 Wynne, AR 72396

Secretary Treasurer ................... Annabelle Clinton

2200 Worthen Bldg. Little Rock, AR 72201


Chairman, YLS ......................... Carl A. Crow, Jr. Box 1620 (321-1200) Hoi Springs, AR 71901 Chairman, Executive Council


James H. McKenzie Box 599 Prescott, AR 71857

VOTING MEMBERS District NO.1 R. Gary Nutter 6 Slate Line Plaza Texarkana, AR 75502 Term Expires 1985 District NO.2 Garvin Fitton P.O. Box 249 Harrison, AR 72601 Term Expires 1984 District NO.3 Gary R. Cottrell Box 328 Van Buren, AR 72956 Term Expires 1985 District No.4 David K. Harp #1 Main Place Russellville, AR 72801 Term Expires 1986 District NO.5 David Maddox 520 Church St. Mena, AR 71953 Term Expires 1986 District No.6 Glenn Vasser Box 599 Prescott, AR 71857 Term Expires 1984 District NO.7 Paul E. Lindsey P.O. Box 777 Camden, AR 71701 Term Expires 1984 District NO.8 Michael W. Lansberry Box 571 Monticello, AR 71655 Term Expires 1985 District NO.9 Herman Hamilton

Box 71 Hamburg. AR 71646 Term Expires 1986

District No. 10 George D. Ellis Box 211 Benton, AR 72015 Term Expires 1986

District No. 18 B. Richard Allen Box 601 Newport, AR 72112 Term Expires 1986

District No. 11 Howard L. Martin Box 9 Cabot, AR 72023 Term Expires 1984

District No. 19 A. F. Thompson, III P.O. Box 3891 Batesville, AR 72501 Term Expires 1985

District No. 12 John D. Eldridge, III P.O. Box 479 Augusta, AR 72006 Term Expires 1985

District No. 20 David Osmon Box 724 Mt. Home, AR 72653 Term Expires 1986

District No. 13 David Solomon 215 Cherry Helena, AR 72342 Term Expires 1986

District No. 21 Beth Gladden Coulson Box 186 Perryville, AR 72126 Term Expires 1985

District No, 14 Richard L. Proctor Box 468 Wynne, AR 72396 Term Expires 1986

District No. 22 Richard H. Smith Box 569 Bentonville, AR 72712 Term Expires 1986

District No. 15 Julian B. Fogleman Box 1666 W. Memphis, AR 72301 Term Expires 1984

District No. 22 Sidney H. McCollum Box 447 Bentonville, AR 72712 Term Expires 1985

District No. 16 Janet K. Moore 401 West Hale Osceola, AR 72370 Term Expires 1984

District No. 23 Robert Hargraves 520 Ouachita Ave. Hot Springs, AR 71901 Term Expires 1985

District No. 17 T. Joe Holifield Box 754 Paragould, AR 72450 Term Expires 1985

District No. 23 Robert Ridgeway 127 Hawthorne Hot Springs, AR 71901 Term Expires 1986

District No. 24 Bobby Shepherd 215 N. Washington EI Dorado, AR 71730 Term Expires 1986 District No. 24 Michael R. Landers Box 127 EI Dorado, AR 71730 Term Expires 1984 District No. 25 Martin G. Gilbert Box 8509 Pine Bluff, AR 71611 Term Expires 1984 District No. 25 Jack McNUlty Box 7808 Pine Bluff, AR 71611 Term Expires 1986 District No. 26 Troy Henry 630 S. Main Jonesboro, AR 72401 Term Expires 1984 District No. 26 William B. Howard Box 1491 Jonesboro, AR 72401 Term Expires 1985 District No. 27 Jim Spears 616 Garrison Ft. Smith, AR 72901 Term Expires 1984 District No. 27 P. K. Holmes, III Box 1626 Ft. Smith, AR 72902 Term Expires 1986 District No. 27 G. Alan Wooten Box 1626 Ft. Smith, AR 72902 Term Expires 1984 October 1983{Arkansas Lawyer/161

District No. 27 Thomas E. Robertson, Jr. 615 N. B SI. FI. Smith, AR 72901 Term Expires 1985

District No. 29 Martha M. McCaskill 1700 First Nail. Bldg. Little Rock, AR 72201 Term Expires 1986

District No. 26 Marcia Mcivor 26 E. Center Fayetteville, AR 72701 Term Expires 1984

District No. 29

District No. 29

District No. 29

Frank B. Sewall Nail. Old Line, Legal Litlle Rock, AR 72201 Term Expires 1986

Wm. Russell Meeks 1151 First Natl. Bldg. Little Rock, AR 72201 Term Expires 1984

Thomas B. Staley 1550 Tower Bldg. Little Rock, AR 72201 Term Expires 1985

District No. 28 Thomas F. Butt Box 135 Fayetteville, AR 72702 Term Expires 1984

District No. 29 James M. Simpson, Jr. 2000 First Natl. Bldg. Little Rock, AR 72201 Term Expires 1986

District No. 29 Kaye S. Oberlag 2224C S. Main Little Rock, AR 72206 Term Expires 1984

District No. 29 Gene O'Daniel Box 2153 Little Rock, AR 72203 Term Expires 1985

District No. 26 James E. Crouch Box 1400 Springdale, AR 72764 Term Expires 1986

District No. 29 Robert L. Henry 1500 Union Nail. Plaza Little Rock, AR 72201 Term Expires 1986

District No. 29 Markham Lester 1290 Worthen Bldg. Litlle Rock, AR 72201 Term Expires 1985

District No. 29 Victor A. Fleming 210 Commercial Natl. Bk. Little Rock, AR 72201 Term Expires 1984

District No. 28

District No. 29

District No. 29

David Malone U of A School of Law Fayetteville, AR 72701 Term Expires 1985

Charles L. Carpenter 1405 Main Street No. Litlle Rock, AR 72114 Term Expires 1984

Robert R. Wright 400 W. Markham Little Rock, AR 72201 Term Expires 1985

District No. 29 Jack Lessenberry 807 W. Third Little Rock, AR 72201 Term Expires 1986

District No. 29 Randy Coleman 300 Spring Building Little Rock, AR 72201 Term Expires 1984

District No. 29 Jeff Pence 319 W. Second, Ste. 30 Little Rock, AR 72201 Term Expires 1985

District No. 29 Thomas M. Carpenter 807 W. Third SI. Little Rock, AR 72201 Term Expires 1985

Law Student Steve Gunderson U of A School of Law Fayetteville, AR 72701

NON-VOTING MEMBERS Past Presidents and Tenure Delegates LeRoy Autrey P.O. Box 960 Texarkana, AR 75502

Charles Carpenter 1405 Main Street No. Little Rock, AR 72114

Robert D. Ross 400-300 Spring Bldg. Litlle Rock, AR 72201

William R. Wilson, Jr. P.O. Box 71 Little Rock, AR 72203

LIAISON NON-VOTING MEMBERS Cyril Hollingsworth, President Arkansas Bar Foundation

Herschel H. Friday Arkansas Bar Association Delegate to American Bar Association

Henry M. Britt, Member Arkansas Judicial Council

E. Harley Cox, Jr., Chairman Institute of Continuing Legal Education

PAST PRESIDENTS' COMMITTEE Phillip Carroll A. F. House Terrell Marshall J. L. Shaver John A. Fogleman Oscar Fendler Louis L. Ramsay, Jr. Bruce T. Bullion Maurice Cathey William S. Arnold J. Gaston Williamson Robert L. Jones, Jr.

Little Rock Little Rock Little Rock Wynne W. Memphis Blytheville Pine Bluff Little Rock Paragould Crossett Little Rock Fort Smith

162/Arkansas Lawyer/October 1983

Chairman 1946-49 1951-52 1953-54 1958-59 1962-63 1963-64 1964-65 1966-67 1967-68 1966-69 1969-70

J. C. Deacon PauiB. Young Henry Woods James West James B. Sharp Robert C. Compton Herschel H. Friday Walter R. Niblock Wayne Boyce E. Hartey Cox, Jr. James D. Cypert J. L. Shaver, Jr.

Jonesboro Pine Bluff Little Rock Fort Smith Brinkley EI Dorado Little Rock Fayetteville Newport Pine Bluff Springdale Wynne

1970-71 1971-72 1972-73 1973-74 1974-75 1975-76 1976-77 1977-76 1976-79 1979-80 1981-82 1982-83



...••.....•......... Tom Carpenter 807 W. Third Little Rock, AR 72201

Economics of Law Practice Section , ........•........... William D. Haught 2200 Worthen Bank Bldg. Little Rock, AR 72201

Probate Section

• .. . . . . . .. .. Dan Stripling Box 388 Clinton, AR 72031 .,.,.,., ... , .. , .. Gerald Halpern 1315 Edgehill Dr. Fayetteville, AR 72701

Real Estate Law Section

SaVings and Loan Section Family Law Section

....•....... "

Robert M. Cearley, Jr. Box 1510 Little Rock, AR 72203 Taxation, Trust & Estate Planning Section

Randall Ishmael Box 4096 Jonesboro, AR 72401

Labor Law Section ....•.....•.... Jay Thomas Youngdahl Box 6030 Little Rock, AR 72203 Workers' Compensation Section

Ronald Griggs 431 N. Washington EI Dorado, AR 71730

Law Student Section .........•......... Steve Gunderson U of A School of Law Fayetteville, AR 72701 Young Lawyers Section Natural Resources Law Section

Roy R. Gean, Jr. 1st Federal Bldg. Fort Smith, AR 72901

Carl A. Crow, Jr. Box 1620 Hot Springs, AR 71901

William J. Wynne 308 NBC Plaza EI Dorado, AR 71730

COMMITTEE CHAIRPERSONS Agricultural Law Committee , J. W. Looney Alternatives To Litigation .......••.... ,.,. D. Mac Glover Annual Meeting ., , , John F. Stroud Anti-Trust & Trade Regulations Committee , , •.. , .. , Steve Napper AUditing Committee , .. , John L. Johnson Automobile "No Fault" Insurance Committee Bobby McDaniel Aviation Law Committee Stephen M. Reasoner Banking Law Committee , .. , Martin G. Gilbert Cameras In The Courtroom Committee Thomas M. Carpenter Civil Procedures , .. Mike Hulen Consumer Law " , .. ,., Bill Isaacs Constitutional Reform Committee , .. , Georgia K, Elrod Creditors' Rights Tom S. Streetman Economics Of Law Practice , , William D. Haught Environmental Law Charles R. Nestrud Federal Legislation & Procedures .. , , ,.,. E. Charles Eichenbaum Group Insurance , ,., .. , Odell Pollard Health Law Committee .. , ..•......... Michael W. Mitchell House Committee Charles L. Carpenter Interest On Lawyers' Trust Accounts ..............•..... Herman L. Hamilton Investment Committee .....•............ James B. Sharp Judicial Council Liaison ....•....... Charles L. Carpenter JUdicial Nominations .. " .. " ", John F. Stroud JUdiciary Committee " .. , .• , W. Kelvin Wyrick Committee To Study Judicial Polls ." .... , .......•..... Stephen A. Matthews

Juvenile Justice Standards Marcia Mcivor Law School Committee Robert C. Compton Law Student Liaison Michael Crawford Lawyers Helping Lawyers Dean R. Morley Lawyer Referral Service ..........•........ Frank Elcan, II Committee On Legal Services For The Deaf Kaye S. Oberlag Legislative Oversight Jack McNulty Local Court Rules Ben D. Rowland Malpractice Education Joseph L. Buffalo Maritime Law Gordon S. Rather Committee On Mentally Disabled Randy Philhours Prepaid Legal Services Harold H. Simpson, II Public Information Samuel A. Perroni Resolutions Committee Second Chair Program Phillip Carroll Senior Task Force E. Charles Eichenbaum Specialization And Advertising Tim Boe Special Planning Tommy Womack State & Federal Securities John S. Selig Arkansas Statute Revision William S. Arnold Uniform Law """ .. " Phillip CarrOll VA Orientation Program Joe Ross Youth Education Mary Thomason McKinnon Legal Services Committee Martha M. McCaskill Jurisprudence & Law Reform Jack A. McNulty Legal Aid Committee G. Alan Wooten Legal Education Committee Don M. Schnipper Legislation Commitee Glenn Vasser Professional Ethics & Grievances John P. Gill October 1983/Arkansas Lawyer/163

Arkansas Bar Foundation OFFICERS Richard F. Hatfield Box 1170 Searcy, AR 72143

President .........••................. Cyril Hollingsworth P.O. Box 3363 (376-4731) Little Rock, AR 72203



Executive Secretary ......•............ William A. Martin 400 W. Markham Little Rock, AR 72201

Robert L. Jones, III Box 2023 Fort Smith, AR 72902

(782-7203) Treasurer

Martin G. Gilbert Box 8509 Pine Bluff, AR 71611


DIRECTORS Richard F. Hatlield .. 1984 Searcy 1985 Searcy Jerry W. Cavaneau James A. McLarty, III 1986 Newport John R. Elrod 1984. . .. Siloam Springs Robert L. Jones, III 1985 Fort Smith Richard H. Wooton 1986 .. . Hot Springs EX-OFFICIO: Dennis L. Shackleford, President • Arkansas Bar Association

Cyril Hollingsworth Robert D. Ross James M. Moody .. James H. McKenzie Samuel N. Bird . .. . ... . .. Martin G. Gilbert Randall W. Ishmael,

1984 Little Rock 1985 Little Rock 1986 Little Rock 1984 ..... . . . . .. Prescott 1985 Monticello 1986 Pine Bluff Past-Chairman

Arkansas Bar Foundation



Criminal Justice Standards Review

House Investment Advisory


.. Cyril Hollingsworth John A. Fogleman Charles L. Carpenter . . . .. James B. Sharp

Membership Public Awareness Special Projects Trusts

Robert D. Cabe Samuel A. Perroni . John F. Stroud, Jr. . . . . . . . . . . . . . . . . . . .. William S. Arnold

Arkansas Institute Of Continuing Legal Education BOARD OF DIRECTORS Don Schnipper, President (624-1252) J. W. Looney (575-3706) MarVin L. Keiffer

123 Market Hot Springs, AR 71901

lawrence Averill (371-1071)

UALR School of Law Little Rock, AR 72201

U of A School of Law Fayetleville, AR 72701

Carl A. Crow, Jr. (321-1200)

Box 1620 Hot Springs, AR 71901


Jonesboro, AR 72401

Cyril Hollingsworth (376-4731)

Box 3363 Little Rock, AR 72203

Dennis L. Shackleford (862-5523)

100 E. Church EI Dorado, AR 71730

Robert L. Jones, III (782-7203)

Box 2023 Fort Smith, AR 72902

William R. Wilson, Jr. (375-6453)

Box 71 Little Rock, AR 72203

E. Harley Cox, Jr. (534-5221 )

P.O. Box 8509 Pine Bluff, AR 71611

EXECUTIVE DIRECTOR Arkansas Bar Association

400 W. Markham Little Rock, AR 72201

EXECUTIVE DIRECTOR Claibourne W. Patty (371-2268)

164/Arkansas Lawyer/October 1983

McAdams Trust

400 W. Markham Little Rock, AR 72201

YOUNG LAWYERS SECTION EXECUTIVE COUNCIL Carl A. Crow, Jr. P.O. Box 1620 Hot Springs, AR 71901

Secretary-Treasurer .....•••.....•.... Richard L. Ramsay P.O. Box 8509 (534-5221) Pine Bluff, AR 71611

Chairman-Elect .....•............... Martha M. McCaskill 1700 First Nail. Bldg. (372-7442) Liille Rock, AR 72201

Past Chairman ......................... Frank C. Elcan, II P.O. Box 549 Harrison, AR 72601 (741-4646)

SOUTHERN DISTRICT Phillip Raley Patrick A. Burrow CENTRAL DISTRICT Kaye S. Oberlag Ann Henderson

NORTHWEST DISTRICT Morse U. Gist, Jr. . Michael Crawford NORTHEAST DISTRICT Jesse E. Porter, Jr John N. Fogleman

Chairman (321-1200)

1984 1985

Pine Bluff Pine Bluff

1984 . . . .. . .. Little Rock 1985 . .. ... N. Little Rock

1984 1985

Hot Springs Hot Springs

1984 ......... W. Helena W. Memphis 1985

LOCAL BAR ASSOCIATIONS ARKANSAS ASSOCIATION OF DEFENSE COUNSEL President Ben Core Vice-President John C. (Jack) Deacon Secretary-Treasurer Robert L. Henry ARKANSAS ASSOCIATION OF WOMEN LAWYERS President Carolyn B. Witherspoon President-Elect Terry Paulson Secretary Susie Pointer Treasurer ,.... Susan McCain ARKANSAS COUNTY BAR ASSOCIATION President Russell D. Berry Vice-President Malcolm R. Smith Secretary-Treasurer Virgil Moncrief ARKANSAS PROSECUTING ATTORNEYS President Kim Smith Vice-President David Klinger Secretary-Treasurer Ron Fields ASHLEY COUNTY BAR ASSOCIATION President William E. Johnson Vice-President . , Gary M, Draper Secretary-Treasurer , " , Bruce D. Switzer BAXTER COUNTY BAR ASSOCIATION President David L. Osmon Vice'President Norman C. Wilber Secretary·Treasurer Phil Dixon BENTON COUNTY BAR ASSOCIATION President Stephen P. Sawyer Vice' President Douglas R. Schrantz Secretary·Treasurer Richard Smith BLYTHEVILLE BAR ASSOCIATION President .. Jeff Gardner Vice'President , .. John Bradley Secretary·Treasurer Bruce Harlan BOONE COUNTY BAR ASSOCIATION President Frank C. Elcan. II Vice-President Donald J. West Secretary-Treasurer Fred C. Kirkpatrick BRADLEY COUNTY BAR ASSOCIATION President H. Murray Claycomb CARROLL-MADISON COUNTY BAR ASSOCIATION President Russell C. Atchley Secretary-Treasurer , , .. Kent Coxsey CHICOT COUNTY BAR ASSOCIATION President , , , , , .. ,., Jerry Mazzanti Vice-President , , .. , James W. Haddock C. S. Dermott Secretary-Treasurer

CLARK COUNTY BAR ASSOCIATION President Don P. Chaney Secretary-Treasurer Steven G. Beck CLEBURNE COUNTY BAR ASSOCIATION President David W. Harrod Vice-President F. W. Jeffcoat ,............. Patrick Gardner Secretary Treasurer , , , ' ... , . , . , .. Earl N. Olmstead COLUMBIA COUNTY BAR ASSOCIATION President ., , William T. Finnegan Vice'President David Talley Secretary-Treasurer Elliott Clegg CONWAY COUNTY BAR ASSOCIATION President Nathan Gordon Secretary-Treasurer William J. Cree CRAIGHEAD COUNTY BAR ASSOCIATION President . Bobby McDaniel Vice· President . Jon R. Coleman R. James Lyons Secretary-Treasurer . CRAWFORD COUNTY BAR ASSOCIATION President . . . . . . . . . . . . . . . . . .. Marril Harriman Vice-President , Bob Marquette Secretary-Treasurer ,.,., Gary R. Cottrell CRITTENDEN COUNTY BAR ASSOCIATION President Michael R. Mayton Vice-President James A. Johnson, Jr. Secretary-Treasurer William C. Ayres CROSS COUNTY BAR ASSOCIATION President Richard L. Proctor Secretary-Treasurer J. L. Shaver. Jr. FAULKNER COUNTY BAR ASSOCIATION President .... , .... ' , . , . , . , ., William Clay Brazil Vice-President '., ,., Phil Stratton Secretary-Treasurer Larry Grady W. HAROLD FLOWERS LAW SOCIETY President Eugene McKissic Vice' President Marion Humphrey Secretary Rodney Slater Treasurer Zimmery Crutcher, Jr. FRANKLIN COUNTY BAR ASSOCIATION President Joe Ramos Secretary-Treasurer Jim Maynard GARLAND COUNTY BAR ASSOCIATION President ,............ Michael G. Rothman Vice-President , Richard Slagle Secretary-Treasurer Bruce MacPhee October 1983/Arkansas Lawyer/165

GRANT COUNTY BAR ASSOCIATION President . John W. Cole Vice-President Joseph W. Swaty Secretary-Treasurer . Harold King GREENE-CLAY COUNTY BAR ASSOCIATION President . . . . . . . . . . .. Joe Holifield Vice-President . Mike Todd Secretary-Treasurer.. . . . . '" Steve Hardin HEMPSTEAD COUNTY BAR ASSOCIATION President . James H. Pilkinton, Sr. Vice-President Royce Weisenberger Secretary-Treasurer Christiana McQueen HOT SPRING COUNTY BAR ASSOCIATION President Fenton Stanley Vice-President . David M. Glover Secretary-Treasurer Donald M. Spears INDEPENDENCE COUNTY BAR ASSOCIATION President Jerry Post Vice-President John Purtle Secretary-Treasurer Jay Dilbeck JACKSON COUNTY BAR ASSOCIATION President Marvin D. Thaxton Secretary-Treasurer Max O. Bowie JEFFERSON COUNTY BAR ASSOCIATION President ........ Martin G. Gilbert F. Daniel Harrelson Vice-President . Secretary-Treasurer. .. .. . .. . .. . . . . .... John Rush LAWRENCE-RANDOLPH COUNTY BAR ASSOCIATION Wm. David Mullen President ..................... Secretary-Treasurer .... . .... David Throesch LEE COUNTY BAR ASSOCIATION President W. H. Daggett Vice-President ........... . . . .. Carrold E. Ray LONOKE COUNTY BAR ASSOCIATION President . . . .. Marjorie Kesl MARION COUNTY BAR ASSOCIATION President . Michael E. Kelly Vice-President . . Kenneth R. Smith Secretary-Treasurer .. Judith C. Bearden MONROE COUNTY BAR ASSOCIATION President . John W. Martin Vice-President . .. James D. Sprott Secretary-Treasurer James D. Sprott NEVADA COUNTY BAR ASSOCIATION President .... ........ . . . . . . . .. A. Glenn Vasser Vice-President Danny P. Rodgers Secretary-Treasurer . James E. Franks NORTH CENTRAL ARKANSAS BAR ASSOCIATION President .......... . .. Samuel F. Beller Vice-President ............ . Larry D. Kissee Secretary-Treasurer Don A. Brown NORTH PULASKI COUNTY BAR ASSOCIATION President . Mackie M. Pierce Vice-President . . . . . . . . . . . .. Henry Osterloh Secretary ............................. Randy Mortey Treasurer ... ................ Art Stuenkel NORTHEAST ARKANSAS BAR ASSOCIATION President . . . . . . . . . . . . . . . . .. Bill E. Ross Vice-President

. . . . . . . ..

Harry Truman Moore

Secretary-Treasurer. . . " . Chadd Durrett OSCEOLA BAR ASSOCIATION President Chuck Banks Vice-President Janet K. Moore Secretary-Treasurer Whit Barton OUACHITA COUNTY BAR ASSOCIATION President Hamilton H. Singleton .. Edwin A. Keaton Vice-President ........ Secretary-Treasurer. .. . .. .. .. . . V. Benton Rollins 166/Arkansas Lawyer/October 1983

PHILLIPS COUNTY BAR ASSOCIATION President . . . .. L. Ashley Higgins Vice-President DUlWood W. King Secretary-Treasurer . Charles P. Allen PIKE COUNTY BAR ASSOCIATION President . Jimmy S. Featherston Vice-President . . . . . . . . . . .. Phillip Clay Secretary-Treasurer ..... Charles Yeargan POINSETT COUNTY BAR ASSOCIATION President . L. D. Gibson Vice-President Wayne Mooney Secretary-Treasurer .. Michael Everett POLK COUNTY BAR ASSOCIATION President . David Maddox Vice-President . .... Bob Keeter Secretary-Treasurer . . Patricia Tucker POPE COUNTY BAR ASSOCIATION President ........ John M. Bynum Vice-President . James R. Pate Secretary-Treasurer Ruth Teal PULASKI COUNTY BAR ASSOCIATION President Robert K. Walsh H. William Allen Vice-President Secretary-Treasurer Frank B. Sewall ST. FRANCIS COUNTY BAR ASSOCIATION President . . . .. Steve Routon Secretary-Treasurer Brad J. Beavers SALINE COUNTY BAR ASSOCIATION President Greg Brown Vice-President . Ray Baxter Secretary Joe Hardin Treasurer . Pete Lancaster SEBASTIAN COUNTY BAR ASSOCIATION President . . . . . . . . . . . . . . . . . . .. Robert R. Cloar Vice-President Troy R. Douglas Secretary-Treasurer Joel Johnson SOUTHEAST ARKANSAS LEGAL INSTITUTE President Robert Wellenberger Secretary Billy J. Hubbell SOUTHWEST ARKANSAS BAR ASSOCIATION President . . . . . . . . . . . .. Winford L. Dunn, Jr. Vice-President


James H. Pilkinton, Jr.

Secretary-Treasurer Duncan M. CUlpepper TEXARKANA BAR ASSOCIATION President John F. Stroud, Jr. Vice-President Chartes Bliel Secretary-Treasurer Robert E. Dodson UNION COUNTY BAR ASSOCIATION President Denver L. Thornton Vice-President Ian Vickery Secretary-Treasurer Beverty Carpenter WASHINGTON COUNTY BAR ASSOCIATION President Truman H. Smith Vice-President . David S. Herdlinger Secretary-Treasurer Mary Ann Gunn WHITE COUNTY BAR ASSOCIATION President . . . . . . . . . .. Chris Raft Vice-President Mike Millar Secretary- Treasurer

Watson Bell

WOODRUFF COUNTY BAR ASSOCIATION President ... Joe N. Peacock Vice-President .............. John Eldridge, III Secretary- Treasurer . . .. Ray A. Waters


Increasingly Arkansas lawyers are fielding clients' questions and inquiries that relate to the general area of international business and commercial law. Arkansas is one of the largest agricultural exporting states in the country and each year more Arkansas manufacturing plants are engaging in export activities. As an adjunct to the export area, Arkansas attorneys represent with increasing frequency foreign entities in matters that relate to Arkansas business or real estate investments. While the typical Arkansas lawyer may feel little or no need to become familiar with international law, it is becoming more difficult to avoid the subject. Although a thorough understanding of international law may be desirable to some practitioners, few attorneys deal with international .Iaw on a large enough scale to justify a comprehensive attempt to familiarize themselves with this complex area of law. However. a basic awareness and understanding of certain aspects of international business and commercial law is important to attorneys who are periodically faced with inquiries in this area. While this article raises many points which should be considered when dealing with individuais or businesses engaged in foreign trade or finance. it is not intended to be a comprehensive

treatment of the subject matter. Therefore. the references contained in the Bibliography and footnotes should be consulted for additional information on specific topics. I. General overview and Practical Considerations, When dealing with foreign citizens. businesses. or governments it is important to realize that the laws governing transactions will probably differ significantly from the laws that govern transactions which take place entirely in the United States. Moreover. it is as important to understand the domestic and business customs of a foreign country as it is to understand its laws. If American businessmen and attorneys understand and respect foreign customs. they are less likely to offend their foreign counterparts and their business projects are more likely to succeed. In general. one should be slow to conclude that business or legal successes can be repeated by merely transplanting domestic techniques. principals and philosophies to international business transactions. Also. regardless of what foreign country the international business transaction may concern. there are overriding United States federal laws and even state laws that require compliance efforts with respect to what is done both within the United States and outside its borders.

The attorney representing a client desiring to engage in the export business typically should first assist the client in determining whether or not there is a need for employment of an agent in a foreign country to assist the client in dealing with the foreign customers. The World Trade Information Center' can be extremely helpful in selecting a foreign agent and is generally a good source of information and assistance in setting up an export program. A Basic Guide to Exporting, published by the United States Department of Commerce is an excellent guide to use when attempting to locate a foreign agent. Domestic consulting firms known as "Export Management Companies" also are useful.' in addition. reports on foreign agents can be obtained from the United States Foreign Service-Department of State. and are available from the United States Department of Commerce. These reports contain such information as the type of business organization of the agent. year established. number of employees. etc. These government agencies can also assist your client in verifying the reputation and credibility of the foreign agent. Once a trustworthy foreign agent is located. the lawyer can be instrumental in preparing some type of agency agreement. The exact terms October 1983/ArI<ansas Lawyer/167

will depend upon whether the foreign agent is merely a sales agent or a distributor. The agreement will contain many standard and some nonstandard terms of agency agreements. 3

In addition to United States domestic laws, it is usually encumbent upon the Arkansas lawyer to determine what laws of the foreign nation may be applicable to the client's transaction. Therefore, it may be necessary to retain counsel in the foreign country to assist in the transaction. It should be remembered that even the word "lawyer" may not be translatable into the language of the foreign nation in which you are dealing. Also it is important to note that in many foreign countries duties among members of the legal profession are divided into specialized subprofessions (solicitors/barristers, notari/avocat, avoue' / conseil juridique, etc.). In summary, in many countries you may not need what would normally be thought of as a "lawyer" but may need an accountant, notary or other professional. As a practical matter in dealing with foreign professionals which you employ, it is wise to have some idea in advance as to what questions to ask, how to phrase the questions, and what answers to expect. Although it may be extremely difficult to communicate with a foreign professional, it is helpful if you explain to the foreign professional, in basic terms what your general needs are and let the foreign professional give you some suggestions as to how he would approach the problem rather than telling him what you think ought to be done. If possible, it is helpful to have previously researched the law of the foreign

country. For this purpose the Martindale-Hubbell Law Digest' provides information of the law of some 52 countries. Martindale-Hubbell is also of assistance in selecting foreign lawyers in many countries as is the United States Department of State. The United States Embassy in a given country will generally know which lawyers it has dealt with in the past and which are reputable. Banks are also a good source of information about foreign attorneys or other professionals. The next section of this review consists of a listing of many of the more important United States laws and areas of law that have some impact on international business transactions. II. United States Laws That May Be Applicable to International Business Transactions Agricultural Foreign Investment Disclosure Act of 1978'-This Act requires that any foreign person who acquires or transfers any interest, (basically 5% or more) other than a security interest, in agricultural land must report the transaction to the Agriculture Department. There are also substantial restrictions within this Act on foreign ownership of real estate in several states within the United States.' Anti-trust laws-Generally antitrust laws are applicable to foreign transactions even where the challenged activity takes place wholly outside the United States.' In addition there may be applicable foreign antitrust laws. Banking restrictions-Interna-

About the Author: Mark W. Grobmyer is a graduate of Washington and Lee University and the University of Arkansas Law School. He has studied International Law and International Business Transactions at the University of Exeter at Exeter, England. Mr. Grobmyer is a member of the American Bar Association Section on International Law and the Arkansas Bar Association Committee on International Law. He is a partner with the Little Rock law firm of Davidson, Horne, Hollingsworth, Arnold & Grobmyer and serves as counsel to certain firms engaged in international business transactions. Mr. Grobmyer has done post graduate securities law studies at Harvard Law School and currently serves as the State of Arkansas liaison to the American Bar Association Federal and State Securities Law Committee. Assisting Mr. Grobmyer in the preparation of this article was the Arkansas Bar Association Committee on International Law, and Mr. Michaela. Parker, a tax partner in Mr. Grobmyer's law firm. 168/Arkansas Lawyer/October 1983

tional Banking Act of 1978'-This Act provides restrictions on foreign banks which enter and operate in the United States market and restrictions on the nationality of directors of banks. There also may be applicable state laws in this area. Currency and Foreign Transactions Reporting Act of 1970'This Act, administered by the Department of Treasury, requires various financial institutions, including broker dealers, to report and maintain records regarding, among other things, domestic currency transactions exceeding $10,000, imports or exports of currency or monetary instruments exceeding $5,000, and any financial interest in or authority over a bank, securities or other financial accounts in a foreign country. Export Administration Act of 1979"-This Act controls exports of certain products which would "make a significant contribution to the military potential of any other country or combination of countries which would prove detrimental to the security of the United States" and it also attempts to control exports where necessary to further foreign policy of the United States or to fulfill its declared international obligations or where it is necessary to protect the domestic economy from the excessive drain of scarce materials or to reduce inflationary impact of foreign demand. One must consult the Export Administration Regulations 15 C.F.R. 368 et seq. to find out whether or not the goods which your client seeks to export will be governed by the Export Administration Act and what type of license may be necessary. Certain shipments require a vali-

dated license for the particular products; other products may be shipped under a general license. Part 371 of the regulations is helpful. The commodity control list, Section 399.1 of the regulations, is useful in determining whether or not the product is "strategic" or in "short supply" or in "any other category" subject to severe restrictions. The Export Administration Act of 1979 must be carefully reviewed to determine what licenses or destination control statements must be obtained. Information can be obtained from the exporters service staff of the Office of Export Administration in Washington or the nearest Department of Commerce District Office. There are efforts to encourage exports by favorable legislation currently pending in Congress and the Export Administration Office should be consulted for additional information in this regard. Foreign Agents Registration Act of 1938"-When dealing with foreign nationals, the lawyer should be wary of the need to register under the Foreign Agents Registration Act of 1938. This Act basically provides that no person shall act as an agent of a foreign principal unless he has filed a registration statement with the Attorney General or unless he is exempt from registration by one of the exemptions contained in the Act. An attorney can easily fit into the category of agents required to be registered, and a willful violation of the Act is punishable by a fine of up to $10,000 or imprisonment of up to 5 years. Foreign Corrupt Practices Act of 1977"-1t is extremely important to satisfy yourself of the reputation of any foreign agent. This Act basically makes it illegal for U.S. companies to offer or give money or anything of value to foreign government officials or foreign political parties or candidates either directly or through intermediaries for the purpose of influencing official actions or decisions affecting the payor's business. The FCPA is enforced with respect to non-public companies by the Justice Department and with respect to the public companies by the Securities Exchange Commission. The FCPA is an extremely difficult Act with which to comply, particularly when encountering customs in foreign countries. It is recommended that you fully familiarize your client with the FCPA. There have been recent attempts to amend the

FCPA to make it easier for businesses to interpret and comply with it." Domestic and Foreign Investment Improved Disclosure Act of 1977"-This Act among other things amends the reporting requirements of Section 13(d) of the Securities Exchange Act of '34 to add citizenship and residence to the facts that must be disclosed by beneficial owners of 5% or more of the equity securities of United States issuers. The Act is clearly directed to foreign investors and tends to improve the monitoring of foreign investments of the United States. International Investment Survey Act of 1976"-This Act provides clear and unambiguous authority for the President to collect information on international investments and to provide analysis of such information to Congress, executive agencies and the public. The President by executive order has delegated responsibility for studying direct investment to the Commerce Department and portfolio investment to the Treasury Department. The President was directed also to establish a system for monitoring foreign investment in United States real estate. Generally when a foreign ownership of a U.S. corporation or unincorporated entity reaches 10%, a sizeable report must be filed with the Bureau of Economic Analysis of the Department of Commerce. This Act is particularly important in light of foreign nationals attempting to obtain nonimmigrant visas as E-2 treaty investors. E-2 status grants significant benefits to certain qualifying foreign nationals who invest in United States business ventures." Mining laws"-Generally alien individuals are not allowed to explore for, or extract mineral deposits on federal lands, unless they have declared their intention to become United States citizens. Securities laws-Under certain circumstances the securities laws of the United States are applicable to foreign dealings. Certain cases have emphasized the United States cannot be used as a "base for manufacturing fraudulent security devices for export, even when these are peddled only to foreigners."" Particular review should be made in this area if it is felt that your client's transactions in any way relate to securities matters." This is an extremely complex area and should be

treated with extreme caution. Also of importance is the question of whether or not foreign nations have securities laws that are applicable to a particular transaction.'" Shipping Act of 1916 and Merchant Marine Acts of 1920, 1928 and 1936" -These acts purport to restrict foreigners owning U.S. shipping vessels and Merchant Marine equipment. Tax laws Generally-Much has been said of the so-called "Tax Havens" that lead many into the area of international law. The area of foreign taxation is extremely complicated and should be thoroughly reviewed in any international transaction. A number of activities will lead to double taxation of a foreign corporation and on its United States shareholders whether or not dividends are actually distributed. A general principal in this area is that a domestic corporation doing business abroad is taxed on its worldwide income, regardless of where such income is earned, although foreign tax credits are available. An important exception to this rule is a Domestic International Sales Corporation ["DISC"I a category created by the Congress to promote foreign trade by awarding tax deferrals" In order to qualify for DISC treatment at least 95% of a corporation's receipts must be from export sales and rentals, an election must be made, and certain other requirements must be met. Once qualified, one-half of the DISC's income is taxed to its shareholders as dividends whether or not distributed, and the other one-half escapes taxation until actually distributed, the stock is sold, or the corporation no longer qualifies as a DISC. DISC rules were SUbstantially changed in 1976 with an increase in complexity and substantial reduction in benefits. An important feature of this change was to apply favorabie treatment primarily to increases in exports over time. Obviously, this substantially reduces effective DISC use though the rule does not apply to DISCs with taxable income of $100,000 or less for a taxable year. Unless substantial and increasing export sales are involved the administration of a DISC is so costly and cumbersome it is frequently not favorable for a small U.S. exporter. Just as the general rule for a domestic corporation (other than a DISC) is that income is subject to U.S. taxation regardless of where it is earned, the general rule for foreign corporations is that income from foreign operations October 1983/Arkansas Lawyer/169

escapes U.S. taxation, regardless of whether the stockholders are U.S. citizens. This is what tax haven planning is based on. As might be expected, there are important limitations to the general rule. If the corporation is a "contrplled foreign corporation" r"CFC"l (generally, 50% of the voting interest owned by U.S. shareholders), then earnings from insurance of U.S. risks, earnings from U.S. operations, earnings involving certain related party transactions, and earnings invested in U.S. property are taxed to U.S. shareholders whether or not distributed. In addition, there are numerous special rules, exceptions and other tax traps and public policy provisions surrounding application of these rules. Examples of public policy provisions include application of special adverse treatment to activities involving bribes or boycotts. The general area of tax havens has recently come under intense scrutiny by the Internal Revenue Service. In January of 1981 a 235 page report entitled "Tax Havens and Their Use by United States Taxpayers-An Overview" was submitted by the Internal Revenue Service and policymaking officials in the Justice and Treasury Departments. It is believed that this report will eventually lead to important and adverse changes in law and regulation.

tionally, it substantially modifies antitrust laws to ease the risk that U.S. companies would inadvertently violate anti-trust laws in engaging in foreign trade. Because this Act was only signed on October 8, 1982, there has not been much actual utilization of the Act, but it is reasonable to anticipate that the prOVisions of the Act will substantially assist United States companies in promoting exports and competing with foreign trading companies. III. Summary-Because detailed explanation of intracacies of international financing is beyond the scope of this Article, the author has compiled a bibliography that contains information related to financing, exchange rates and controls, and other matters that are of importance in international transactions. From a practical standpoint, one must approach the international area with much caution and trepidation, but because the export market is so huge and the potential for investment in the United States is likewise immense, there is no doubt that there will be increasing interest in the area by clients of Arkansas lawyers and thus attorneys should strive to be at least familiar enough with the subject to assist the client in making the initial evaluation of the decision of whether or not to become involved in international trade.

Trademarks and Licensing Laws--{)ne should be careful in dealing with international trading to not do something to waive protection of a trademark or other proprietary interest. Many treatises exist on the subject of international licensing and should be consulted."


Trading With the Enemy Act"This Act restricts trading with certain countries designated by the United States Government. There are numerous reporting requirements that must be reviewed when dealing with foreign nationals in the United States." The reporting forms are available from the International Investment Division (BE-SO), Bureau of Economic Analysis, U.S. Department of Commerce, Washington, D.C. 20230. The Export Trading Company Act of 1982"-This Act provides for the creation of export trading companies and provides for a new loan guaranty program for use by exporters under the U.S. Export-Import Bank. Addi170/Arkansas Lawyer/October


1. The World Trade Information Center is a service of the Port Authority of New York and New Jersey funded in part by the United Stales Agency for International Development.

For more information write:



4. 5. 6.


Director Export Development and Information Group The World Trade Institute One World Trade Center, 55th Floor New York. New York 10048. Ozark Regional Commission Handbook, an Intemationallrade reference guide and service directory for the Ozark Regional States (1979). See ALI-ABA resource materials: International Trade for the Non-specialist 332 (1979). 332. See also Schmilthoff, Export Trade, the Law and Practice of International Trade (7th ed. 1980) 7-8 Martindale-Hubbell Law Directory (1982). 7 USC I 3501·3508 (SUllO. IV. 1980). Marans, Williams, Griffin, District of Columbia Bar Assoc., Foreign Investment in the United States-legal Issues and Techniques (1980). Commit1ee to StUdy Foreign Investment in the United States, Section of Corporation, Banking and Business Law, ABA, A Guide to Foreign Investment under United States Law (1979).

8. 12 USC 113101·3108 (Supp. IV 1980). See also Vila, Legal Aspects of Foreign Direct Investments in the United States. 16 Int'I Law. 1 (1982). 9. 31 USC 111051-1122 (1976). 10. 50 USC App. 112401·2420 (Supp. IV 1980). 11. 22 USC 11811-621 (1976) 12. Pub.L.No. 95·213. til. I. 1101, 91 Sial. 1494 (amending 15 USC 1178m, 78ff (1976) and codilied al 15 USC 1178dd-l. 78dd-2 (Supp. IV 1980». 13. Atkenson, The Foreign Corrupt Practices Act of 1977: The International Application of the SEC's Corporate Government's Relorms. 12 Inn Law. 703, (1978); Baruch, The Foreign Corrupt Practices Act. 57 Harv. Bus. Rev. 32 (1979); Sprow and Benedicl. The Foreign Corrupt Practices Act of 19n: Some Practical Problems and Suggested Procedures. 1 Corp. L. Rev. 357 (1978). 14. Pub.L.No. 95·213, IiI. II. 1201. 91 Sial. 1498 (amendin9 15 USC 1178m, 780 (1976». 15. 22 USC 113101·3198 (1976 and Supp. IV 1980). 16. Immigration and Nationality Act of 1952 as amended. 8 USC 1101(a)(15)(E)(ii) (1976). 17. 30 USC 122 (1976) (Iollowing Ihe Mining and Minerals Policy Act of 1970, 30 USC 121(a) (1976». 18. lIT v. Vencap, Lid., 519 F.2d 1001 (2d Cir. 1975). 19. For a discussion of securities aspects of international law. see Howard C. Buschman, III. Antifraud and the Water's Edge: Transnational Transactions. Rule 10b-5. and the Federal Securities Code, 7 Sec.Reg.L.J. 232 (1979'80). 20. Committee 'C'-Securities Issues and Trading, Section on Business Law, International Bar Association. Comparative Survey of Securities Laws (1980). 21. 46 USC 11801 el. seq.• 861 el. seq.. 1101 et seq., as amended (1976 and Supp. IV 1980). 22. LR.C. 11991. 992 (1982). 23. Glickman, Franchising, Mat1hew Bender (1982). 24. 50 USC App. 111-100 (1976 and Supp. IV 1980). 25. 15 CFR 8. 808 el seq .• 42 Fed.Re9. 64315 (Dec. 22. 1977). 43 Fed. Reg. 2169. January 16. 1978 as amended at 43 Fed. Re9. 54624, November 22. 1978; 44 Fed. Re9. 32586. June 6. 1979; 46 Fed. Reg. 23226. Apr. 24.1981; 46 Fed. Reg. 60191. Dec. 9. 1981. 26. Pub.L.No. 97·290; 96 Sial. 1233 (1982). Note: Complete bibliography available upon request.

i-ANYBODY TALKIN' POLITICS? Tell 'em they beller lalk 10

JERRY RUSSELL Arkansas' Premier Polilical Consultan. (9 oul II winners in '112 primar}') Campaign Consultan.s, Inc. P.O. BOll 1111/1501) 11S·J996 UII~ Rock. AR 11111

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

My office workday, like that of my colleagues, consists of innumerable interruptions compressed like a crime against nature into a limited span of time. As with any rare commodity, I guard what time I have against any would-be usurpers, and I have come to regard any unscheduled derailment of my train of thought, unladen though it may well be, with the same disdain otherwise reserved exclusively for real estate brokers nee housewives. I trust you can appreciate my displeasure when some months ago a law book salesman, one Liberman by name, outflanked my secretary, rushed into my office unannounced and presented me with Volume 1-A of the proposed 150 volume set on Admiralty Law in the State of Kansas. With a face as straight as I have ever seen on his genre, he assured me that this set would catapult me from the melancholy mediocrity of a small town practice directly into a performance before the U.S. Supreme Court of such scintillating brilliance that at its conclusion, the Chief Justice would proclaim me competent and insist that I autograph his copy of my brief. In anticipation of the future worth of my signature, he requested a sample, affixed to a check as a deposit. He promised me instant exaltation if I acted at once, and I promised him instant extantation if he didn't vanish. In the next instant, I was alone again on the track. Such devastating directness has not come easily to me, for early on in my career, I was every law book salesperson's Valhalla. It has taken me years to dislodge the trappings of civility in these matters, a period which has, for the lack of that ability, cost me dearly and annually. In those formative years, I adhered out of sheer

terror to the notion of literary osmosis, the belief that acquisition of the books was somehow akin to the acquisition of the knowledge contained therein. I was sole, young, unlearned and inexperienced, and above all else, I feared mortification, the root word of which means death, at the hand and minds of more learned adversaries. It was, to my mind, a clear case of purchase or perish. Oh, and it was so analgesic, no money down, no interest, only $37.50 per set per month per infinitum, and a tacit promise never to sue for failure to pay. All those lovely books surrounded me with the cherished aura of competence, and as long as I didn't actually say or do anything, I appeared to all the world, if not the Bar, as a LAWYER. My library grew by leaps and bound volumes, but to my dismay, all I acquired was an avid following of law book salespeople, who congratulated me on my practice, obviously booming to require such a vast library. They treated me with great respect and some of them even stopped spitting on my carpet. Even after I had bought all they had to sell, still they came, making sure I was not some legal fiction by keeping their fingers firmly in my pocket parts. No longer a pauper in forms, I drew writs of quo warranto, trover and coram nobis, storing them as against some gloriously litigious day of reckoning. I Shepardized every decision on the Rule in Shelly's Case, awaiting that frantic call from the heirs of A. I prayed for a fertile octogenerian like a Bedouin prays for rain, and I knew exactly how to empower an entire posse comitatus if need be. That no one really wanted a posse comitatus was of no moment. I would nonetheless be ready. I took to quoting chapter

and verse on the law at every chance. Before long however, even my professional friends stopped discussing their cases with me, and unless a book salesman was in town, I ate lunch alone. It did not take me very long to realize that something was amiss. All the law book salespeople I knew drove Lincolns and Cadillacs while I rode the bus. I gained that first painful thrust of insight the day a client called to ask me how his case was coming. I answered him by citing from memory every case on point from the Pennsylvania Reporter, including, of all things, those from the Superior Court. "That's real nice," he said when I was finished, "but what's my case worth and when do I get the money? I'm looking at a new car." I told him I didn't know and shortly thereafter he got another lawyer. His case was settled in three months, just the length of time it would have taken me to research and draft a masterful brief in support of the preliminary objections to my opponent's new matter. In due time, I really did become a lawyer, and eventually I learned how to make my living at it. Many of the books I still have, and some I even use from time to time. The rest are packed away somewhere, mildewed and dusty, gathering apt tribute to a freshman's folly. The salesmen no longer flit around like drones to a queen, and while I may not be as learned as some, I do all right. And it's only occasionally any more that I wake up in the middle of the night, wondering what to do if a client's boat runs aground and goes belly up in Kansas. Copyright '980-$. Sponfe. Esq



October 1983/Arkansas Lawyer/171

CODE Of PROfESSIONAL RESPONSIBILITY Confl icts Of Interest by Professor Howard W. Brill School Of Law University Of Arkansas The Supreme Court of Arkansas has for the first lime recognized the disqualification that flows to an attorney who simultaneousiy represents a client and in a separate law suit brings an action against that client. In City of Little Rock v. Cash, 277 Ark. 494 (Dec. 6, 1982), taxpayers and water consumers in Little Rock challenged the enactment of municipal privilege tax upon water meters. On the merits, the Court agreed that the city had no authority to enact such a tax. At the trial court level the defendant, City of Little Rock, moved to disqualify the plaintiff's attorney because the attorney was simultaneousiy representing the City in a case pending in Federal Court. The Supreme Court agreed. Even if 99% of the federal cases had been resoived, disqualification was mandatory. The Court did not rely upon any prior Arkansas cases or upon a specific provision of the Code of Professional Responsibility. Instead, the Court simply found that the conduct of the attorney in both suing and defending a client at the same time does not adhere to the highest standard of professional conduct and the necessity of avoiding even the appearance of impropriety. The dissent contended that the plaintiff's attorney had been misled by actions of the city board in suggesting that the federal case would not be used as a basis for a motion to disqualify. But a lawyer must adhere to the highest ethical standards of the profession. The client is to rule upon the appropriateness of the ethical conduct. The client cannot sanction unethical behavior. 172/Arkansas Lawyer/October 1983

Although the trial court erred in failing to disqualify the plaintiff's attorney, the Supreme Court did not reverse the judgment on the merits. (The Supreme Court does allow an interlocutory appeal of an order disqualifying an attorney but it does not allow such an appeal of a refusal to disqualify an attorney. See Ark. Rule of Appellate Procedure 2(a) (8), as amended July 12, 1982.) Instead the remedy granted was to refuse to approve an attorney's fee even though authorized by statute. The loss of an attorney's fee of $316,190 should provide sufficient warning not to simultaneously represent and oppose a client. Conflicts of interest present themselves in numerous contents. Conflicts may arise when one lawyer attempts to represent multiple criminal co-defendants, see Mann v. Britt, 266 Ark. 100, 583 SW. 2nd 21, 1979, when the lawyer appears as both an attorney and a witness, see the Arkansas cases collected in 33 Ark. Law Rev. p. 605, fn. 13, when there are business relations between the plaintiff and his client, see Fletcher v. Long, 271 Ark. 943,611 SW. 2d 779 (Ct. App. 1981). In State of Arkansas v. Dean Food Products, Co., Inc., 605 F.2d 380 (8th Cir. 1979), a leading case on a conflict between a present client and a prior client, the federal court disqualified an assistant attorney general who filed an antitrust law suit on behalf of the state of Arkansas, Previously he had been an associate with a law firm who had represented and continued to represent a defendant in the action. Because there was a substantial relationship between the prior representa-

tion and the current lawsuit, the assistant attorney general had to be disqualified, even though the motion to disqualify was tardy. As an ethical matter, disqualification lies in the public's interest; and laches by a party cannot justify the continuing breach of the Code of Professional Responsibility. In addition, not only must the assistant attorney general be disqualified, but his entire staff also-not because they were imputed to have confidential knowledge, but because their continuation on the case would present to both the public and the Bar the appearance of impropriety. That issue was also raised in City of Little Rock v. Cash. The plaintiff's attorney had been an assistant city attorney for Little Rock for a seven year period, terminating three years before the commencement of the law suit. During his employment with the city of Little Rock, he had played some role in the annual enactment of the ordinances approving the privilege tax. The city's argument was that he should be disqualified from representing the plaintiffs because while in his former employment as a city attorney, he had gained knowledge of the ordinances and it would be unfair to allow him to use that knowledge against the city. The majority did not rely upon that argument in disqualifying the attorney. The rule developed in the cases is that a lawyer is disqualified from proceeding against a client if there is a substantial relationship between the present representation and the prior legislation, the concern being both the appearance of impropriety and confidential information that might

have been available during the course of the prior representation. In a recent case the Arkansas Supreme Court did not extend these disqualifying policies to legal secretaries. In Herron v. Jones, 276 Ark. 493, 637 SW. 2d 539 (1982), the defense firm hired a secretary who had previously worked for the plaintiff's law firm. The court concluded that the appearances of impropriety rule under Canon 9 does not apply to secretaries. Therefore, while an attorney who had been hired from the plaintiff's firm would result in not only in his disqualification but the disqualification of the firm, the hiring of a secretary did not require disqualification of the firm. Even

though the appearance of impropriety rule does not apply, the requirement of confidentiality under Canon 4 that binds attorneys and their employees is controlling. In this instance she had been isolated from knowledge while working for the plaintiff's firm and she was not working on the case while with the defendanfs firm. Notice the difference between hiring a secretary from an opposing firm and hiring an attorney from an opposing firm. If an attorney had been hired from an opposing firm, Canon 4 (confidentiality) would mandate the disqualification of that attorney. In addition, the entire firm would be disqualified under DR 5-105(0) which imputes the confiden-

President's Report

The Association is grateful to its many members who participated in the LRPC. The Special Planning Committee is entitled to individual recognition for organizing the conference. The members of the committee in addition to Chairman Walsh were Richard Williams, Tommy Womack, Wayne Boyce, John Stroud, Gene Matthews, Jr., Garvin Fitton, and Allan W. Horne.

continued from page 142 The Judicial System The most important goal of this area is an amended judicial article to the Arkansas Constitution. It is suggested that a small committee of lawyers be appointed to draft a judicial article which addresses such issues as juvenile court system, merit selection of judges, increasing jurisdiction amount for inferior courts, restructuring the jurisdiction of courts along functional lines, and establishment of a centralized office of public defender.

Alternatives To Litigation The Uniform Laws Committee will be asked to draft legislation for the purpose of extending application of the Uniform Arbitration Act to include controversies involving insurance disputes and employer/employee cases.

Future Of The Judiciary Of significant importance in this area is the request for the appointment of an Association committee to study and propose legislation establishing a "Judicial Compensation Commission." The function of such a commission would be to handle all aspects of judicial compensation including salary, retirement, insurance, etc. A high priority was given to a study of the judicial election/selection process. Also rated high for action is increasing the participation of the judiciary in Association activities.

tial knowledge to all members of the firm and requires its disqualification. The Court has also refused to disqualify a prosecuting attorney who, thirteen years earlier, had represented the accused when he was convicted. Williams v. State, 178 Ark. 9 (December 13, 1982). If the earlier conviction were used as an aggravating circumstance, the prosecuting attorney would be in a position to use confidential information to the detriment of the former client. Since the prosecutor used only the conviction itself and not any circumstances surrounding the conviction, no prejudice was shown.

" Lawyers' Mart 20¢ per word

$5 minimum

BOOKS FOR SALE The implementation of these immediate plans will be a function of the Executive Council. A meeting of the Executive Council is planned at which time the report of the SPC will be analyzed, committees identified to perform the tasks set forth by the report, and a schedule of action developed to complete the tasks. Much remains to be done in order to carry out the long-range plans of the Association. The SPC report was made to the House of Delegates as a beginning. The planning function of the SPC will be continuing. The Committee chairman for 1983-84 is Tommy Womack. There will be a LRPC held March 29-31, 1984, at Red Apple Inn to review the progress made this year, and changes as needed in the Association's long-range plan. There is a job for every Association member to carry out these long-range plans. You will have an opportunity to participate in and benefit from the advent of long-range planning in the Arkansas Bar Association.

FOR SALE: Arkansas Reports, Vol. 1-246, all original volumes; Amjur 2d, 1-current, with out-ofdate pocket parts. $2,000 per set. Call 372-0399. West's Arkansas Digest complete through 1967. $150. Terms available. Contact W. H. McClellan, 86 Kingspark Rd., Little Rock, AR. Phone: 225-5353. U.S.CA. (Complete) $750; Pacific Reporter (Vol 1-180) Make offer. Contact Garland County Law library, 534 Ouachita Ave., Hot Springs or call 624-3327. Arkansas Reports, Arkansas Digest, Am Jur 2d-all current. Contact Jim Gray 767-6293.

EQUIPMENT FOR SALE IBM Mag Card II under service contract, $3,000. Call 321-1200, Hot Springs. OCtober 1983/Arkansas Lawyer/173

OYEZ 路 OYEZ II By: Carol Utley Communications Director

MARCH PAT AYDELOTT became the new deputy prosecuting attorney for White County. Ozark attorney TED YATES was guest speaker at the monthly meeting of the Arkansas Valley Vocational-Technical Chapter of Phi Beta Lambda. JUDGE TIM TARVIN was guest speaker for the Hamburg High School Social Studies Class. He spoke to the group about the Arkansas Juvenile Court System. ALICE ANN BURNS, assistant state attorney general since 1979, was named deputy attorney general in charge of the criminal justice division. JOE T. GUNTER of Cabot was promoted from vicepresident to senior vice-president and general counsel by Fairfield Communities, Inc. Magnolia's CAROLYN JANE CLEGG and STEPHEN R. CRANE were named "Outstanding Young Arkansans" by the Arkansas Jaycees and Jaycettes for their outstanding contributions to the community. W. B. PUTMAN, E. E. MAGLOTHIN, JR. and JIM ROSE, III announce the formation of a partnership for the general practice of law at P.O. Box 760, Fayetteville, AR 72702. The firm is under the new name of Law Offices of W. B. Putman. RICHARD C. BUTLER of Little Rock, chairman of the Peoples Savings and Loan Association, received the William F. Rector Memorial Award for his contributions to the city's growth and development. Arkadelphia attorney OTIS TURNER was appointed to the Arkansas Industrial Development Commission by Governor Bill Clinton. JIMMIE GLYNN DUNLAP of Marked Tree announced the opening of his law office at 106 Frisco Street. JAMES M. ROY, JR., MICHAEL H, MASHBURN and JAMES D. CYPERT announced that JAMES E. CROUCH and WILLIAM M. CLARK, JR. became partners in the firm. Others in the firm include: Robert J. Lambert, Jr.; Charles L. Harwell and Kent Hirsch. James B. Blair and Leslie L. Reid are of counsel 174/Ar1<ansas Lawyer/October 1983

to the Springdale firm. RAMSAY, COX, L1LE, BRIDGFORTH, GILBERT, HARRELSON AND STARLING announced that L. LAYNE LIVINGSTON and J. MARC HESSE have become associated with the firm in Pine Bluff. LITTLE, McCOLLUM & MIXON announced that DAVID C. GEORGE became a partner in the firm now known as LITTLE, McCOLLUM, MIXON & GEORGE at 102 E Central in Bentonville. APRIL JAMES D. SPEARS of Fort Smith was named by the Arkansas Workers' Compensation Commission to the position of Administrative Law Judge. JUDGE EDWIN KEATON of Camden was guest speaker at the Mt. Tabor Baptist Church Baccalureate worship service. JIMMY D. DILL joined the law firm of Brockman, Brockman and Norton in Pine Bluff. He was associated with Reliable Abstract and Title Company of Pine Bluff as executive vicepresident. GRISHAM A. PHILLIPS of Benton opened an office for the generai practice of law. JOSEPHINE L. HART of Mountain View was promoted to lieutenant colonel in the U.S. Army Reserve Command and became deputy judge advocate general. NATHAN M. NORTON, former chairman of the Public Service Commission, has joined the firm of Wright, Lindsey and Jennings in Little Rock. LILLIAN WILLIAMS, Clarksville attorney, won first place in the 10th Annual National Whistlers Convention in Louisburg, N.C. First place honors in the "oldest" category were awarded the 90-year-old greatgrandmother for her renditions of Paderewski's "Minuet", her own composition of "Arkansas Blues" and Sousa's "Stars and Stripes Forever." "Miss Lillian" has been whistling since 1918 but did not begin "competitive whistling" until 1979. Little Rock attorney JOHN WALKER was guest speaker at UAPB Founder's Day Ceremonies during the

110th observance. CHARLES LEDBETTER of Fort Smith was elected to the board of trustees of Hendrix College. He is a partner of the firm of Shaw and Ledbetter in Fort Smith and a 1960 graduate of Hendrix. JOHN WESLEY HALL JR. of Little Rock, was elected a Fellow of the American Board of Criminal Lawyers. BOB MOREHEAD of Pine Bluff was appointed by Gov. Clinton to the UAPB Board of Visitors. MICHAEL J. DENNIS joined the law firm of BRIDGES, YOUNG, MATTHEWS, HOLMES & DRAKE. BEN CORE of Fort Smith was reappointed as Arkansas State Chairman of the Defense Research Institute for 1983-84. DOUG ANDERSON of Helena, was elected to a one-year term as Chairperson of the Alcohol and Drug Abuse Advisory Council. SKIP MOONEY JR. joined the Jonesboro law firm of Mooney and Boone. He was graduated in 1982 from the University of Arkansas at Fayetteville Law School. Juvenile JUDGE A. WATSON BELL of Searcy was featured speaker for the Flag Retirement Ceremony at the White County Fair Ground sponsored by the Girl Scouts of White County. DAN BOWERS joined Harrison attorney BILL DOSHIER in the practice of law at his law office located at 215 West Rush Street. STEVE VOWELL of Berryville, a 1968 graduate of Green Forest High School received the 1983 "Outstanding Alumnus Award" from that group's Alumni Association. DENNIS R. MOLOCK opened his law office in Stuttgart at 310 S. Main Street. MEREDITH MILLER WINELAND joined the firm of PATTEN, BROWN and LESLIE in Little Rock. GENE RAFF of Helena was honored as an Outstanding Alumnus of the University of Arkansas Law School. CLARK S. BREWSTER joined the law firm of BOSWELL and SMITH in Bryant. DAVID MATTHEWS of Lowell was featured speaker during the Rogers High School academic awards

program. LEON NICHOLSON of Newport, joined the law firm of THAXTON-HOUT in that city. TIM WATSON of Newport, was installed as president of the Newport Area Chamber of Commerce. He is a member of the law firm of Pickens, Boyce, McLarty and Watson. BECKY and TERRY LYNN, both Heber Springs attorneys, addressed the Business and Professional Women's Club with a program , on legislation. ERIC HANCE has reloca.ted his law office at 330 College Street in Batesviile. JOHN CLAYTON ,of North Little Rock was guest speaker at the Batesviile Rotary Ciub meeting. Bob Keeter announced that JANE E. BROWN became associated with him in the general practice of law. Offices are located at 612 Mena Street, Mena, Ark. Juvenile Referee RANDY WRIGHT was guest speaker at the Hope Rotary Club meeting. He explained the county's juvenile court system to the group. ROY C. "BILL" LEWELLEN, JR. opened his law office in the Gerrard Building at 14 W. Main in Marianna. MAY JAMES D. SPROTT of Brinkley was elected vice-president of the Hendrix College alumni Association's board of governors. W. D. MURPHY of Batesviile, was chosen as Arkansas College's distinguished alumnus for 1983. KATHLEEN BELL and RUSTY POR-

TER, both of West Helena, were named to serve on the Board of Directors of the East Arkansas Regional Mental Health Center. Harrison attorney DONALD J. ADAMS was named Outstanding Trial Lawyer for 1982-83 by the Arkansas Trial Lawyers Association. MORT GITELMAN of Fayetteviile was honored as Civil Libertarian of the Year by the American Civil Liberties Union of Arkansas. Hope attorney JAMES H. PILKINTON, JR., a member of the law firm of Pilkinton & Pilkinton, was elected to the Board of Directors of the First National Bank of Hope. ROBERT R. CLOAR of Fort Smith, was elected president of the Arkansas Trial Lawyers for 1983-84. TROY HENRY of Jonesboro is the president-elect. Attorney BOBBY E. SHEPHERD was sworn in as EI Dorado municipal magistrate. Rector attorney JOE CALVIN spoke to the Eta Epsilon Chapter of Beta Sigma Phi sorority on estate planning. MARK LINDSAY and WAYNE BALL announced the formation of a partnership known as BALL & LINDSAY at 118 N. Block in Fayetteville. Wright, Lindsey & Jennings announced that SAMMYE L. TAYLOR became associated with the firm and that JAMES T. DYKE joined the firm as counsel. OLAN PARKER, JR. was named Outstanding Trial Judge of the Year by the Arkansas Trial Lawyers Association. Fayetteviile


attorney WALTER R. NIBLOCK addressed the Association of Trial Lawyers of America during the Eigth Circuit Seminar on Trial Advocacy held in Little Rock. FRED LIVINGSTON of Batesviile, was elected to the Development Council for the University of Arkansas at Fayetteville. JOHN W. CONE was named Jefferson County deputy prosecuting attorney. JAKE LOONEY, dean and professor of law at the University of Arkansas, was speaker at the Hatfield FFA club's annual banquet. DARREL STAYTON of Pine Bluff joined the law firm of MULLIS, DAVIS and CHADICK. He is a former deputy prosecuting attorney in Jefferson County. JUNE Clinton State Bank in Clinton has named JOHN L. JOHNSON as Chairman of the Board. SHERRI STEWART of Newport, was named director of the state Natural and Scenic Rivers Commission. Little Rock attorney MARTHA MILLER McCASKILL received the Decade Award from Arkansas College during the annual Alumni Weekend. Decade Awards are presented by the college to members of the class who have distinguished themselves most in their respective fields. JOHN S. SELIG of Little Rock was appointed staff judge advocate for the 122nd U. S. Army Reserve Command which covers Arkansas. Louisiana and Oklahoma. MARCIA HEARNSBERGER of Hot Springs, was named a trust officer with First National Bank in Hot Springs. The Bassett Law Firm of Fayetteviile announced that WILLIAM ROBERT STILL, J R. became associated with the firm. Jonesboro attorney JUDY HENSON was awarded a Citation of Honor by the National Federation of Business and Professional Women's Club, Inc. The Lawyer's Co-Operative Publishing Company of Rochester, New York honored Hamburg attorney WILLIAM E. JOHNSON for his assistance in preparation of the lead article in "American Law Reports, Fourth." WILLIAM E. KEADLE opened his law office in Glenwood. PAUL W. HOOVER, JR., partner in the firm of Hoover, Jacobs, and Storey in Little Rock, was elected to the board of directors of Metropolitan National Bank. JEANNE ANN WHITMIRE announced the opening of her law office at 117 South 2nd, Rogers, Ark. Circuit Judge RANDALL WILLIAMS of Pine continued on page 177 October 1983/Arkansas Lawyer/175


Methods And Means By: Bernard Sternin

The Bottom Line: Document Design Good document design can make all the difference between mediocre word processing applications and really effective ones. That's true whether you are typing your documents manually, or using printed forms. But it is especially true when you start using automatic typing equipment. Document design means that you expressly plan how documents will read, with the goal in mind of making them easier to produce. There are a handful of techniques that are involved in good document design. Once you zero in on them, you'll be able to apply them over and over to almost all of the documents your office produces. The impact on productivity will be enormous. With an investment of a few minutes spent in planning how your documents are designed, you can gain hours of time, year after year. With the expenditure of no additional money you can increase the return on the thousands of dollars invested in your automatic typing equipment. There are very few areas in law office management that will get you so large a benefit for SO limited a commitment. This article will spell out some of these techniques by depicting an actual document, and making some related comments. The document shown is a verification form. The comments are intended to spell out why the style of its design will increase efficiency when a needed copy is produced. To get the most from the approach used here try to relate each technique commented on to various other form documents you use in your office. The document shown here was designed for production by automatic typing equipment. However, you could construct it as a printed form or you could type it manually. As you review the document and the com176/Arkansas Lawyer/October 1983

2. It gives the person in charge of your document design a way of conveying certain basic information about the document in graphic, nonverbal ways. The particular display used here shows the user that the paper is to be inserted between 20 and 105 in the typewriter and that the left margin is at 35 and the right at 95. A tabular stop at every fifth space is also depicted by the scale shown on line 5. 3. It provides numbered lines. That makes it easy to refer to a particular

ments it might also be helpful for you to review in your own mind just what relevance the technique being discussed would have for each of these latter two ways of producing final copy. Display Sheets. Placing a form document on a specially designed display sheet can be extremely helpful. The sheet serves several functions. 1. It identifies the form document as a form document. This very mundane function is important and often not recognized. 40












5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22





State of New York County of I__} I, 1

}, being duly sworn, depose and say:

I am 1

} in the within matter. I have read the foregoing } and know its contents.

The same is true to my own knowledge, except as to those matters therein stated to be alleged on information and belief, and as to those matters I believe them to be true.


25 26 27

28 29 30 31

32 33 34 35 36


I_ _} Subscribed and sworn to before me on/_ _ l

........................................... Notary Public


line when you want to give instructions. The sheet shown here is available through the Circle West Corp., P.O. Box 186, Elmont, NY 11003, and is called a "Layout Sheet." Lines 10 and 11 : The name of the state will be fixed. The name of the county may vary. Consequently, if you elect to use "55.:" put it on the first line, following the name of the state. By keeping it off the second line, the â&#x20AC;˘ use of county names of varying lengths will not involve the "55:" symbol. â&#x20AC;˘ Line 13: The use of the word "I" at the variable places the verification in the first person. First person pronouns, I, my, mine, me, are not affected by the gender of the person signing the verification. You thereby avoid the need to be concerned with the gender dependent pronouns associated with use of the third person: he, she, his, hers, him, her. Line 15: The use of the articles "a" and "the" at the variable are avoided. Hence, the variable inserted on this line could read in any number of ways: the plaintiff one of the defendants a party. Line 18: This closing sentence of the verification has been structured as a paragraph. Notice that this paragraph has no variables. The paragraph that precedes it has two. During use, the variables added into the pre-

Executive Council Notes continued from page 144 tion's Bylaws: The creation of a committee on legislation; the preparation of a legislative package of bills not to exceed 10 separate bills; and a resolu, tion procedure allowing the filing of any resolution 30 days before an annual or semi-annuai meeting, with referral to the resolution committee. Robert K. Walsh reported on the long-range planning conference, the goal of which was to set goals and priorities for the Association over the next five years. The report of the seven study groups was adopted by the House as its five-year plan. New Executive Council members are: Joe Reed, Northwest; Jim McLarty, Northeast; Gary Nutter, South; and Tom Overbey, Central. The House appointed Hariey Cox to a full

ceding paragraph will require that line endings be rearranged throughout the balance of its text, until the end of the paragraph. Some lone words might be moved to a point beyond the right margin, and those will need an operator's decision regarding hyphenation. The design used here limits any such decisions to the preceding short paragraph. Line 24: The style of date intended is straight forward: "December 31, 1981," not the inverted "31st day of December, 1981." If the style used is the same as that used on letters, the day's date may be stored for the day and played out automatically, both on letters and on legal instruments. Line 26: The use of a series of dots as the signature line is preferable to the use of a solid underscore, for several reasons. 1. The name of the person signing is usually typed under the line. The use of dots rather than underscoring provides a bit more separation of the line from the typed signature. That may be aesthetically more pleasing. 2. Sometimes it's helpful to be able to count the number of character that compose the iine. You can count dots. It's not easy to count the characters in a solid underscore. 3. If a typewriter is out of alignment a solid underscore doesn't look like a clean line. Further, the underscore iine can sometimes cut through the top sheet of paper. Dots will not give you either problem.

three-year term on the Board of AICLE. The following elections were certified: William R. Wilson as President-elect for 1983-84; new delegates to the House of Delegates for 1983-84; and Annabelle Clinton as secretary-treasurer for 1983-84. Incoming president Dennis Shackleford reported that progress on the search for a new Executive Director will be reported to the House and that under the Constitution and Bylaws, the Executive Council would hire the Executive Director, subject to the approval of the House of Delegates. James H. McKenzie will be Chairman of the Executive Council in 1983-84. The meeting was adjourned at 12:37 p.m. ~


4. When giving people written instructions where to sign, the use of the phrase "sign on the dotted line" is widely understood. "Sign on the underscore line" is awkward. Line 27: The name of the person who is to sign should be typed under the dotted iine. Make it a practice to begin it under the first dot of the line, as opposed to centering it under the line. Both the dotted iine and the location of the typed signature begin at the center point of the paper and may go completely to the right margin, to provide maximum room. This form document is a very important one to encode, if you are using word processing equipment. It is likely to be dupiicated many times and stored with many documents. Getting it done right, once and for all, can therefore be extremely important. You might find it helpful to see how I've done it. If you have an automatic typewriter that uses mag cards, send me a biank mag card together with a self-addressed return envelope, and I'll send the card back to you, encoded with this document. I'll also include various other materiai that will illustrate certain further ideas about document design that relate specificaliy to automation. Write to Bernard Sternin, 5 Hawke Lane, Desk Rockville Centre, New York 11570.

Oyez-Oyez continued from page 175 Bluff, was elected chairman of the state Adult Probation Commission. Walters, Rush and Arnold established a new office at 1101 H Street in Barling. DALE ARNOLD is the attorney practicing at that location. WILLIAM G. WRIGHT and DONALD P. CHANEY, JR. announced the firm's name change to WRIGHT & CHANEY, P.A. and that TRAVIS R. BERRY became associated with the firm. BERRY became associated with the firm. FRANK C. ELCAN, II, Immediate Past-Chairman YLS, has announced the opening of his new law office at 600 Pine Street, P.O. Box 549, Harrison, Arkansas 72601.

October 1983/Arkansas Lawyer/1??

Cases And Materials On American Conflicts Law A Book Review by Dean Lawrence H. Averill, Jr.

Cases and Materials on American Conflicts Law, By Robert A. Leflar, Luther L. McDougal III and Robert L. Felix. The Michie Company, Law Publishers, Charlottesville, Virginia, 1982. pp. xxi, 564. $28.00. Robert A. Leflar, Distinguished Professor of Law and Dean Emeritus, University of Arkansas at Fayetteville and Professor of Law Emeritus, New York University, had been a paragon in the area of Conflict of Laws for many years before I took the course in law school in 1964. When I became a law teacher one of the first courses I was assigned to teach was the course on Conflicts. During my years of teaching this course, I looked upon Professor Lellar's writings as a great aid in my preparation for class. I used his ideas as a model of analysis and principle. His lucid and profound text and articles (particularly in the choice of law area) were suggested and often required reading for my students. It was with great enthusiasm then that I responded to the news that Professor Lellar's imprint had been put into a Conflict of Laws course book. Entitled Cases and Materials on American Conflicts Law,' it was prepared by Professors Luther L. McDougal and Robert L. Felix in collaboration with Professor Leflar. My perusal of this book has not dampened my original emotion and in fact has rekindled the thought of teaching the subject again. The foundational strength of Leflar's Cases and Materials is the pervasive inclusion of Professor Leflar's writings on the subject. From frequent quotations from Professor Leflar's (now companion) text on the subject, American Conflicts Law,' to exceptionally well selected excerpts from his 178/Arkansas Lawyer/October 1983

other writings, the class book constitutes a thorough overview of his conflicts philosophy and analyses. From my point of view, this is extremely meritorious. Professor Leflar's writings have always been a beacon in a sea of darkness particularly in the choice of law area. Although others have written outstanding theoretical analyses of the issues and answers in the area, Professor Lellar's approach to choice of law recognizes that from a practical standpoint conflicts issues and their answers must be dealt with by the courts under specific fact situations and not solely by professors and students in the classroom where answers are not needed. It is clear that this practical application of his philosophy has been the reason courts have relied upon it as their underlying theory.' This is not to discount the theoretical justification for his analysis but is intended only to emphasize the greater potential influence his analyses posses because they are more easily employed by the courts than are other theories. Clearly, and despite Professor Leflar's eminence in the field of conflicts, Leflar's Cases and Materials would be substantively deficient if the analysis of the other eminent scholars had not been included. This, of course, is not a problem because Leflar, McDougal, and Felix include either relevant and poignant excerpts or carefully written summaries of the selected writings of these other authorities. Significantly, you are introduced to various analyses by such conllicts supernotables as Cavers, Currie, Ehrenzweig, Cheatham, Von Mehren, Trautman, Weintraub, Reese and Beale. The ideas of many others are included as well. The

inclusion of a vast array of analyses makes Leflar's Cases and Materials an excellent teaching tool for both background and thought provoking purposes. Leflar's Cases and Materials also excels when analyzed from other pedagogical standpoints. The authors indicate the materials were designed for the typical three-semester-hour course in a law school curriculum and clearly they carry out that intent. Although most professors will probably do a little trimming, the quantity of material provided is reasonable for the amount of class time suggested for the course. On this point, Leflar's Cases and Materials does not commit what I feel is the common sin of most recent class materials in Conflicts as well as in many other subject, i.e., too much material to cover for the class time allotted to the typical course. Although the publishers often encourage this tendency by suggesting that a "kitchen sink" approach is necessary to sell classroom materials, I personally prefer materials that are designed for the typical course. My trouble with the. "kitchen sink" approach, is that, in fact, as the teacher I have to become the editor and, in effect, almost a co- . author.' I like the class materials that have the imprint of the author's philosophy on them. If I do not like that imprint, I may go to a competitor's version. That decision is part of the selection process. I usually do not want to create my own book out of someone else's book. This problem is particularly applicable to the beginning professor who does not have the background to create his or her own version of the materials. I realize that

there is a difference of opinion on this issue. Notwithstanding, Leflar's Cases and Materials clearly fits into my model and I highly endorse its technique. Several other beneficial features of these materials also deserve mention. As indicated, the book contains a reasonably generous amount of collateral materials including excerpts from the Restatements and law review articles. This is not to imply that significant cases are lacking, however. As the title indicates, it is a traditional "casebook and it meritoriously includes both the recent superstar cases' as well as the Conflicts professor's old friends and hall of fame decisions.' This feature not only lets you know where you are, but also how you got there. Furthermore the notes after the cases are relevant and helpful. They typically update the case, explain or embellish its principle or ask reasonable and profound questions. What more can a student or professor ask for? Several nonsubstantive matters fur-

ther add to the merits of the materials. First, the Table of Contents is thorough and well-organized. Such features aid the student because it makes review and personal outlining easier. Second, the Index is excellent. Although some might feel this is irrelevant, I have found that a high quality index is essential for maximum effective use. This index not only includes references to the significant terms relevant to conflicts, but it also includes, for example, references to the location of excerpts by the other authorities included. Whoever prepared the index should be complimented. Clearly my opinion of Leflar's Cases and Materials is very favorable. Professors Leflar, McDougal, and Felix have produced an excellent product. I will use it as my class materials when I teach Conflicts. I would recommend others to consider it also. J believe it

FOOTNOTES 1. For convenience and in no way to downplay the importance of Professors McDougal's and Felix's substantial contribution 10 the book, the book will hereinafter be referred to as Leflar's Cases and Materials.

2. (3d ed. 1977). 3. See. e.g., Health v. Zellmer, 35 Wis. 2d 578,

151 NW.2d 664 (1967). reproduced in Lellar's Cases and Materials, 393. 4. The other major class materials available and their length are as follows: Cramton. Currie and Kay, Conflict of Laws (3d ed.

1981) (West Pub. Co.. pp. 1026); Martin. Conflicl of Laws-Cases and Materials

(1978. 1982 Supp.) (Li"le Brown

Arkansas Advance Annotation Service, 1983路84 By publisher's editorial stafT 3 pamphJets per year $45.00' Probate Law of Arkansas, 1961 By publisher's editorial stafT 465 pages, hardbound with 1981-82 cumulative supplement . . . . . . . .. $35.00' 1981-82 supplement separately ..... 20.00'


Co. pp.

(7th ed 1978. 1982 Supp.) (Foundation Press, pp. 997): Scoles & Weintraub, Cases and Materials on Conflict of Laws (2d. ed

1972,1978 Supp.) (West. Pub. Co. pp. 965); Vernon, Conflict of Laws: Theory and Prac路 tice (2d ed. 1982) (Matthew Bender & Co.,

pp. 1203). 5. See, e.g., Shaffer v. Heitner, 433 U.S. 186 (1977), reproduced in Leflar's Cases and Materials. 72. 6. See, e.g., Pennoyer v. Neff, 95 U.S. 714 (1878), reproduced, in part. in Leflar's Cases and Materials, 21,


would also be useful to the practitioner who needs an overview of the subject and an analysis of the relevant cases.

Arkansas Statutes Annotated, 1947 Edition 25 hardbound volumes with 1983 cumulative pocket-part supplements


757); Reese & Rosenberg, Conflict of Laws

Arkansas Model Criminal Jury Instructions, 1979 Drafted by Arkansas Supreme Court Committee on Criminal Jury Instructions 389 pages, looseleaf with 1982 supplement $65.00' 1982 supplement separately 25.00' Arkansas Court Rules, 1983 By publisher's editorial stafT Appx. 775 pages, softbound Arkansas Criminal Code, 1982 By publisher's editorial stafT 700 pages, softbound






for customer service contact: ALLIN R. JONES P.O. Box 1306 Conway, Arkansas 72032 (501) 327-6526

路plus shipping, handling and sales tax where applicable

October 1983/Arkansas Lawyer/179



Software, The Solution To Lawyers' Needs As was forecast in the previous article, once a law office has determined its needs, the next step is not to go looking for hardware-the next step is to find software which will satisfy those needs. The last step is to find acceptable hardware! Actually, there are several reasons why hardware is last. First, software cannot usefully be written in a vacuum, so whoever wrote the software will already know on which micros it will run and-for time-saving, at least-where NOT to look. Secondly, without adequate software, the finest hardware can be assembled in garages as the saying goes, so there are always a staggering number of options to consider if you start there; whereas specialized applications packages such as legal software are relatively few if you limit it to equipment costing $tO,OOO or less-the true micro-so starting with software saves untold hours of potentially fruitless searching. What To Look For In Data Processing Applications In point of fact, all legal software programs can be sorted into one of two classifications ... those that perform only the 'time/accounting and billing' functions-called TAB for short-and those which integrate the TAB functions into the general ledger of the office where all asset, liability, equity, income and expense accounts are kept. This latter category is sometimes referred to as a 'fully-integrated general ledger or GL' program. One of the principal deficiencies of running a TAB system only-the tax trap of not reporting the reimbursement of some kinds of client advances while at the same time deducting the same amounts-has been fully dislBO/Arkansas Lawyer/October 1983

cussed in another article. Some of the other critical deficiencies to avoid and some of the crucial subsystems to be sure are included in a TAB system are... t. Billing rates. Some systems will not permit-or permit only inflexibly-the changing of standard rates by timekeepers. Unlike other portions of a program which must be rigidly adhered to, complete flexibility in fixing and changing rates is a must. Similariy, some programs will not permit more than one timekeeper to bill at the same rate...this, too, is nonsense. 2. Handling prepayments and other credit balances. Some systems have no provision for allocating client prepayments later, i.e. when bills are prepared, between client 'advances'-clients costs 'advanced' by the law office-and service fees. Yet, more and more lawyers realize the economic necessity of obtaining such prepayments. Worse, even if no 'advances' were involved or the credit balance arises as a result of overpayment (or even misapplied payments, where more than one matter for a client is being handled, many systems do not contain a mechanism for allocating such credit balances among affected timekeepers! Either no credits are given for lawyer-productivity-report purposes, or the first-named lawyer gets it all, regardless of the contributions of others. 3. Correcting errors. Some systems have no way to detect inputting errors such as entering time or advances or receipts before such data is 'set into concrete' by being written to disk. [As explained in other articles, there are various remedies for this deficiency, one of the better of which involves the use

of Hash Totals.] Thus, the first apprehension of an error may be encountered on the proposed bill to a client-which, of course, beats having the detection occur after the bill has been sent, especially by the client! But how are corrections made, whenever the errors are detected and, insofar as lawyer productivity records are concerned, how are adjustments made. In this case as in many others, Murphys Law holds that anyone who claims computers make no errors is either a computer salesman or a Martian! 4. Providing audit trails. There are two so-called audit trails-written records that can be traced to reconstruct or to verify how computer results were obtained-which must be maintained at all times and at all costs because negligence-to say nothing of static eiectricity and other 'acts of God- can and frequently do destroy magnetic records wholesale. These two audit trails are (1) books of original entry such as time sheets, checks and check books, bank deposit forms etC.-the kinds of records you always must keep, even for manual¡ systems-and (2) micro journal printouts for each function performed on the computer. To illus- . trate, the first kind of records referred to will verify for all time what should have gone into the micro-so if a disaster struck, it could all be reconstructed-and the second kind of record-the micro 'journals' which should be printed out periodically-would verify item-by-item what actually went into and came out of the micro. Because of these system-saving I .... .â&#x20AC;˘

capabilities, these micro 'journals' are in reality more important by far than many of the 'reports' some legal software programs produce, yet many such systems cannot run such journals. 5. Training manual. Of the dozens of other desirable micro functions to look for, an ancilliary consideration is vastly more important than many because, in this day of limited personal support, if the so-called 'documentation' that accompanies software is not 'user friendly' as well as accurate and kept up to date, no amount of sophisticated programming can compensate. Like the necessity of being able to repair hardware-which is every bit as important as getting the right machine in the first place-software without an adequate training manual is like putting in for sick leave for the 4th of July... a total waste! Where To Look For Software Packages Data processing software written for lawyers by micro hardware vendors is very rare whereas word processing software is quite normal. Moreover, several 'transportable' word processing packages-especially those which run under the CP/M operating system-can be run on micros,

ness (b) run their software on micros you can afford, (c) provide adequate service, and (d) otherwise qualify under the checklists for selecting hardware and software which have been developed. 2. Robert Wilkins, former chairman of the ABA Economics Section, publishes "The Lawyers Microcomputer"-RPW Publishing Corp., P.O. Box 1046, Lexington, SC 29072-a monthly periodical which will be carrying information about suppliers of 'legal' software for a variety of purposes including word and data processing. This is not the main purpose of this periodical, so coverage is not intended to be comprehensive. 3. NIRAD, Law Division, 1039 Vista View Drive, Salt Lake City, Utah 84108, has compiled a short list of suppliers of legal software not only for data processing but also (a) for substantive specialties such as probate, collections, etc, (b) for both internal and external retrieval systems and (c) for docket control. The foregoing is a very general summary of the subjects referred to. More details can be obtained from ABA monographs and other sources available from the author. If more information is desired, please enclose a stamped and self-addressed envelope. ~

whether or not the vendor also has such a package. So the problem is not usually word processing software, it is data processing software which presents problems. Worse, though a host of computer periodicals and services advertise software, they are, alas, usually of little help because... they are written almost exclusively for general businesses---{)r computer specialists-which 'know not' our legal peculiarities, and few lawyers know how to find such publications, let alone justify the expense of subscribing to and reading them, and most of the leads are either (a) to minicomputers or mainframes, i.e. not micros or (b) to business or accounting applications in general rather than to legal packages. Hence, there are few specialized sources of .information regarding data processing programs for lawyers. These such sources are... 1. A brochure available from the ABA Economics Section, 1155 East 60th Street, Chicago, IL 60637 entitled LOCATE. Re-compiled in 1982 by Bruce D. Heintz of Arthur Young and Co., CPAs, this source must be carefully studied to be certain the suppliers are (a) still in busi-

Word Processing Magnetic Media for Wills and Trust Agreements M. Edwin Prud'homme Immigration And Nationality Law &

Related Foreign Matters

h.ul.lhk ;\tm: CPI12t1hl.. .. '- II.')


R.llhu ~h.I(1.. ~1(,d('J II ")( IIp,,'l 11 tll .. l ..,· 110 18.\1 Dhpl.I\\\lIlt·111 d ... I.. .. I· I") ifni ~hltlll Ii (I t1bb,- I". DH.11 til .."' .. '· II~, \\'.III~ Ii tll .. l ..,· I~ 1~1l1ll"1;':"I)I"hll'ml1lt!l .. I.. .. I· ~J:; 1.. 1111('1 r-'. 12 t1 ... I.... , - S 11.-. 1.1l1ll'1 "tIMrtU 1'(~1i (l<h,~",- II",


III l'u'par:1l10n:



f'-, tll .. i.. .. ' -

.. )-



.\801( I.. .\I.l~n .. ~1.l1 d"I.... )- II', .\ho.. .=',·1/1"' (1)/.\111 II ... " .. ,· II', (.1'>/.\1 Opt'ldllll~ ''''\It'lIl ",v"n 19 til',!..") - ?.!O nit 1,lphoJl(' 6000 (2 dl ..I..'d- II'. Xt'IO,8;){)f6th .. b,· In



\ B 1)1( l \pplt (':Olllllll

:\1<1~1l.l\.. rlll't

.1, lit'

18:\1 Pc.

R.tdlU "th.u l \Iodd III \\,lIlg\\I"Ut'l


(OllllTllUlIlI\ PIOP('II\' ;'3:) "t(',,<lnltl' FOIlll\ hUIII:

Drafting Wills and Trust Agreements: A Systems Approach B\ Roht'n P. \fiJI... IIl'l

$95 Member of the Arkansas Bar

2625 San Jacinto Sl. Houston, Texas 77004

Tn ehe book on a 30 da)' erial basis. then order tht magnetic media.

ir you

like Ihe book.

R.P.W. Publishing Corp.

713/658-8189 Telex: 791-395 Virginia-Houston

P.O. Box i29AR Lexington. South Carolina 29072 (803) 359-9941 Dl,.lllll~ \\"ill" ,11111 1'11" .\,l.:II'I'Illt'lll' \ 'n'lI'lth ,\ppIO,1< h " ,Ill ,1I1ll11,d 'llh~, IpliUtl '1'1 I II I'. Jlh' IlllIl,rl ,11l11U,d Hlh,! IlpllOll lit< hnln IIIe" nuo~ ,lIld upll.lh", ,I ",.h' ,"ppll'lllt'lll ,lIul Ilpd.lll" 101 \Oll! '1.111' (II .II,lIl,.hh'1 ,111\1,1 1l111111hh 11I'\"IIIU'1 l'u,t,t!<I',md h,mclllllg lur IIl1' K1",~ 17'/,101 rill" 1II,1!-:'ll'U, 1ll1~11,1 1 '\ (, 1tI"HII'Il" ,llId




October 1983/Arkansas Lawyer/181

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

CLE ACTIVITY INCREASES DURING SIXTH YEAR OF OPERATION The Arkansas Institute for Continuing legal Education (AICLE) has completed its sixth year of operation. During the period July 1, 1982 to June 30, 1983, the number of programs, the diversity of topics and the overall attendance by members of the Bar Association and members of other interested professions have exceeded the previous year. Statistically speaking AICLE directly sponsored or cosponsored 19 separate programs consisting of a total of 164 lecture/demonstration hours presented to approximately 1900 registrants for an average of 100 registrants per program-session. Of the total programs four were videotape replays of the 1982 Fall Legal Institute, one day devoted to the subject of real estate transactions and the other day devoted to domestic relations update. The videotape regional replays were first introduced in Arkansas during the fiscal year 1980-81, and they have continued to be generally well received by the members of the Bar, depending on the subject matter and the avoidance of conflicts of schedule with local trial courts. I expect that future years will bring more videotape replays of this nature as CLE demands increase, especially with the advent of designation of specialties by the practicing Bar and the concurrent need for CLE updates on those respective areas. Also from an economic standpoint the use of videotape replays preserves intact outstanding presentations of speakers who would not otherwise be available to travel around the state on a regional basis for the benefit of those lawyers who, due to preference or circumstances beyond their control, will not or cannot attend major programming like the Fall Legal Institute in Fayetteville or the Mid-year Bar Meeting in Little Rock. 182/Arkansas Lawyer/October 1983

By necessity (and now by tradition) AICLE relies on the members of the Arkansas Bar Association to patronize the various CLE presentations during the Bar year, not only as registrants but also by participating as program planners, chairman or moderators, lecturers and panelists and authors of course materials-all of which is done with little or no honoraria and minimal reimbursement of personal expenses. Not only have individuals been involved, but various committees and sections of the Arkansas Bar Association participating during the past year such as: The Young Lawyers Secton; Taxation Section; Agricultural Law Section; Economics of Law Practice Committee; Labor Law Section; Banking Law Committee; Arkansas Association of Women Lawyers; Real Estate Law Section; Family Law Section; and the Federal Practice Committees of the U.S. District Courts of the Eastern and Western Districts of Arkansas. Chairman of the Young Lawyers Section and the Legal Education Committee of the Bar also sit ex officio on the board of AICLE along with Bar Association executives, Bar Foundation executives and members of the House of Delegates. The leadership of the Arkansas Bar Association is to be commended for its support of strong Bar section and committee activity in the CLE area, and the sections and committees indicated above have responded overwhelmingly. The membership of the Bar has responded by enthusiastically participating in the various programs as faculty or planners as well as providing overwhelming attendance as registrants. And last but not least, the two cosponsoring Law Schools at the University of Arkansas at Fayetteville and UALR have provided leadership and program planning through their respective deans, who are also members of AICLE board. More importantly, the Law Schools have provided generous faculty support as program planners, pre-

It siders and participants as well as authors of systems and program ma-' terials. In this sort of climate it is no wonder that AICLE has continued to thrive and grow to mee) the challenges for providing continuing legal education programming since its inception in 1977. The Bar membership will continue to benefit by the availability of the quality CLE programs in the ensuing years which will be on a variety of topics, basic and advanced, with registration costs modest by national comparison. LAW OFFICE AUTOMATION THEME OF NEW CLE PROGRAM As a result of a questionnaire circulated to members of the Arkansas Bar Association in 1981, which was developed and compiled by the Economics of Law Practice Committee, the idea evolved to sponsor a program on Law Office automation-A Team Approach for Lawyers and Staff Personnel. This program came to fruition on April 15, 1983 at the Riverfront Hilton in North Little Rock, and it was attended by 60 persons including not only lawyers but their administrative staff members. The program was a joint effort of William D. Haught, chairman of the Economics Law Practice Committee and James W. Hyden, member of the committee and program chairman. The topics presented were: Evolution of the Automated Law' Office; Evaluating, Selecting, Acquiring and Using Equipment; Law Office Automation-Where Are You路 Now? Where Are You Going?; Development of Use of "Systems" on Word Processing EqUipment; Effective Utilization of Word Processing Equipment and Operating Personnel-The Attorney's Viewpoint; and the same topic from the secretaries' viewpoint. Since it became apparent during the question and discussion period that most of the people in attendance had already taken a step toward law office automation, the

Economics of Law Practice Committee has already began to plan a program during the next Bar year which will evaluate the experiences of law firms around the state and take a look at the total concept of law office management rather than focusing on automation alone. TAX PLANNING FOR BUSINESS ORGANIZATIONS THEME OF 路 TAX AWARENESS INSTITUTE The Fifth Annual Tax Awareness Institute, jointly sponsored with the Taxation Section of the Arkansas Bar Association was held at the Riverfront Hilton Inn at North Little Rock on April 22, 1983. This year's program, chaired by Michael O. Parker, focused on the basic tax planning consideration for the formation, operation and dissolution of business organizations, and it included such topics as: Sole Proprietorships; General Partnerships; Securities Laws; Corporate Formation; S Corporations; Corporate Operations; and Liquidations and Sales. Not only were attorneys invited but also CPA's Trust Officers and Life Underwriters. A hypothetical situation was used as a model at the program, and the speakers drew examples from that fact situation where possible. This program was enthusiastically received by 110 registrants, and planning is already in progress for next year's Tax Awareness Institute. WOMEN LAWYERS COSPONSOR FEDERAL COURT ORIENTATION PROGRAM Another "first" in Arkansas CLE was a Federal Court Orientation Program jointly sponsored with the Arkansas Association of Women Lawyers, which was held at the Federal Court House in Little Rock on May 16, 1983. This program was chaired by Jacqueline S. Wright, and all of the faculty participa路 tion other than Federal judges and court staff were supplied by members of the Arkansas Association of Women Lawyers. Along with actual 路 walk-through tours of the District Clerk's Office, the Bankruptcy Court and office, U.S. District judges' offices chambers, the Federal Court Law library, and U.S. Probation Office the following substantive topics were presented: Duties and Filing Procedure, U.S. District Court and U.S. Bankruptcy Court; U.S. Court of Appeals-Eighth Circuit Practice; Practice and Procedure of the Federal District Court (a panel discussion by a

U.S. District Court Judges); and Pitfalls to Avoid a Federal District Court. The highlight of the afternoon preceedings was the swearing in ceremony conducted in the main federal trial courtroom with Judge Roy. This program came about because the Arkansas Association of Women Lawyers had been looking for a CLE project, and at the same time the federal jUdges of Arkansas were concerned that newly admitted attorneys from 0-5 years experience needed to deal with the most basic fundamentals of Federal Court Practice in order to become more comfortable and confident when they made their first few appearances in federal court. This program was attended by 50 persons, and it is anticipated that this, too, will become an annual event on the CLE calendar, having been adopted as a "pet" project of the Arkansas Association of Women Lawyers with the unqualified blessing of the Federal Judiciary. AICLE GOES SATELLITE FOR THE SECOND TIME A second satellite T. V. program, cosponsored with the Practicing Law Institute of New York was heid on June 28 at Conway, Arkansas KETS Studios concerning the general topic "Doing Business with Troubled Companies". This program was designed to advise legal practitioners, house counsel, credit managers, senior loan officers and accountants about the problems and pitfalls in doing business with the corporate candidate for Chapter XI or the Chapter XI Debtor under the Bankruptcy Act, and how to avoid these pitfalls to the extent possible. This program was not designed for the bankruptcy specialist, but rather for the trade creditor or advisor to the trade creditor with occasional contacts with the bankruptcy system. Therefore not only were the Arkansas Bar members invited, but also senior loan officers employed by member banks of the Arkansas Bankers Association. The specific topics included the following: Structuring Prepetition Credit Transactions; Pros and Cons of Participating in Attempted Out of Court Structuring; Consideration in Filing an Involuntary Bankruptcy Petition; Post Petition Remedies; Extending Credit to the Debtor-In-Possession; Should you Serve on the Creditors' Committee?; Litigating with the Trustee or Debtor-In-Possession After Marathon Pipeline; and a review of individual

creditor's rights in Chapter XI. NOTE FALL 1983 CLE SCHEDULE! Medical Tort Seminar, jointly sponsored with the Health Law Committee, will be held at the Excelsior Hotel, Little Rock, on August 26. This seminar will cover these topics: Review of Malpractice Law in Arkansas; Informed Consent and Products Liability; Evaluation of the Plaintiff's Medical Malpractice Case; Physician and Hospital Liability (emphasis on pediatric neurosurgery, O.B. physician, pre-natal diagnosis, ultrasound, etc.); and Medical Products Liability. The 1983 Fall Legal Institute will be held at the FayetteVille Hilton in the University of Arkansas Conference Center in downtown FayetteVille, September 8-9. This institute will be devoted to debtors/creditors law and system update with recent developments in the federal bankruptcy law where appropriate. Bob Wilkins of South Carolina will conduct a one day seminar on Drafting Wills and Trusts-a System Approach at the Camelot Hotel in Little Rock on September 16. The 24th Annual Practice Skills Course (formerly Bridging-the-Gap), jointly sponsored by AICLE and the Young Lawyers section of the Arkansas Bar Association will be held at the Riverfront Hilton, North Little Rock on October 6 and 7. AICLE will again cosponsor with the Agricultural Law Section of the Arkansas Bar Association A Third Agricultural Law Institute in Little Rock at the Excelsior Hotel on October 13 and 14. The Annual Arkansas-Federal Tax Institute will be co-sponsored with the Arkansas Society of Certified Public Accountants and held at the Excelsior Hotel in Little Rock on December 1 to 2.

October 1983/Arkansas Lawyer/183




'" E

'iii .r::: 0



'0", "iii a: 0


'0 ~

0. 0.




$ $

85.00 95.00

(Includes course materials, Thursday Luncheon, Thursday Reception. Coffee Breaks and the Program)

c 0

.~ ~

C1l 0.

0 0

Football Tickets @ $12.00 Thursday Luncheon-Extra Guest Tickets at $10.00 each

$ '-----$






$"-----_ _

><Ii C1l <Jl





:0 0.

'Spouse's name



c c




Address _ _ _ _ _ _ _ _ _ Zip,






rr ~

'If attending.

C1l ~

'c" <Jl

Mail REGISTRATION with check to:





iii C1l <Jl

sue- PIC" suE




400 West Markham


Little Rock, Arkansas 72201









ATTORNEY'S ECONOMIC CONSULTANTS "A Division o( Education and Research Associates, tnc." SERVING THE LEGAL PROFESSION WITH EXPERTISE IN THE FOLLOWING AREAS: Workmen's Compensation (Lump-Sum Settlement Calcula· lions)

Evaluation of Lost Earnings Capacity from Partial Of Total Permanent Disability or Wrongful Death

Economic Valuallon of Pecumary Damages in Busmess Tort. Contract and Anti·Trust Cases Valuation of MinOrity Stock Holdmgs in Estate Settlements Valuation of Future Earnings Capacity for Stock Issuance Economic AnalysIs for Charters or Branch Applications lor

Financial Instllut_ons

QUALIFIED AS EXPERT WITNESS IN ARKANSAS AND OTHER JURISDICTIONS P.O. Box Drawer 34117 Little Rock, Arkansas 72203 (501) 661-0161 Telex: 78-3081

MID-SOUTH SECURITY SERVICES, INC. 10010 Rodney Parham Little Rock, Arkansas 224-5845 or 227-7812 (Formerly Baker Securities, Inc.)

Services Offered Video Recorded Depositions Private Investigation Accident Analysis Court Room Video Undercover Investigation


Service Directory MISSING LEGAL BRIEF PRINTING PARAGON Printing & Stationery Company has been printing BRIEFS for over 35 years.


May we be of service to you? NO EXPENSE TO THE ESTATE

311 East Capitol


Little Rock








Video Recorded Depositions; Private Investigation; Accident Analysis; Court Room Video; Undercover Investigation Two Financial Centre Little Rock, Arkansas 224-5845

Our expanded Texas branch provides fast, convenient service.

Excelsior-Legal Southwest, Inc. p.o. Box 5683, Arlington, TX 76011, (817) 461-5993

Toll free line-1-800-433-1700 Black Beauty is America's most popular corporate outfit. Here are some of the reasons• Everything (including seal) is inside the "all-in-one" corporate outfit. • Improved corporate record book and slip case in lustrous black vinyl with high quality gold stamped border. The sturdy, dust-proof slip case reserves place on shelf when corporate record book is removed .• Hidden rivets and gold label window on spine for attractive appearance and quick identification .• Interior pocket neatly holds loose



• Improved I\<\" extra capacity booster standard three ring metals. Black Beauty "all-in-one" outfits include: • Customized seal in zipper pouch.• 20 lithographed share certificates in a separately bound section with full page stubs. Each is numbered and imprinted with corporate name, capitalization, state and officers' titles.' 50 sheets, rag content paper. Or printed Minutes and By-laws with tax materials updated to conform with the Economic Recovery Tax Act of 1981. Minutes and By-laws include up-to-date IRC § 1244 Resol ution, Subchapter S Materials, MedicallDental reimbursement plan, appendix of forms, instructions, work sheets and 20 blank sheets. Special editions are available for CA, CT, DE, FL, GA, IL, Ml, MO, NJ, NY, PA, TX and Blank State (Model Business Corporation Act).• Our exclusive corporate record tickler.• Mylar ,....reinforced tab indexes with five positions.• Transfer ledger, 8 pages bound in separate section. Complete Black Beauty· Outfit No. 70 (Green No. 71) 50 sheets blank minule paper $39.50 No. 80 (Green No. 80 with printed minulesand by-laws$43 .00 Charge to American Express MasterCard or Visa

You may also select Green Beauty with the same fine features.

Excelsior-Legal Request C<ltalog- of


New York· Georgia· lIlinois • Texas

Law Products and Services


SOI!fHWEST. INC. P.O. Box 5683

-------------------------------Please include $1.00

o No. 70 0 No. 71 ..$39.50 Please Ship: 0 No. 80 0 No. 81 ..$43.00


shipping lind handling.




Arlington. TX 76011 4Print corporaU' ntlnlf! ...."ctly Ill. (In c@rtific,u-",orincorporation. Ir

Shipment within 24 hours after receipt of order.

authonzed shares



than 'IS chnroctc... und

--=:;:-_ each

NPV or 0 PV $__

Certificates signed by President and


lldd 17.00 fur 2" die Ileol.,

Capitalization $

ISecrel.8ry·treosurer. unlell! otherwise speo::ified)

0 Ship via Air-$5.00 extra

DIRe !H244 complete set-resol., dir. min .. treatise, law etc., $4.95 extra. SHIP VIA AIR: $5.00 ADDITIONAL WITHIN THE 48 CON·


o AM EX Charge 0 MC






Ship to _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Zip Code



OCTOBER 1983  

First American Title Insurance Company ofMid-America For nearly a century the First American eagle has been a symbol of reliable protection...

OCTOBER 1983  

First American Title Insurance Company ofMid-America For nearly a century the First American eagle has been a symbol of reliable protection...