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April 1983Vol. 7, NO.2

THE OFFICIAL PUBLICATIONOF THE

ARKANSAS BAR ASSOCIATION

OFFICERS

J. L. (Jim) Shaver, Jr., PresidentDennis Shackleford, President-ElectAnnabelle Clinton, Secretary-TreasurerRichard F. Hatfield, Council Chairman

EXECUTIVE COUNCIL

Floyd Thomas, Jr.Norwood PhillipsW. Kelvin WyrickCharles CarpenterRobert M. CearleyKaye S. OberlagD. Mac GloverMarcia McivorRobert HornbergerTommy WomackJuiian FoglemanJames A. McLarty

EX-OFFICIO

J. L. (Jim) Shaver, Jr.Dennis ShacklefordJames D. CypertAnnabelle ClintonFrank C. Elcan, IIRichard F. Hatfield

EDITOR

C. E. Ransick

ASSOCIATE EDITOR

Carol Utley

(§Fe

ArkansasLawyer

SPECIAL FEATURES

Cover Story:Law Day USA-May 1, 1983 58

Growing Public Discontent with the William French Smith 59Civil and Criminal Justice System

The Tax Equity and Fiscal Joseph M. Ervin 68Responsibility Act of 1982 Paul J. Nicholson

Second Injury Law II W. W. Bassett, Jr. 78

Effective Assistance of Counsel David E. Howe 90

Annual Meeting 56

REGULAR FEATURES

President's Report J. L. (Jim) Shaver, Jr. 54Juris Dictum ..........•.... . . . . . . . .. Robert L. Lowery 55Law School News 86In Memoriam 94Executive Council Notes ...•..•.•.... Annabelle Clinton 85Service Directory IBCAddenda C. E. Ransick 95AICLE News Claibourne W. Patty, Jr. 74The Arkansas Bar Foundation Randall W. Ishmael 82Lawyers' Mart 76Young Lawyers' Update ........•.•... Frank C. Elcan, IITo Wit . 66Legal Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84Methods and Means Bernard Stern in 64

The Arkansas Lawyer (USPS 546-040) is published quarterly by the Arkansas BarAssociation, 400 West Markham, Little Rock, Arkansas 72201. Second classpostage paid at Little Rock, Arkansas. Subscription price to non-members of theArkansas Bar Association $6.00 per year and to members $3.00 per year includedin annual dues. Any opinion expressed herein is that of the author, and notnecessarily that of the Arkansas Bar Association, The Arkansas Lawyer, or theEditorial Committee. Contributions to The Arkansas Lawyer are welcome andshould be sent in two copies to the Arkansas Bar Center, 400 West Markham, LittleRock, Arkansas 72201.

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

July 1983/Arkansas Lawyer/53

PRESIDENT'S REPORT

has been filed with the Arkansas Supreme Court.

Since it is impracticable anduneconomical to set up interest bearing accounts with interest accruing toindividual clients in most instances;and because lawyers are prohibitedfrom personally benefiting from any interest, they have placed nominal andshort-term trust funds in aggregated,non-interest bearing, commercial bankchecking accounts.

Under IOlTA, these idle funds areplaced in an aggregated (NOW) checking account, with the interest earnedpaid to a foundation to provide moneysfor pUblic interest law projects.

"The obvious appeal of a programwhich can produce found money-newmoney-that doesn't appear to comeout of anybody's pocket is simplyoverwhelming."-Charles C. Keller,President, Pennsylvania Bar Association.

law Day USA on May 1st will provideContinued on page 55

During the first year of IOlTA inFlorida, $290,000 for legal aid hasbeen granted by the Florida BarFoundation. 160 banks and savingsin-loan Associations are participatingin the program.

With the cut back in legal ServicesCorporation funds, IOlTA appears tobe the rational solution to the problemof furnishing legal services to the poor.

Public RelationsThe Public Information Committee

with Chairman Sam Peronni continuesto push video and radio "public service" spots with the TV and radio stations around Arkansas. The Committee is now making its own videospots-so we will be looking forward tomessages of greater interest to Arkansans.

SpecializationThe Arkansas Plan for Specializa

tion has been approved by the Arkansas Supreme Court, and is printed inthe News BUlletin, September 1982.The Court has not as yet appointed itsCommissions to regulate this program.However, at least two of our Association's sections (Probate law; Taxation,Trust & Estate Planning) are alreadyworking on their applications. It is expected that the Family law Section andWorkers Compensation Section willalso file.

tion and a dedicated Chairman of ourFederal Legislation and RegulationsCommittee-E. Charles Eichenbaum.The attempts at court-stripping of theU.S. Supreme Court's jurisdiction weredefeated in the last session.

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

However, the Congress defeated theattempt to place restrictions on theFederal Trade Commission's assumedjurisdiction over the professions, in approving the FTC's emergency fundingmeasure on December 20, 1982. TheArkansas Bar Association has been aleader in the effort to remove FTCjurisdiction over the legal profession.

It would appear that the legal profession was "tarred" by the AMA. In herarticle under FORUM (The ArkansasGazette, January 2, 1983), nationalcolumnist Mary McGrory indicates thatthe AMA's PAC was the main reasonfor the Congressional action. A casecan be made in Arkansas since theArkansas Supreme Court has a clearConstitutional mandate to regulate thelegal profession and does not need anyfederal assistance. We will continue tooppose FTC intervention in the regulation of our legal profession.

IOlTA (Interest on lawyers'Trust Accounts)

The Association's petition for establishing the IOlTA program in Arkansas

Daniel Webster

I want to talk about some of the goalsattained by our Association for themembership.

Legislative PackageAlthough I have served in the Arkan

sas Legislature for so many years, I amstill impressed with the total effort thathas gone into the Association's currentlegislative package for Arkansas. Eachmember has received the Association's Legislative Digest, Vol. 2, No.1,8-1-82. covering 27 proposed bills, witha "Do Pass" from the House of Delegates on 18 bills, now in LegislativePackage. Subsequent Legislative Digests will carry not only the action onthese bills, but will also itemize all otherbills during the Legislative Session thatwe consider of interest to Arkansaslawyers.

'There are many goals of great valueto man which cannot be attained byunconnected individuals, but must beattained, if at all, by association. "

Federal LegislationWe are most fortunate in having an

understanding Congressional delega-

54/Arkansas LawyerlJuly 1983

Judicial Reapportionment

............1111 JURIS DICTUM

by Robert L. LoweryExecutive Secretary, Judicial Department

The Temporary Board of JudicialReapportionment was created by Act265 of 1981 and extended by Act 38 ofthe First Extraordinary Session of1981. The nine-member Board consisted of the Governor, the AttorneyGeneral, the Secretary of State, theChief Justice of the Arkansas SupremeCourt, the Speaker of the House ofRepresentatives, the President ProTem of the Senate, the Chairman of theJudiciary Committee of the House ofRepresentatives, the Chairman of theJudiciary Committee of the Senate,and one additional member named bythe Governor.

The Board completed its work in December, 1982. It considered statisticalreports of the Arkansas Judicial Department for past years and for 1985 asprojected. In addition to the filings ineach of the Circuit, Chancery and Probate Courts in each county, the Boardconsidered the number of courthousesin each circuit, the population perjudge, the square miles in each districtand the number of attorneys in eachdistrict, as well as other special matterspointed out by jUdges, prosecutors,legislators and others.

The 1980 combined filings per judgeshowed a wide variance between thedistricts, the high being 2,010 and thelow being 880. The 1985 combined filings per judge were projected to rangefrom a high of 2,884 to a low of 1,180.

Continued from page 54a wonderful opportunity for the Association and membership to observe the1983 theme, "Sharing in Justice."Robert L. Brown will again serve as ourState Chairman.

During the Fall, legislative briefingson the Association's package wereheld around the State. Most of thesewere well attended. However, the briefing in North Central Arkansas at Batesville had to be cancelled because of theweather. Reports are that the sessions

The population per judge ranged froma high of 47,902 to a low of 24, 175. Thesquare miles of land area per judgeranged from 1,956 to a low of 137. Thenumber of attorneys per judge rangedfrom a high of 146 to a low of 20.

While the Board had the authority torecommend as many judges as it sawfit, this authority was effectively nullified by the economic realities of thetimes. It was decided that the fiscalcondition of the state did not permit theaddition of judgeships to the system atthis time.

The Board then considered the option of redistributing the workload of thejudges by transferring counties fromone circuit into another. The JudicialDepartment was requested to provideinformation in this regard, and anumber of options were prepared andpresented to the Board for its consideration. After reviewing the options andhearing additional testimony from interested parties, the Board concludedthat the apparent inequalities of judicialworkload would not be best remediedby the method of altering existing judicial districts.

It was the recommendation of theBoard that the judicial circuits remainas they are and that the 1985 GeneralAssembly be urged to provide at leastthe following judgeships:

1. A circuit judge in the Sixth Judicial

were well received by the legislators.

The Young Lawyers Section is responsible for the Association's ReliefProgram. Since some 14 counties inArkansas were declared disaster areasin December, 1982, the YLS has gonefully operational in this important publicservice.

ConclusionThese are a few of the "goals"

being "attained by association~ withthe Arkansas Bar Association. r ...

District (Perry and Pulaski Counties).

2. A circuit/chancery judge in theSeventh Judicial District (Grant, HotSpring and Saline Counties).

3. A circuit/chancery judge in theTenth Judicial District (Ashley,Bradley, Chicot, Desha and DrewCounties).

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

It is hoped that by 1985 the economywill be in a condition whereby morejudgeships can be created along withmore support staff. While the filings willoccasionally stabilize or even experience a small drop, the overall trend isfor a steady and substantial increase.From 1972 to 1981 the filings increased over 70 per cent while thenumber of judgeships increased lessthan 30 per cent.

It should aiso be noted that theSeventy-Third General Assembly assumed additional judicial expenses,the most significant recent additionbeing the bringing of the court reportersinto the state system. With this recentchange, the State of Arkansas has increased its judicial expenditures sothat now approximately $0.25 of every$100.00 is spent on the judiciary.

f-...


ARKANSAS BAR ASSOCIATION85TH ANNUAL MEETING

"ANATOMY OF THE TORT TRIAL"

WITH SEVEN NATIONALLY RENOWN SPEAKERS

June 8-11, 1983Arlington Hotel

Hot Springs, Arkansas

S6/Arkansas Lawyer/July 1983

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Law Day-U.S.A.May 1,1983

"Sharingin

Justice"

Cover Story ...

"Restrainer Container"

"The drawing evolved around theidea that not only does the Constitutiongrant freedom, it also restrains thesefreedoms in order to assure us of anorderly society".

-Artist Calvin C. Carr

The art work is a colored pencil drawing from West '79/The Law-an exhibition of contemporary art reflecting aspects of the Law, sponsored by WestPublishing Company in cooperationwith the Minnesota Museum of Art. Weare indebted to the author and WestPublishing Company for permission touse "Restrainer Container" on thecover of the 1983 Law Day USA issueof The Arkansas Lawyer. Artist Carrreceived his B.S. Art from the University of North Dakota and his M.A. Artfrom the University of Minnesota. Aparticipant in many competitive and invitational art exhibits, he is currentlyworking in the Minneapolis PublicSchools.

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

S8/Arkansas Lawyer/July 1983

"Participation, the sharing in ourcountry's system of justice, helped ourconcepts of justice to evolve in an orderly way as our society changed froma small, homogenous group of farmersand tradesmen to the highly industrialized, vastly diverse country we aretoday. Participation in the making ofimportant decisions forced suchchanges as the social security system,environmental protection measures,and voting rights for women.

Citizens have the right to help determine the meaning of justice. Forgingjustice in the fires of social andeconomic change should not and mustnot be left to the few. It is the naturalprovince of the many.

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

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

It has also been our policy to publisha "Law Day" article in The ArkansasLawyer. This year, we have selectedthe address of the Honorable WilliamFrench Smith, Attorney General of theUnited States, before the ABA Houseof Delegates, on August 10, 1982. TheAttorney General discusses public discontent with our legal system.

EUREKA!Chairman H. William Allen of the

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

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

Growing Public DiscontentWith The

Civil And Criminal Justice SystemBy: William French Smith

Attorney General Of The United States

There is an old story about an attempt by the great Chief Justice, JohnMarshall, to dislodge a particular lawbook from a high and tightly packedshelf. He succeeded instead in dislodging the entire row of books, whichstruck him on the head and knockedhim to the floor. A librarian instantlyrushed to his aid, but the venerable oldChief was unhurt and answered theoffer of assistance by saying:

"I am a little stunned for the moment.I have laid down the law often, nowthis is the first time the law haslaid me down."

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

Nearly two decades ago, Dean Roscoe Pound observed: "Law is experience developed by reason and appliedcontinually to further experience." During the past two decades, a growingpublic discontent has arisen over ourcivil and criminal justice system-inlarge part, because reason has notbeen applied sufficiently to improvingthe federal legal system.

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

that our criminal justice system is morethan fair to the accused but less thansuccessful in protecting society. In addition to questioning the effectivenessof criminal justice, the public has become increasingly concerned aboutthe efficiency of both the civil and criminal systems. Simply put, the burgeoning case/oad in our courts hasslowed and clogged the wheels of justice.

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

In no area is the need for changeclearer than in our criminal laws. In recent years, through actions by thecourts and inaction by Congress, animbalance has arisen in the scales ofjustice. The criminal justice system hastilted too decidedly in favor of the rightsof criminals and against the rights ofsociety.

By 1981 nearly nine of ten Americans believed that the courts in theirown areas failed to deal harshlyenough with criminals-an increase ofalmost one-third since 1972. Also by1981 , nearly eight of ten Americans didnot believe that our system of lawenforcement worked to discouragepeople from committing crimes-al-

most a fifty percent increase since1967. In the Nation's capital, one publicinterest legal foundation has set up aCourt Watch Project to involve its80,000 members nationwide in themonitoring and reporting of judges whogive sentences that appear far too lenient in specific cases.

We have focused so much on protecting the accused that we have lostsight of the purpose for which government itself was established-to protectcitizens from those who would preyupon them. Let us be ever mindful ofthe need to safeguard individual liberty,but let us also recognize that the mostbasic individual liberty is freedom fromviolence. That basic liberty can be secured only by the effective and vigorous enforcement of our criminal laws.As Judge Learned Hand recognizedfifty years ago: "Our dangers do not liein too little tenderness to the accused... What we need to fear is thearchaic formalism and the waterysentiment that obstructs, delays, anddefeats the prosecution of crime."

Too frequently today, our criminaljustice system allows the crimina/to beset free and imprisons the law-abidingcitizens with the fear-and reality-ofcrime. We have been working for sometime to secure passage of legislativereforms that would restore the balancebetween the forces of law and theforces of law/essness by making ourcriminal laws more effective. TheUnited States Senate now has before ita package of reforms which would,among other things:

-Reform our bail system to preventthe most dangerous offenders


from returning to the streets oncethey've been caught;

-Make jail sentences more certainand abolish the frequently abusedprocess of parole;

-Provide stronger criminal forfeiture laws that will take the profitout of crime, especially organizedcrime and drug-trafficking;

-Increase the other federal penalties for drug-trafficking;

-Recognize the rights of the victimmore fully and require judges toweigh the criminal's impact uponthe innocent when sentencing;

-Make it a federal crime to kill, kidnap, or assault senior federal officials, including Justices of theSupreme Court; and

-Permit the federal government totransfer surplus property to thestates, free of charge, when theproperty is needed by the statesfor prisons.

The importance of these reforms toour system of justice and to the safetyof the public cannot be overstated.

In the last decade violent crimejumped eighty-five percent. In the timeit takes to deliver my remarks today, anaverage of fifty violent crimes will becommitted across the country. Duringthat same period, over 400 propertyCrimes Will be committed. Last yearalone, one out of every three households in our Nation was victimized bysome form of serious crime. At a timewhen the incidence of crime hasreached crisis levels, it would be irresponsible for Congress not to act onthese badly needed reforms.

To meet the continuing and gravethreat of crime, we are also pressingother reforms. We have proposedmodification of the exclusionary rule sothat the criminal would not go freewhen the officer seizing evidenceacted in the reasonable, good faith belief that his actions were lawful. And wefavor limiting the insanity defense sothat only those who did not have themental state which is an element oftheir crime would escape responsibilityfor their acts. Abuses of the exclusionary rule and insanity defense havehelped turn the criminal justice systeminto a cynical game. Our reforms wouldmake it once again a quest forJustice-not only for the accused, butfor society as well.

BO/Arkansas Lawyer/July 1983

Recognizing that law enforcement islargely a state and local function, wehave institutionalized a new cooperation and coordination between federal,state, and local officials. Through lawenforcement coordinating committeesin each federal district across the country, federal resources will be directedagainst the particular problems in eachcommunity on which they can have thegreatest impact.

Since much of the epidemic of crimearises from narcotics trafficking, wehave brought the resources and expertise of the FBI to bear on the drug problem for the first time. Since last summer, the FBI has initiated over 800investigations nationwide involvingnarcotics trafficking, including 200 jointInvestigations with the Drug Enforcement Administration. Drug traffickingnot oniy causes so much violent crime,but is also rapidly becoming a leadingoccupation of organized crime. BringIng the sophisticated resources of theFBI into the effort, in conjunction withDEA, will make a vital difference in thebattle against drugs.

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

In a similar fashion, the security ofAmerican economic well-being and ourpeople's respect for law require newinitiatives to meet the problem of illegalimmigration to the United States. Weneed not-and must not-forsake ourheritage as a nation of immigrantsyearning to be free, but we must rationalize and enforce the laws governingImmlgrahon.

. The staggering dimensions of illegalImmIgration to this country havedramatically undermined public confidence in our legal system. Although theproblem is not susceptible to simplesolution, the public rightly expectsmajor improvement. As one nationalopinion survey found in June 1980over ninety percent of the public favo;an "all out effort to stop illegal" immigration. As is the case with criminallaw, the public wants fair and reasonable immigration laws that will be effective and efficiently enforced.

In recent years, this Nation truly has

lost control of its own borders. Thereare some three to six million illegalaliens in this country-and the numbergrows by from one-quarter to one-halfmillion each year. Added to that, theUnited States in 1980 admitted over800,000 legal entrants-the largestnumber since 1914. Taken together,legal and illegal immigration to thiscountry in 1980 reached an all-timehigh for any year-including the greatunrestricted migrations between 1880and 1921. The Mariel Boat Lift fromCuba in 198Q--and the arrival of Haitians that year at the rate of about 1,000a month-have themselves become asymbol of the failure of Americanimmigration and refugee policy.

The largest single weakness of priorpolicy has been its lack of realism.Rather than confronting reality, it choseto look the other way and to adoptmakeshift approaches to only the pressing problem of the moment.

On July 30 of last year the Presidentproposed a new and comprehensiveimmigration and refugee policy thatrecognizes things as they are and logically proceeds from there on all theissues now pending-illegal immigration, legal immigration, mass arrivals ofundocumented aliens, and refugee assistance. In a similar fashion, the bipartisan Simpson-Mazzoli bill nowpending before Congress would provide an excellent vehicle for achievingnecessary reforms.

Although all of the interrelated proposals that go together to make a newpolicy workable are beyond the scopeof these remarks, the central themecan be simply stated. It is to deter illegalimmigration by modestly expandingthe opportunities for legal employmentand then concentrating more enforcement resources upon thwarting futureillegal immigration. To do so, wemust-for the first time-ban employers from hiring iliegal aliens.

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

its last term, the United States Supreme Court itself accepted fifteenpercent more cases for argument thanduring the preceding term-andthirty-six percent more cases than justthe term before that.

Most significantly, the number ofcases per judge has increased dramatically. Despite the Omnibus Judges Billof 1978, which added 152 judges to thefederal bench, the growth of the federaljudiciary has not kept pace with thelitigation boom. At the district courtlevel, judges today must process fiftypercent more new filings each yearthan in 1960. Judges at the appealslevel must hear almost four times asmany cases today as in 1960.

In addition, litigation is more complexand time-consuming than ever before.For example, compared to 1960, fivetimes as many federal trials took morethan one month in 1981. It is unsur·prising that expeditious resolutions ofcivil suits seldom occur. A recent studyfound over 15,000 cases in our federaldistrict courts that had been pendingfor more than three years.

The first step in responding to theseproblems must be more judicial resources. The 1978 Omnibus JudgesBill represented the first increase in thesize of the federal judiciary in the pasttwo decades. Already there is an obvious immediate need for more federaljudges to handle the burgeoning caseload. In addition, I believe it is time torecognize that the creation of judgeships should be regularized and basedupon such an assessment of need, notpolitics.

The problem facing the federalcourts, however, is not simply one oftwo few judges to handle the work. Toogreat an expansion of the federaljudiciary would create its own set ofproblems. Constant, dramatic expansion tends over time to dilute the prestige and reduce the collegiality of thefederal bench, making it harder to attract the best candidates. Increasingthe number of decision-makers issuingopinions would threaten uniformity,evenhandedness, and stability in theapplication of the law. Doctrinal confusion even within a single jurisdictionhas become increasingly difficult to avoid. As former Assistant Attorney General Daniel Meador has noted, we riskcreation of a "judicial Tower of Babel."

We are therefore actively supportinga wide range of legislative initiatives

which will, if enacted, significantly lessen the burden on the federal courts.We support the abolition of diversityjurisdiction, which accounts for a quarter of the civil filings in the district courtsand about 14 percent of appeals in thecircuit courts. There is no longer anypersuasive rationale for diversity jurisdiction, and its abolition would free thefederal courts for their primary task ofinterpreting and enforcing federal law.

We have also proposed a major revision of the federal habeas corpus laws,to impose a statute of limitations andprovide that issues fully and fairly litigated in state court not be subject torelitigation in federal court. Our purpose is to restore finality in criminal law.An incidental effect would, however, bethe removing of an unnecessary burden on the federal courts, since stateprisoners filed over 8,000 habeascases in federai courts last year. Theonly thing to commend the vast majority of those cases, to paraphraseJudge Learned Hand, "is the hardihood in supposing they could possiblysucceed."

We are also considering the proposal to create special tribunals to decide certain types of factual disputesarising in the administration of welfareand regulatory programs. The resolution of many such disputes does notrequire the resources or expertise of anArticle III court. The creation of suchtribunals was proposed over five yearsago by a Justice Department Committee headed by Judge Bork.

To ease the burden on the SupremeCourt itself-which has doubled since1960-we are proposing legislationthat would abolish the mandatory jurisdiction of the Supreme Court. The Supreme Court could better supervise thedevelopment of law in the federal circuits if it had complete discretion overits own docket. Every case which theSupreme Court must hear because ofmandatory jurisdiction represents oneless case the Court could have heardbecause of its importance. Chief Justice Burger has urged that "all mandatory jurisdiction of the Supreme Courtthat can be should be eliminated bystatute," and the Department of JusticefUlly agrees.

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

the Bankruptcy Act of 1978 to remedythe constitutional defects found by theSupreme Court in its recent decision inNorthern Pipeline Construction Co.v. Marathon Pipe Line Co.

The Bankruptcy Act of 1978 soughtto improve the efficiency of the federalcourts in dealing with bankruptcy matters. The dimensions of that undertaking are readily apparent-as ofMarch 31 of this year nearly 700,000estates were pending before the federal bankruptcy courts. As the result ofthe Supreme Court's decision, however, a new system must be in place byOctober 4 of this year when the Court'smandate will issue.

We are presently engaged in anexpedited review of the options available under the Supreme Court's opinion. There are at least three-all ofwhich present difficulties. First, wecould return to the pre-1978 system,but it was that system which causedCongress to pass the 1978 Act. Second, we could grant Article III status tobankruptcy judges, but that wouldmean the appointment of some 200federal judges with life tenure. Or third,we could continue the bankruptcycourts as Article I courts, but narrowtheir jurisdiction to exclude private civilcases such as Northern Pipeline. Unfortunately, this third option is perhapsthe most complex analytically-particularly in light of the limited time available-and would reintroduce at leastsome of the inefficiencies the 1978 Actsought to eliminate.

Although the October 4 deadlinemakes changes in the bankruptcy system necessary immediately, the otherchanges I have outlined today are alsoimperative and require timely action.Public discontent with the federal criminal and civil justice system increasesdaily as the perception spreads that it isneither effective nor efficient enough tomeet the needs of modern society.Discontent over the role of law mayineVitably lead to disrespect for the ruleof law-unless we take well-reasonedaction soon. Reform is therefore essential. As Winston Churchill oncewrote:

"Things do not get better by beingleft alone. Unless they are adjusted,they explode with a shatteringdetonation."

The fuse of public discontent is lit. It isup to all of us-especially the leadersof the organized bar and the officials ofthe Justice Department. to avert thethreatened explosion. t--


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WORKSHOP OBJECTIVES: The fundamental concepts, basic principles and common problems of will and trustdrafting are the focus of this one-day drafting workshop, with consideration of the smaillo medium estate situations. TheWorkshop material includes a text on law, pre· and post·mortem planning, and problems and techniques of drafting,plus sample clauses, complete will and trust forms and other practical information intended to provide practicalguidance to the attorney in preparation of estate planning documents. The forms include. among others: maritaldeduction formulas; tax allocation and disclaimer clauses; an outright will for a surviving spouse with trust for minorchildren; a marital deduction trust; and a revocable living trust. Professor Halbach reviews and analyzes the forms pro·vision-by-provision. This "how-to·do·it" workshop stresses the drafting problems confronting the practitioner,including:A. Estate, gift and income tax law.B. Dispositive provisions for spouses, children and others.C. Powers of appointment, class gifts and other future interest provisions.D. Trustee selection and the trustees' powers.E. Administrative provisions and powers.F. Lifetime planning to insure optimal results and postmortem flexible.WORKSHOP SPEAKER: EDWARD C. HALBACH, JR.. an internationally recognized authority on estate planning andtaxation, is a noted author and popular lecturer in the field of wills, trusts. futu!e interests, taxation and estate planning.He is president-elect of the International Academy of Estate and Trust Law, has served as Chairman of the ABA's RealProperty, Probate, and Trust Law Section, and received the 1981 Award for Excellence of The National College ofProbate Judges.ADVANCE QUESTIONS: Registrants are invited to submit questions in writing to the Forum in advance to the sched-uled workshop. The Forum will answer as many as possible of the questions of general interest.WORKSHOP MATERIAL: Each registrant will receive a wills and trusts drafting guidebook expressly revised andupdated for this program. The guidebook provides a detailed outline of the topics to be covered by Professor Halbachas well as will and trust forms and special clauses.CONTINUING LEGAL EDUCATION CREDIT: This program has been designed to qualify for continuing legal educa·tion credit from the States of Colorado, Utah and the other surrounding states.FEE: THE REGISTRATION FEE IS S160.00. The fee includes tuition. workshop materials, and coffee breaks. Mealsare not included. Early registration is encouraged to guarantee your reservation at this popularly acclaimed draftingworkshop. On site registration will be accepted only if meeting room space is available.REFUND: Full refunds less $15.00 will be made if requested 15 days before the date of the workshop in which you areregistered. No refund can be made after that date.TAX DEDUCTION: Education expenses, including travel costs and meals. are deductible for income tax purposes ifthey improve or maintain professional skills. Treas. Regs. § 1.162-5.

MAIL THIS FORM WITH YOUR CHECK TO: The Southern (aliforMI T4" r.. Est4te Planning Forum. 2356 Moore Street. 5I.llle 204. ~n DIego, CA 92110 (619)298.7620

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office

Methods And MeansBy: Bernard Sternin

Getting Started With Methods

A great deal is continually being written that relates to the substantiveareas of practice. There doesn't seemto be a shortage of materials that discuss the what of what has to be done inthe practice of law.

By comparison, relatively littleseems to get written that deals with thehow part of practice. We don't oftensee materials that describe methodswe might use to get our work done.

That's what this column is about. Itspurpose will be to set out ways andmeans, techniques you might want toadopt to help get work done. Someonenext door or down the street or inanother city may be doing much ofwhat you are doing, but using methodsthat are more effective. The goal herewill be to spell out what some of thesemethods are, so that you can decidewhether some of them might be worthwhile for you to use.

(Editor's Note: Methods and Means isa new Regular Feature. Bernard Sternin is a graduate of Harvard LawSchool and a member of the New YorkState Bar. He has served in the American Bar Association as Chairman ofthe Committee on Word Processingand Automated Drafting in the Sectionon Economics of Law Practice; asVice-Chairman of the Committee onthe Use of Modern Technology in theSection of Insurance, Negligence andCompensation Law; and on the SubCommittee on Equipment and Technology of the Committee onEconomics of Law Office Management in the Section of General Practice; and is on the Section onEconomics of Law Practice.)64/Arkansas LawyerlJuly 1983

Effective office methods are important. They can often save a significantamount of money. What's more, onceyou establish them as routines youregularly follow they can continue tosave money in an ongoing way withoutany further attention.

Establishing methods is importantfor another reason, beyond savingmoney: By setting them up as routinesthat are regularly followed you take amajor step forward in establishing controls over your office operations.Methods are one of the most importantmeans you can use to make sure thatoffice experience remains available toyou and your staff in the future.Methods institutionalize learning. Theyperpetuate the know-how of each person in the office and make it availableto others. Methods give you a morereliable tool than memory to be surethat the practices you have found to bebest are established and continued.

Most of the materials that are writtenabout law office methods are in booksand periodicals that deal with "officemanagement." The materials in thesepublications fall into two broadly different categories:

The first category deals with management of the office as a whole. Thisgroup contains materials that relate toareas such as organizational arrangements, personnel administration, layout of office space, and so forth. Let'scall this area of concern "plant management."

The second category deals with the

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

The materials in the first category,plant management, are probably ofmore interest to the larger law firm. Thematerials in the second category, filemanagement, are probably of more interest to the smaller law firm and to thesolo practitioner. I suspect that attorneys in smaller firms and solos billmore of their work on a flat fee basisthan do attorneys in the larger firms,and hence keeping costs down becomes relatively more important. Also,I suspect that in smaller firms attorneyscarry a greater case load than in largerfirms. Consequently, the amount oftime lawyers in smaller firms can giveto each file may be more limited, andtherefore more effective processingtechniques become relatively moreimportant.

The "methods and means" I'll bedealing with in these columns will relateprimarily to techniques we can use toget our work done in handling particularmatters. Consequently, the materialsI'll be discussing here will be more inthe area of file management than plantmanagement.

There is one important topic that re

Continued on page 65

YOUNG LAWYERS'UPDATE

By Frank C. Elcan, IIYLS Chairman

YLS To Host Regional AffiliateOutreach Meeting

On March 25 and 26, 1983, theYoung Lawyers Section wili host lawyers from the states of Oklahoma, Missouri, Tennessee, Mississippi, Louisiana, Texas and Arkansas at a regionalAffiliate Outreach meeting of theYoung Lawyers Division of the American Bar Association. The program willbe held in Hot Springs, Arkansas, (bypure coincidence) during the OaklawnPark racing season. The program onFriday, March 25, wili feature a showcase of American Bar Association/Young Lawyers Division publicservice projects which are underway invarious other sections throughout thenation. On Saturday, March 26, the Arkansas Institute for Continuing LegalEducation will sponsor a triai tacticsseminar. Both the Friday and Saturdaysessions wili adjourn weli in advance ofpost time at Oaklawn Park. In addition,the Young Lawyers Section has reserved a block of reserved seats atOaklawn Park and a block of rooms at ahotel in close proximity to the racetrack. I encourage young lawyers fromall sections of the state to make plans

Methods And MeansContinued from page 64

lates both to plant management and tofile management. That's the questionof the attorney-secretary arrangementyou use. Is one-to-one always best? Insome situations could two-to-one orone-to-two or two-to-two be better?Several years ago I wrote about somenew attorney-secretarial arrangements in an article called "An Easy andEffective Way to Reorganize your LawOffice for Automation." The article wasan attempt to deal with the question ofwhich secretary should get the automatic typewriter in offices in whichthere were more secretaries than ma-

to attend this meeting. It is a rare opportunity to see American Bar Associationprojects demonstrated for possibleimplementation in our state. The trialtactics seminar is expected to be excellent as well. More information on theseminar wili be forthcoming throughBar mailings.

YLS CoordinatesDisaster Relief

The Young Lawyers Section Committee on Disaster Relief was caliedinto action after the disastrous weatherthat struck our state in December.Chairmen Ed Tarvin of Little Rock andJohn Moore of Mountain Home coordinated activities in conjunction with theFederal Emergency ManagementAgency in rendering legal advice tothose persons stricken by the floodingand tornadoes. The legal advice wasgiven to those who were eligibie byfederal guidelines for free legal services, and was limited to non-fee generating cases. Area coordinators ineach of the judicial districts in the statewhere damage occurred were contacted to provide assistance to theFederal Emergency ManagementAgency staff working in their area.

chines. However, even if you don'thave any word processing equipmentyou may stili want to think about somepossible new patterns of officeorganization and work flow for theirown value, independent of machines. ifso, write to me for a free copy of thearticle.

Bern'd Offering:"An Easy and Effective Way to

Reorganize your Law Office forAutomation." An article that discussespatterns of secretarial support and office work flow other than the traditionalone-to-one arrangement. The articlealso sets out a plan for evolving new

Those persons who worked with thisproject are to be thanked for their workin such a time of crisis.

Annual MeetingScheduled in June

The annual meeting of the YoungLawyers Section is scheduled forThursday, June 9, 1983, at the Arlington Hotel in Hot Springs in conjunction with the annual meeting of the Arkansas Bar Association. Election of officers for the 1983-1984 bar year wili beconducted, as weli as reports of thevarious committees of the Section. Weare also sponsoring the annual dancewhich wili be on Thursday night. A goodtime was had by ali who attended thedance last year, and plans are underway to make this year's dance a goodone as well. I hope ali young lawyerswili attend the annuai meeting. It is anexcelient means of meeting active section members from ali areas of thestate, as weli as providing the opportunity to become involved in one ormore of the various committees operating in our section.

~,

arrangements in a series of gradualsteps.

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

If you are now using automatic typingequipment and want to have furtherrelevant material included, indicatewhat equipment you have.......


TO WITBy S. Sponte, Esq.

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

Halfway HomeI am above all else a person of pas

sion, and to that professionally troublesome affliction I incessantly and deliriously yield. When matters touch uponthat base and basic instinct, I do notplead for my clients, I bleed for them. Ido not pray for their relief, I pray for theirdeliverance, and it should come as nosurprise to my more stable colleaguesthat I accept defeat in such instanceswith all the philosophical good grace ofa scorned liberal.

Such a crusade caused me recentlyto appear before a judge in anothercounty who fUlly believed that he wasTHE LAW. He had made up his mindwell in advance of trial as to the appropriate outcome and he was not about tobe dissuaded of his perch by someforeign lawyer armed only with excessive zeal, a brash though fetchingmanner, and 150 years of supportive,uncontroverted precedent. When thedefense rested, His Honor called usboth to sidebar and handed out copiesof his opinion, no doubt written at thespeed of light, for in it the real matterhad simply ceased to exist. That I wasto taken aback was, to some degree,my own fault, for I had not preViouslybeen aware of his famous opinion ofsome years earlier in which he had declared the doctrine of stare decisis tobe unconstitutional infringement uponhis right to freedom of expression.

The effect of this particular setbackto my psyche was typically cataclysmic. Whereas before I was sailin', now Iwas frightfully becalmed. I stoppedreading my mail, returning my phonecalls, answering my correspondence.In short, for a time, I took on all theappearances of a successful, busylawyer.

I should know better than to be soprone to passion, for I first learned of its

66/Arkansas LawyerlJuly 1983

corrosive effect upon the legal mind inlaw school, at the hands, the mind andmouth of one Professor Alleshazy.Next to the Dean, passion was his favorite anathema, and he would preachupon it endlessly. "It has no place inyour thoughts", he would suggest, andwe would listen. "It is of use only toconcert musicians and hookers", hewould argue, and we took note. "In thisprofession, you wilt never be theformer, and only rarely the latter", hewould roar with clenched fist swingingmadly skyward, shaking Blackstonefrom repose. "Be dispassionate or bedamned", he would bellow fervently,collapsing thereafter in a quivering,spasmodic heap at the base of thepodium, while we broke into a frenziedfit of coldly analytical cheering.

As with most professors, I paid himno heed, and thus brought to my fledging practice the ardor of the uninitiated.For a while, while the romantic weightof law school still sat squarely on myshoulders, the object of my passionwas crystal clear. Like Justice Black, Icarried a small copy of the Constitutionin my pocket, always alert to a spontaneous outbreak of Constitutional debate. I was on the road of Brandeis andCardozo then, and they were close tomy heart. Somewhere along that road,though, I must have missed a sign, for Ihave long since settled into a smalltown general practice, and I haven'theard a word from Louis or Benjaminfor years.

Amidst the title exams and falldowncases that otherwise occupy my time, Ilapse into mental pause of late andwonder why I have spent so much passion on such a harmless career. I amnot now a likely candidate to sway byforce of passion the larger course ofhuman events. No cadre of bated

breaths await my every word, and I expectl'lI pass along uncited and unseen.The nature of my living permits me toleave in my wake only ordinary contributions to smaller worlds. Before toolong though, some poor old downtrodden widow will wander totally bereftinto my office with an eviction notice tocheer me up and spark anew the fire.Until then, for passion's sake, I will takeup the violin. It seems a reasonablechoice, considering the alternative.

Copyright 1980-S. Sponte, Esq.

t-(Editor's Note: Law generally isa rather somber profession. True,once in awhile,there is a pleadingor decision couched in a humorous vein. However, we lawyersmust admit that there are few witsin the legal profession. So, it iswith the especial pleasure that wecontinue the Regular Feature inThe Arkansas Lawyer, appropriately entitled "To Wit" and authored by S. Sponte, Esq. All lawyers should be able to identifywith him.)

ImportantNe"WBooksonEducationLa"WThe Legal Aspecrs of Censorship ofPublic School Libraryand InstruclionalMaterials. by Joseph E. Hryson and Elizabelll W. DettyProvides legal. pllilosopllical and practicalguiclelines for SCllOOI officials in the arua ofcensorship. ASSists in preparation ofpoliciesand proceclures for preventing litigalionand adverse public relations.Appx. 350 pages. Ilardbound ...520.00'

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july 1983/Arkansas Lawyer/67

The Tax Equity And FiscalResponsibility Act

Of 1982Part 1

By Joseph M. Erwinand

Paul J. Nicholson

INTRODUCTION

This is the first in a series of threearticles which is designed to explorethe effects of the Tax Equity and FiscalResponsibility Act of 1982 upon theprovisions of the Internal RevenueCode. It is not designed to be a scholarly treatise but a practical workingguide for the general practitioner.

This first installment will cover theindividual and withholding provisions(including pension withholding provisions) of the Act. The second articlewill cover the business, pension andcorporate provisions and the third article will cover the reporting, penaltiesand enforcement, and administrativeprovisions.

MEDICAL EXPENSESAND

CASUALTV LOSS DEDUCTIONS

Topping the list changes made bythe 1982 Act upon the provisions of thetax law is the change in the deductionfor medical expenses. Under pre-82Act law', sums paid for doctors anddentists services were deductible onSchedule A of Form 1040 to the extentthat they exceeded 3% of the taxpayers adjusted gross income. The1982 Act raises this percentagethreshold to 5% of adjusted gross income. In addition, the Act repeals thededuction for amounts paid towardhealth insurance premiums beginningwith tax years starting after 1982. TheAct' repeals the 1% threshold in thededuction of prescription drugs andeliminates the deductibility of non-prescription drugs for tax years after 1983.

Casualty loss deductions and disas68/Arkansas Lawyer/July 1983

ter loss deductions are also modified.Beginning in 1983, taxpayers wishingto take a casualty loss deduction willhave to meet the present $100.00 perloss threshold plus an additionallimitation of 10% of adjusted gross income.In other words, only that portion of acasualty loss that exceeds 10% of thetaxpayers adjusted gross income andalso exceeds $100.00 will be deductible.

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

GROUP TERM LIFE INSURANCE

Employees are not taxed upon thepremiums paid by their employer forproviding them with up to $50,000.00 ofgroup term life insurance coverage.The Act provides that this rule will continue to obtain but that in taxable yearsbeginning after 1983 a category of taxpayer called a "key employee" will betaxed 0" the premiums paid by theemployer unless it can be shown thatthe plan providing the insurance doesnot discriminate in favor of "keyemployees" as to eligibility to participate and in the type and amount ofbenefits that are available under theplan'.

The Act defines "key employee" asanyone who during the plan year or thepreceding four plan years was (1) anofficer of the employer, (2) one of 10employees owning the largest interestin the employer, (3) a person owning

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

For the purposes of applying the testset out above, the constructive ownership rules under Section 318 will apply.However, the aggregation rules underSection 414(b) will not apply in determining whether the individual is a 5% ora 1% owner'.

As for determining whether the plandiscriminates in favor of key employees the plan will not be considereddiscriminatory if (a) it benefits 70% ofall of the employees of the employer,(b) 85% of all participating employeesare not "key employees", (c) it benefitsemployees who qualify under a classification set up by the employer andfound by the treasury not to discriminate in favor of key employees.'

The employees of related employerswill be treated as employees employedby a single employer for the purposesof these tests except (a) thoseemployees with less than three yearsof service, (b) part-time and seasonalemployees, (c) employees not coveredby the group term insurance plan butcovered by a collective bargainingagreement if the group term life insurance was the subject of good faith bargaining and (d) non-resident alienswho receive no U.S. source income.

We do more than print the lawwe put it into perspective...

South ArkansasRon Ford (318) 949-9309

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

The taxpayer is permitted to take certain special itemized deductions to arrive at alternative minimum taxable income. These special itemized deductions are deductible only to the extentthat they have not been utilized indetermining adjusted gross income.The special itemized deductions are:(1) casualty and gambling losses, (2)medical expenses (only to the extentthey exceed 10% of adjusted gross income), (3) charitable contributions, (4)the estate tax attributable to income inrespect of a decedent, and (5) qualifiedinterest".

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

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

U.S. Supreme Court Reports. L EdUSCSFederal Procedural Forms, L EdFederal Procedure, L EdBankruptcy Service, L Ed

THE LAWYERS CO-OPERATIVE PUBLISHINC CO.Aqueducl BuokllllQRochester New York 14694

the Act is computed by first computingthe taxpayer's "alternative minimumtaxable income" (explained below).This figure is then reduced by theappropriate exemption and multipliedby a 20% rate. If the resulting figureexceeds what the taxpayer would oweusing the standard method of computation (that is his regular tax) then theamount by which the regular tax is exceeded is added to the regular tax'.

The taxpayers alternative minimumtaxable income is computed by startingwith the taxpayers adjusted gross income, computed without regard to regular net operating losses. Adjustedgross income is then added to theamount of the taxpayers tax preferences (defined below) for the year.This figure is then reduced by specialalternative minimum tax net operatinglosses (explained below) and furtherreduced by special itemized deductions and by any trust distributions included in income under the "throwback" rules". The result of this computation is the taxpayers "alternativeminimum taxable income". As statedbefore, this figure is then reduced bythe amount of the appropriate exemption which for a married taxpayer filing

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The Act repeals the add on minimumtax and expands the alternative minimum tax for tax years beginning after1982. The tax preferences under thenew law include those under previouslaw plus some additional new ones.

The alternative minimum tax under

ALTERNATIVE MINIMUM TAX

The Act sets out that there will not bediscrimination merely because theamount of life insurance provided toemployees bears a uniform relationship to compensation. It is unclear yetas to whether the present regulationspermitting bracket coverage whereemployees in certain salary ranges areprovided certain coverages are validunder the Act. For example, under

, present regulations an employer mayset up categories in which employeesearning $10,000.00 to $20,000.00 peryear obtain insurance in an amountequal to 200% of salary with employees earning $20,000.00 to$30,000.00 per year obtaining insurance coverage in the amount of 250%of their salary. It is possible that suchcategories will be considered discriminatory.

If the unemployment benefits received by a taxpayer added to disabilitypayments, otherwise eligible for exclusion, added to the deduction for twoearner married couples and other adjusted gross income exceeds thestatutory base amount then the taxpayer must include in income the smaller of the amount of unemploymentcompens.ation or one-half the amountof the excess by which the above totalexceeds the base amount.

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

TAXING UNEMPLOYMENTCOMPENSATION


principal residence of the taxpayer or aqualified dwelling used by the taxpayeror any member of his family during theyear. A qualified dwelling is a house,apartment, condominium or mobilehome not used by the taxpayer on atransient basis'". Qualified net investment income is equal to qualified investment income over qualified investment expenses, and qualified investment income is equal to the sum ofgross interest, dividends, rents, royalties, items treated as ordinary incomeunder the recapture rules, intangibledrilling costs, any net capital gain onthe sale of investment property, anditems of tax preference for excludedinterests and dividends". Qualified investment expenses are expenses directly connected with the production ofinvestment income". However, anydeductions which are tax preferencesare excluded.

In computing the minimum tax base,the taxpayer is permitted to reduce adjusted gross income by a speciallycomputed alternative tax net operatingloss deduction. The alternative taxNOL deduction is essentially the regular net operating loss deduction for ayear with these two exceptions:

(1) In computing the alternativeNOL which may be carried forwardthe loss is reduced by the alternativeminimum taxable income of the preceding year to which it was carried.

(2) The alternative NOL is computed in the same manner as theregular NOL except that (a) it is reduced by the amount of the items oftax preference arising in that yearwhich are taken into account incomputing the NOL and (b) onlythose itemized deductions whichqualify as alternative tax itemizeddeductions are taken into account.

The alternative NOL is used up in thecarryover year by the amount of alternative minimum taxable incomewhether or not the taxpayer is subjectto the alternative minimum tax. And,the NOL deduction for purposes of theregular tax isn't affected by the specialminimum tax computation".

All of the pre-82 Act tax preferenceswhether for the add-on or alternativeminimum tax will obtain as tax preferences under the new Act except thosefor the amortization of child carefacilities and the preference for railroadrolling stock and qualified stock options". In addition, the Act adds thefollowing as tax preferences; (1) interest excluded under all savers certifi-


cates and for post-4 net interest exclusions, (2) dividends excluded underthe dividend exclusion, (3) the excessamounts which are expensed in regardto expenditures for mining explorationcosts, development expenditures andcirculation expenditures, research andexperimental expenditures over theamount which would be deducted ifthese expenditures had been amortized and capitalized on a straight linebasis over a ten year period, and (4) thebargain element in incentive stock options at the time the option is exercised.(This is the amount by which the fairmarket value of the shares at the timeof exercise exceeds the option price.)"

The alternative minimum tax may bereduced by the usual tax credits allowable except that the non-refundablecredits are not allowable." The foreigntax credit is allowable to the extent ofthe foreign tax and the taxpayer'sforeign source alternative minimumtaxable income. Where the alternativeminimum tax exceeds the regular taxamount and an allowable credit iswasted, there can be a carryforward orcarryback of that credit under the usualrules and a use against the regular tax,and not the alternative tax, in the carryforward or carryback year. An exampleis as follows: "X" has a regular tax of$10,000 less $5,000 investment credit.His alternative tax is equal to $8,000 sohis tax is equal to the $5,000 regular taxplus $3,000 excess for alternative tax.In effect, only $2,000 of the credit wasused and $3,000 can then be carriedforward or back."

PROLONGED WRITE OFFELECTION

The Act permits a taxpayer to avoidthe treatment of research and experimental expenditures, intangible drillingcosts, mine development and exploration expenditures and circulation expenditures as tax preferences by electing to write off these expenditures overa ten year period". In the case of lOG's,the Act permits a special election inwhich the lOG can be written off over afive year period taking a certain percentage set out in the statute, of thelOG in each of the five years". Investment credit on the lOG is allowed in theyear in which it is paid or incurred and incomputing the applicable percentage,the lOG is reduced by the basis reduction under the new investment creditrules2

" .

WITHHOLDING PROVISIONS

Section §301" of the new law requires the payor of interest, dividendsor patronage dividends to withholdfrom payments a tax equalling 10% ofthe amount of the payment. The withholding is to be made at the time thepayment is made or credited. The taxpayer receives a credit for the amountof withholding against his income tax inthe year in which the Withholding wasmade. The Act establishes a categoryof exemptions from withholding, and itestablishes a category of exempt recipients. It provides for the election out ofwithholding by the timely filing of anexemption certificate, and it defines indetail the term "payor" and the types ofpayments which are subject to withholding".

The terms exempt individual includes persons who have filed anexemption certificate and whose taxliability for the preceding taxable year is$600.00 or less ($1,000.00 on a jointreturn), individuals who are 65 or overwith a tax liability for preceding years of$1,500.00 or less or $2,500.00 on ajoint return", and simple trusts (beingdefined as trusts which distribute all oftheir income). Also payments tocorporations, governmental bodies,securities dealers, money marketfunds, exempt organizations andnominees, are exempted from withholding". Minimal interest paymentsnot in excess of $150.00 per annum areexempt where the payor has soelected. And, qualified consumercooperative payments are exemptwhere the cooperative has applied forand received an exemption.

Financial institutions are permitted toelect annual withholdings as opposedto making withholdings every time aninterest payment or dividend paymentis made. This election is conditional onthe balance of the account subject tothe withholding not being permitted tofall below the amount of the tax thatwould otherwise be deducted andconditioned on the financial institutionnot permitting the account to be closeduntil the proper amount of tax has beenwithheld".

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

Payors are to make deposits of withheld tax under a system of withholdingto be established by regulations. Theyare liable for the withheld tax to theUnited States and no one else. And,reasonable reliance on an exemptioncertificate in effect at the time the tax isto be withheld will relieve the payor ofliability" .

Interest which is subject to withholding includes interest paid; on registeredobligations, deposits in banks,amounts paid by mutual savingsbanks, savings and loan associations,bUilding and loan associations,cooperative banks, homestead associations, credit unions, industrial loanassociations or similar organizations inrespect to deposits, investment certificates or withdrawable or repurchaseable shares and amounts of interestpaid by insurance companies under anagreement to pay interest, interest paidby brokers and interest paid on accounts held by investment companies". All dividends are subject towithholding, a dividend being definedas a distribution out of a corporation'searnings and profits. Distributions froma Subchapter S corporation in moneymade within two and one-half monthsafter the close of the corporation's taxable year is defined as a dividend andsubject to withholding".

Some interest and dividend payments are excluded from the definitionof interest and dividends. Interestpayments which are excluded include:(1) Interest paid on obligations held bynatural persons, (2) interest on stateand municipal obligations, (3) intereston all savers certificates, (4) amountssubject to withholding of tax on nonresident aliens and foreign corporations, (5) amounts exempt from tax relating to income derived from foreigngovernments, (6) amounts which aresubject to withholding of tax, and (7)amounts paid outside the UnitedStates which is income from sourcesoutside the United States".

Dividend payments which areexcluded include; (1) amounts paid outas a distribution of stock relating to thereinvestment of dividends in stock ofpublic utilities, (2) any amount which istreated as a taxable dividend by reasonof redemption 01 stock or a preferredstock bail-out or in connection with certain reorganizations, (3) any amount ofinterest that is not subject to withholding, (4) to the extent provided byregulations any amount paid by aforeign corporation not engaged in atrade or business in the United States,

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

PENSION WITHHOLDING

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

The Act refers to the amount of aperiodic or non-periodic distributionsubject to withholding as a "designateddistribution". This term is defined to bethe portion of a distribution which is notan amount paid as wages or an amountthat it is reasonable to believe is notincludable in gross income." In otherwords, the withholding is to be madefrom the taxable portion of a distribution.

The payor of a "designated distribution" of any periodic payment mustwithhold from the payment as if it werewage payment for the appropriatepayroll period. 3I The amount to bewithheld is to be determined by reference to "a withholding certificate"which is to be filed by the recipient stating the number of exemptions and therecipient's marital status. If the recipient fails to file a withholding certificate then he is to be treated as a married individual claiming three exemptions. 39

As for withholding on "non-periodic"or on lump sum distributions the Actdivides such distributions into twocategories; qualified total distributionsand non-qualified total distributions. Aqualified total distribution is defined tobe a designated distribution which it isreasonable to believe is made in onetaxable year of the recipient and whichis made under a qualified pension, profit sharing, stock bonus or annuity plan,and consists of a balance to the creditof the employee under the plan." Ac-

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

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

The recipient of a periodic or nonperiodic distribution has the right underthe Act to elect exemption from thewithholding provisions of the Act."Prior to making a distribution the payoris required to notify the payee of hisright not to have the distribution subjectto the withholding rules. As to periodicpayments, the payor must notify thepayee no earlier than six months before the time of the first payment andmust thereafter annually notify thepayee of his right to file, amend or revoke an exemption election." Anyelection made by the payee remains ineffect for the calendar year uniess revoked earlier.

As for non-periodic distributions thenotice must be given no later than thedate of payment. The Internal RevenueService has promulgated regulationswhich set out a suggested form for thenotices and exemption statements."These regulations provide that thepayor may incorporate the electionstatement with a withholding certificatein the same form.

In addition to Withholding requirements, the new Act imposes uponemployers, plan administrators, andissuers of insurance and annuity contracts the duty to report to the InternalRevenue Service, plan participantsand the plan beneficiaries such information as will be prescribed by futureregulations. It is expected that the required information will include information sufficient to identify the amount ofthe distribution, the amount of the accumulated deductible employeecontributions, the amount of accumulated non-deductible employeecontributions, the amount of capitalgain, the amount of ordinary income,the cost basis of any employer securities included in the dist,ibution and inthe case of qualified total distributions

JUly 1983/Arkansas Lawyer/71

information regarding the five year rule.These reporting and withholding

rules for pension payments are effective for payments made after December 31, 1982. The Internal Revenue Service may delay complianceuntil June 30, 1983 where prior compliance would cause undue hardship."In addition, the Internal Revenue Service is authorized to issue exemptionson a case by case basis on pre-July '83payments where the payor has attempted to comply in good faith andhas a plan to assure its ability to complyby July 1,1983." Also, the Act providesthat there will be no penalty levied forthe failure to collect or account forpayments made before July 1, 1983where the payor has made a good faitheffort to withhold and actually withholdsfrom any subsequent 1983 paymentssufficient amounts to satisfy the preJuly 1, 1983 requirements." However,there is no relief for any failure to timelypay over any amount actually withheld.

BACK UP WITHHOLDING RULES

The act provides for withholding atthe rate of 15%, starting in 1984, oncertain payments to a taxpayer whohas failed to furnish his taxpayer 1.0.number to the payor or with respect towhom IRS has notified the payor thatthe number furnished is incorrect. Thenew provision does not apply to payments for which withholding is otherwise required. 49

The category of payments to whichthis rule applies consists of the following; (1) payments made by a person inthe course of a trade or business asrent, salaries, wages, premiums, annuities, compensations, remunerations or other fixed or determinablegain or upon the collection of certainforeign items, (2) payments relating tonon-employees, (3) payments relatingto dividends, (4) payments relating to

Paul J. Nicholson


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

The withholding on a payment described above is required if the payeefails to furnish his taxpayer identification number to the payor or IRS notifiesthe payor that the number the payeefurnished is incorrect. In the case ataxpayer who fails to furnish a numberor who furnishes an obviously incorrectnumber, the withholding obligationapplies immediately and continuesuntil an apparently correct 1.0. numberis furnished."

CONCLUSION

The Tax Equity and Fiscal Responsibility Act of 1982 is a vast and complex law which touches almost everyfacet of the Internal Revenue Code. Itwill take some time for scholars andpractitioners to totally digest and become comfortable in applying its provisions. One can only hope that Congress will refrain from mammoth taxlegislation over the next few years soas to permit the tax community to catchup in its understanding of the full ramifications of T.E.F.R.A.

The next installment will cover thebusiness, pension and corporate pro-visions of the act. 1-_- _

FOOTNOTESUnless otherwise noted all section

references are to the Internal RevenueCode of 1954 as amended byT.E.F.RA 1982.

Medical & Casualty Loss1. *213(a)2. *213(b) and (b)(2), *202(b)(1).

Group Term Life Insurance3. *79 as amended by *244 of T.E.F.R.A.4. *79(d)(6).5. *416(i)(I).6. * 79(d)(3)(A).

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

Unemployment Compensation7. *85(b).8. TEFRA *611(b)(2).

Alternative Minimum Tax9. *55(b) and (d), S. Rept pp 109-111.

10. For good explanation of Throwback Rulessee: McNulty, Federal Income Taxation ofIndividuals pp 320·323 (West PublishingCo. 1978).

11. *55(a) and (1)(1).12. 155(e), S. Rept. p. 110.13. 1155(e)(5)(A); 55(e)(5)(B); 55(c)(5)(c) and

55(e)(8).14. *55(e)(4), S. Rept p. 110.15. 155(e)(5)(A).16. 155(e)(5)(c).17. 155(d), S. Rept. p. 111.18. *57(a), Conf. Rept. p. 475.19. Id.20. *55(c)(1).21. S. Rept. p.l11.

Prolonged Write Off22. *58(c).23. *58(i)(4).24. ConI. Rept. p. 475.

Withholding Provisions25. Codified as §3451 (a) for an explanation of

the policy behind the withholding rules. SeeSenate Report p. 288.

26. *3452.27. *3452(b).28. *3456(b).29. *3453(a).30. §3453(b) and (e).31. *3451 (e)32. §3454(a)33. §3454(b).34. §3454(a).35. *3454(b).

Pension Withholding36. §3405(a)(l) and (d)(2) Policy statement:

Senate Report p. 288, Conference Reportpp. 584, 586.

37. 13405(d)(5).38. *3405(a)(1) and (d)(2).39. *3405(a)(4).40. *3405(d)(4).41. 13405(b)(2)(B) and (C).42. *3405(b)(2)(A).43. *3405(b)(3)(A) and (B); *3405(a)(2) and (3);

*3405(d)(10)(A).44. *3405(d)(10)(B).45. Reg. *35.3405-1.46. *334(e)(5).47. Conf. Report p. 586.48. *334(e)(6).

Backup Withholding49. *3402(S).SO. *3402(S)(3)(A).51. *3402(S)(I).

Joseph M. Erwin

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clift

July 1983IArkansas Lawyerl73

AICLE NEWSby Claibourne W. Patty, Jr.

Executive DirectorArkansas Institute ot

Continuing Legal Education

,It

Several Programs Of Interest Planned For Spring

Banking Law in the 80's-A Semi·nar for Lawyers and Bankers, cosponsored with the Banking LawCommittee of the Arkansas Bar Association will be presented on February18, 1983, at the Excelsior Hotel in LittleRock. The program, chaired by ChrisBarrier of Little Rock, will have asspeakers in small panels, lawyers,lawyer-bankers, and bankers on thesetopics: structure and transitionbranching, holding companies andacquisitions with John Selig, Esq. aspanel leader with William H. Bowen,Esq. and James H. Penick, III, Esq. aspanelists; product development ARMsinvestor accounts, and future prospects with H. Hall McAdams, III, Esq.as panel leader and Thomas A. Prince,Esq. and Bobby Shepherd, Esq. aspanelists; learning to live with bankruptcy with Isaac A. Scott, Esq. aspanel leader and Jim Guy Tucker, Esq.and James E. Smith, Jr., Esq. andpanelists and interest rateregulation-Amendment 60 withJames M. McHaney, Esq. as panelleader and Jim Guy Tucker, Esq. andPat Koch as panelists. The luncheonspeaker, Dr. Robert L. Qualls, Executive Vice-President of Worthen Bankand Trust Company and former Director of the Department of Finance andAdministration under the first administration of Governor Bill Clinton, willspeak on the topic "Peering into theFuture". The Banking Law Committeewas promoted to cosponsor this program since in recent years the bankingindustry has been experiencing substantial changes not only in the areas ofthe regulation of interest rates but byconsiderations of branching and holding company activities, new types of74/Arkansas Lawyer/July 1983

accounts and the upsurge of individualand corporate bankruptcies. Thetheme of this program is "Lawyers!Bring your Banker-Clients! Bankers:Bring your Lawyers-and Tell ThemWhat You Need to Know!!"

The Second Federal Civil PracticeSeminar, cosponsored with the Arkansas Federal Practice Committeesof the Eastern and Western Districts ofArkansas will be presented on March17, at the Excelsior Hotel, Littie Rock.The program, cochaired by Bill Wilson,Esq. and LeRoy Autrey, Esq. will include the topics of pre-trial conferences, hearings on motions, attorneysfees, motion practice with a proposedupdate on bankruptcy law. Since thehighlight of the previous Federal CivilPractice Seminar was the afternoonpanel with all federal judges able toparticipate, there will again be such apanel which will allow each of thejudges to give a four or five minuteopening on their views of the practice intheir courts after which the floor will beopen for questions from the lawyerparticipants on all topics pertaining tofederal civil court practice in Arkansas.This program will be a second in aseries of programs which have beenencouraged by the Eighth Circuit Courtof Appeals and it is expected that thiswill be as well received by the participants this year as the first annual program in 1982.

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

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

The participants in these programs aretraditionally federal and state officialswho are at the decision-making level, aU.S. Circuit or District Judge and seasoned lawyer-practitioners who act asmoderators and workshop leaders.

On the same dates there will be a"race track special" program jointlysponsored with the Young LawyersSection of the Arkansas Bar Association as a part regional meeting of younglawyers including states surroundingArkansas at which the YLS of the Arkansas Bar Association will host for thediscussion of public service programsand to conduct a seminar on Friday andSaturday mornings March 25-26, at theRamada Inn in Hot Springs. The afternoons will be spent at the racetrack,which sport is not available in manysurrounding states. More details on thesubject matter of this course will bemailed out to YLS members within thenext 30 days.

A new program jointly sponsoredwith the Economics of Law PracticeCommittee entitled Automating theLaw Office-A Team Approach will

be presented on April 15, 1983, at theRiverfront Hilton in North Little Rock. Ithas been a concern of the Economicsof Law Practice Committee that manylawyers and law firms are consideringautomation but are not familiar withwhat equipment is avaiiable, how tobest utilize their staff and even understanding the "iingo" associated withthis class of vendors. It is hoped thatthis program will answer many of thequestions heretofore unanswered, anda mailing will be made within the next60 days.

The annual Tax Awareness Institute jointly sponsored with the Taxation, Trust and Estate Planning Sectionof the Arkansas Bar Association will bepresented at the Riverfront Hilton inNorth Little Rock, April 22-23, 1982.The program will be devoted to acomprehensive update on tax planningof business organizations which will involve a comprehensive fact situationinvolving the formation, evolution andeventual dissolution of a typical smallbusiness organization with a discussion at each step including soleproprietorships, general partnerships,securities law, limited partnerships,corporate formation, C corporation vs.S corporations; corporate operationsand tax treatments of liquidations andsales. A brochure more fUlly outliningthe details of this program will bemailed to the bar membership within 60days.

Another first will be a program jointlysponsored with the Health Law Committee of the Arkansas Bar Associationto be held at the Excelsior Hotel in LittleRock on May 13, 1983, which will bedevoted to topics of particular interestto lawyers representing doctors,clinics, hospitals and other health carefacilities due to its emphasis on theareas of medical malpractice, malpractice concerning hospital liability,antitrust problems in the health lawfield, hospital staff privileges and medical office management. This seminarwill be more fully explained in a brochure to be mailed to the bar membership within 60 days.

Yet another first is another programto be sponsored with the ArkansasWomen Lawyers Association to beconcerned with an Orientation of NewFederal Court Admitlees to be held inthe middle or later part of May and willbe a walk through and orientation in theliteral sense of the word during the

morning with a session before a fullpanel of federal district judges in theafternoon culminated by a swearing inceremony. Due to the nature of thisprogram the mailing of brochures willbe limited to those persons who havebeen admitted to U.S. Federal DistrictCourts within the last five years. Thisprogram is patterned after a similarprogram conducted the Northern District of Michigan which was highly successful and will no doubt be well received in Arkansas.

Last but not least please mark yourcalendars for Video-Tape Replays ofthe Fall Legal Institute highlightingone day of real estate transactions andanother day of domestic relations update which will be held at the followingdates and locations: Thursday and Friday, January 27-28, at the MediaCenter of Southern Arkansas University, Magnolia, Arkansas; Thursdayand Friday, February 10-11, PlazaEast Room, Camelot Hotel, Little Rock;Thursday and Friday, February 24-25,Spencer Gallery-Fine Arts Center,UAM campus, Monticello; and Thursday and Friday, April 7-8, AudiovisualCenter, Arkansas State University,Jonesboro. The topics to be presentedwill include all of the topics presented atthe Fall Legal Institute as a video replaywith the exception of crop and pastureleases on Thursday, which will be presented by Dean Jake Looney, live. TheMagnolia workshop will be jointlysponsored by Southern Arkansas University. The Little Rock workshop willbe jointly sponsored with UALR Schoolof Law. The Monticello workshop willbe jointly sponsored by the Office ofContinuing Education, University ofArkansas at Monticello and the Southeast Arkansas Legal Institute. Theworkshop at Jonesboro will be jointlysponsored by Arkansas State University Continuing Education Division andthe Northeast Arkansas Legal Institute.These video replays allow attorneys toattend a major program such as theFall Legal Institute which they were notable to see live either due to a conflict inschedule or the distance involved.

Estate Planning ThemeOf 1983Midyear Meeting

By the time you receive this newsletter the Midyear Meeting of the Arkansas Bar Association, held at theCamelot Hotel, Little Rock, during

January 13-15,1983, will be history. Asa response to the strong preference ofArkansas practitioners, the programcochairmen, Dean Lawrence H. Averill,Jr. and Richard A. Williams, Esq., haddeveloped a day-and-a-half programaround the general topic of estateplanning divided into three specificsessions.

The first session on Thursday afternoon was lead by Dean Averill andRichard Williams and was devoted entirely to drafting techniques pertainingto non-trust wills; trust wills; marital deduction wills; revocable trusts; irrevocable trusts; and trusts for minors. TheFriday morning session lead by Professor L. Scott Stafford with panelistsByron Eiseman, Esq.; Ted Drake, Esq.;F. H. Martin, Esq.; and Joseph Hickey,Esq. was devoted to problem solvingtechniques using specific problems included in the handout materials whichwere considered with emphasis on recent tax law changes. The Thursdayafternoon session was devoted to estate planning for lawyers (and otherprofessionals) and consisted of the following speakers and topics: Thomas L.Overbey, Esq. spoke on income andestate planning for lawyers with emphasis on tax savings techniques during active practice, for retirement and incontemplation of death; William S. Arnold, Esq. spoke on estate planning forprofessionals with particular emphasison disposal of practice or partnershipinterests; and Gregory C. Lathrop, achartered financial analyst and President of Lathrop Investment Management Corporation in Little Rock, spokeon the topic of investment opportunitiesfor professionals. At the time of going topress we expected a total registrationof 150-175 persons.

Also conducted on Thursday morning was the Second Annual Trial Advocacy Competition between the lawschools of the University of Arkansas atFayetteville and UALR. The trialcompetition was held in the restoredsouth courtroom of the Old FederalBuilding, UALR School of Law, andwas sponsored by the Arkansas Chapter of the American Board of Trial Advocates. The law school representedby the prevailing team is entitled to receive the "Henry Woods Annual Awardfor Trial Advocacy" inscribed with thename of the law school and the teammembers with the plaque to be retained by the prevailing law school untilthe next annual competition. a.......


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II

An Important Announcementfor

Arkansas Bar Association LawyersIn 1977 Robert P. Wilkins and the Arkansas Bar Association produced the Wills and

Trust System for Arkansas lawyers.

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

2. Congress enacted the Tax Equity and Fiscal Responsibility Act.

3. R.P. W. Publishing Corp. has published an expanded national version of Robert P.Wilkins' book: Drafting Wills and Trust Agreements: A Systems Approach. The ERTAsupplement to this book contained over 600 pages.

It is not economically feasible to update Wills & Trusts System.

The Arkansas Bar Association and Robert P. Wilkins have worked out a specialarrangement for Arkansas lawyers which will allow them to update Wills & Trusts System andjoin thousands of lawyer subscribers from around the country by using Drafting Wills andTrust Agreements: A Systems Approach with a special Arkansas supplement written byRichard A. Williams.

Arkansas Bar Association members have until midnight March 31, 1983 to purchaseDrafting Wills and Trust Agreements: A Systems Approach at $50 (plus $3.75 for shipping andhandling) regular price: $85.

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Second Injury Law,OLD AND NEW

Part IISECOND INJURY LAW PRESENT

by W. W. Bassett, Jr.

(Editor's Note: This article is the second of a three-part series on SecondInjury Law taken from the keynotespeech given by W. W. Bassett, Jr. ofFayetteville, during the 1982 Workers'Compensation Institute. Part/-Second Injury Law Past appearedin the January 1983 issue of The Arkansas Lawyer.)

Now we move on to the Second Injury Law Present. Again, the SecondInjury Law Present is most probably amisnomer. As we saw in a review of thecases under 81-1313(f)(1) and 811313(f)(2)(i)(ii) & (iii), we very rarelysaw application of the Second InjuryFund even raised by a party, never sawit actually defended before the Commission or in the courts as a separateentity and as early as 1950 saw its application severely limited. What then,has brought to life this sleeping giantknown as the Second Injury Fund? Itmay have been the inequitable resultsof Sandy and the later Mullinax caseor perhaps others at the level of the FullCommission which we don't knowabout, or it may have been compromise legislation between management and labor in an effort to enact alaw that will "fit" in the eighties and theyears to come. I personally don't know.Whatever, 81-1313(f)(i) was passed bythe Legislature on March 2, 1979, butwas to "commence" January 1st,1981. The immediate problem was: willthe Act be given retroactive effect orwill it apply only to those cases thatarise after January 1st, 1981? We nowhave an answer to that questionalthough we didn't for sometime and it78/Arkansas Lawyer/July 1983

proved to be a real problem for some.The question of course was whetherthe new Act(s) were to be treated retroactively or whether they were to beprospective in nature. In HarrisonFurniture v. Chrobak, Ark.App. _: 602 SW.2d 955 (1981),the Court of Appeals held that the newAct applied only to cases that aroseafter January 1, 1981 (Note: The fullCommission adopted the Court of Appeals ruling of Chrobak in Earl Beairdv. Reynolds and Williams and HomeInsurance, Opinion dated January 7,1982).

The period of Second Injury LawPresent is best represented by a triumvirate of cases after January 1, 1981 , tothe present time. Isay present becauseeven though the new amendments arein full force and effect (the 1979Amendment became effective on January 1, 1981 and the 1981 Amendmentbecame effective on March 3, 1981.),the bulk of these cases have hardlyreached the Administrative Law JudgeLevel let alone the Full Commission orthe Court of Appeals. This area of law isperhaps the most interesting eventhough this period is the shortest inlength of time, and it is by far the mostrevolutionary in terms of "change".During this period, our Court of Appeals broke with established cases andgave us some idea what we might expect in those cases to follow in the future.

At the time of his employment withChicago Mill & Lumber Co., SterlingGreer had a left prosthesis as a result

of a non-related compensable accident many years prior to January 19,1978. In January of 1978, the claimantsuffered an additional injury which resulted in a 40% impairment to his rightleg. Mr. Greer maintained that under81-1313(f)(2)(iii) he was permanentlyand totally disabled. The Law Judgeheld that Mr. Greer was totally andpermanently disabled as a result of thetwo injuries and on the basis of 811313(f)(2)(iii) concluded that the second injury fund would apply. However,the Full Commission following, although not mentioning, the case ofSandy, found that since the claimanthad not sustained a total loss of theright leg (remember only 40%) as theresult of the second injury that the Second Injury Fund would not apply.

In a novel approach, the ArkansasSupreme Court in the case of ChicagoMill and Lumber Co. v. Greer, 270Ark. 627; 606 SW.2d 72 (1980) metthe old law of Sandy head-on and whilequoting from Act 253 of 1979, did notuse that Act as the basis for its decisionbut instead utilized the rationale andreasoning contained in the new 1981Act. The Court found that: "The respondent would be liable only for thedegree of disability that the employeesuffered during his employment with itand the Second Injury Fund should beresponsible for the additional compensation". The Court remanded the caseto the Full Commission with instructions to: "Determine the liability ofChicago Mill and to require the SecondInjury Fund to pay the difference between this amount and permanent and

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ers' Compensation Practitioners whohad to sift through the effects of thesetwo cases? The Full Commissiongrasped the difficulty and I think quitevividly and articulately set forth theproblem all of us faced as a result ofthese two cases in the June 17, 1981case of Honeycutt v. Craighead Memorial Hospital. This case involved aclaimant who had a second grade education and whose experience had beenprimarily manual labor. The claimantincurred a compensable injury to herback on March 16, 1978 whileemployed by the hospital. She hadsurgery on two separate occasions andwas released in 1979 with a 30% ratingto the body as a whole. Prior to theclaimant's compensable injury, shehad incurred a noncompensable injury to her back for which surgery hadbeen performed in 1974. There was nofunctional rating as a result of this 1974surgery but the doctor who performedthe surgery as a result of the 1978 injury estimated her disability wouldprobably be between"10% and 15% tothe body as a whole as a result of this1974 injury". The claimant had returned to work following the first noncompensable injury and the lay testimony reflected that her condition wasin no way affected by her 1974 injury.Meanwhile, the respondents contended that at least a portion of theclaimant's disability at the present timewas attributable to her February, 1974injury and they therefore invoked theSecond Injury Statute.

continued on page 80

not the result of a work related injury,and then found for the first time that inorder for Section (f)(2)(ii) to apply, theprior injury had to be a work relatedinjury or an injury in the "compensationsense". This proved to be incorrect aslater recognized by the Court of Appeals. The tragedy of Marshall is thatthe Court of Appeals reached the rightresult for the wrong reason. Marshallmuddied already dirty water involvingquestions of apportionment and theSecond Injury Fund. However, Marshall is mentioned herein only for itsimportance at the time it was decidedfor it is no longer the law and to showand prove a prior injury, that particularinjury in question need not be work related or adisability in the compensationsense. After all, the entire reason forapportionment, and in turn the application of the Second Injury Fund, is basedupon the fact that the worker should befUlly compensated but at the same timeshould not receive a windfall. Secondly, and just as importantly, theemployer and carrier should not haveto pay for an injured worker's disabilitythat occurred sometime prior to the accident in question.

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

total disability."

This was a landmark case. For the1sttime, it opened up Sec. (f)(2)(iii) andexposed the Second Injury Fund tohuge awards of permanent and totaldisability whereas for 30 years awardshad been unavailable because ofSandy and the prohibition against applying Sec. (f)(2)«(iii) unless there wasa total loss or use of the member of thebody. The Court didn't overrule Sandybut so distinguished it that I respectfullysubmit that it no longer has weight. Notonly did the Court in Greer brush asideSandy's requirement of total loss oruse of the member before Sec. (f)(2)(iii)applies, but the Court also held that theprior injury need not be an injury "in thecompensation sense" before Sec.(f)(2)(iii) applied. This brings us to thesecond in our triumvirate of cases,namely Marshall v. Ouachita Hospital, 269 Ark. 958, 601 SW.2d 901(1980) and affirmed on Second Appeal_____ Ark. App. __; 621SW.2d 7 (1981). The Court of Appealswas faced with a worker who was injured in 1978 and later underwent alaminectomy at L-5, S-1. There was nodispute that as a result of this injury andthe claimant's prior condition that hewas permanently and totally disabled.But, had the claimant suffered a prior"injury"? Was this injury a prior "compensation injUry"? Hardly, the claimant's prior "injury" that he suffered wasthe result of being stricken with poliowhen he was 21 years old. The claimant began his career at the OuachitaHospital wearing braces on both legsand a back brace which connected withthe leg brace. He also was required touse two crutches in order to walk. He,however, had served as a salesman foran insurance company, a shoe company and for a rubber company andhad received his GED as well as havinggraduated from an accounting course.He had a long history of work with theOuachita Hospital for over 22 yearsand in short was "a good employee".Keep in mind this is not a Sec. (f)(2)(iii)case, but instead involves Sec. (f)(2)(ii)or an injury 'to the body as a whole'.The Administrative Law Judge foundthe claimant to be permanently and totally disabled, but took a rather novelapproach and apportioned 80% of theclaimant's award, finding that this wasthe amount that represented prior disability and to which the respondentswould be entitled to receive credit. TheCourt of Appeals reversed finding thatthe polio suffered by the claimant was


Second Injurycontinued from page 79

What then was the Commission todo? In its conclusion, the Commissionrecognized that the Case of Marshallv. Ouachita Hospital which had beendecided by the Court of appeals mostprobably was still the law. Remember,the Marshall case which was decidedfirst by the Arkansas Court of Appealsheld as follows:

"A claimant had not suffered any jobrelated injury as defined by theworkers' compensation act nor anydisability since he was disabled as aresult of polio and hence the priordisability as a result of the polio wasnot subject to apportionment".

On the other hand, Chicago Mill v.Greer decided after Marshall, andspecifically on October 13,1980, held:

"Neither can we agree with the respondent fund, that the first injurymust be an injury that would havebeen compensable under the Act."

How did the Full Commission handlethis conflict between the courts? With abit of artful legal draftsmanship, that'show. Talk about the "artful dodger" inOliver Twist, well our Commission puthim to shame in their legal dexterityand gymnastics in writing this opinion. Iquote in part from it:

"We assume that any inconsistencythat may exist as a result of theabove cited Marshall and Greercases, if indeed any inconsistencyexists, (note the diplomacy involved) will Ultimately be resolvedbetween the respective courts."

The poor Commission! What was itto do to escape its no-win situation? Itwas damned if it followed Greer anddamned if it followed Marshall. TheCommission did the only thing it coulddo and that was to simply wait out thejurisdictional battle between the Courtof Appeals and the Supreme Court,knowing well that a definitive statementfrom the courts as to whether Marshallor Greer represented "the law" wasbound to happen. The only questionwas when. Well, Marshall didn't lastlong. lt did however pave the way forthe third of the Second Injury Law Present cases, namely Harrison Furniture v. Renard Chrobak, __ Ark.App. __; 620 S.W.2d 965 (1981).

BO/Arkansas Lawyer/July 19B3

Mr. Chrobak had been afflicted sinceinfancy with a spastic left hemiparesis.The neuromuscular condition manifests itself in a withered left hand, armand leg and resulted in both of his extremities on the left being smaller thanthe right. The claimant also walked witha limp and he had little or no use of hisleft hand and arm. On October 11,1979, the claimant suffered an injury tohis right hand which severed two fingers and severely damaged his entireright and in that it was essentially functionless.

The Administrative Law Judge foundthat under Davis v. Stearns-Rogersand Rooney v. Charles that the claimant's prior left hemiparesis was not adisability in the compensation sense.The Law JUdge reasoned that since theclaimant had worked every day of hisadult life with hemiparesis and hadnever missed any work that the disability was in effect "latent" and did notrepresent an active disability. As suchthe respondents were not entitled toapportionment. The Law Judge foundthe claimant to be permanently and totally disabled and refused to apportionany disability whatsoever.

The Full Commission meanwhile affirmed the Administrative Law Judgeas to permanent and total disability butfor a different reason. The Full Commission did not mention the Davis caseof Rooney v. Charles in their affirmance but mereiy held that the LawJudge's action and failure to apportionwas proper because the claimant'sdisability was similar to that disabilitythat Mr. Marshall suffered when hewent to work for the Ouachita Hospital,i.e. polio, and therefore under the thenlaw, not apportionable. Keep in mindthat when Chrobak was heard by theAdministrative Law Judge that Greerhadn't yet come down. In fact, when thecase was heard by the Full Commission, Marshall was the law, bad law,but nevertheless, the law. The FullCommission affirmed the Law Judgeon the basis that the record reflectednot only that the claimant was permanent and totally disabled but that apportionment would not lie-but for adifferent reason-strictly under Marshall which was then the law, the priordisability was nonapportionable since itwas not a disability that resulted from acompensable injury. They didn't wantto, I think, but the Full Commission reluctantly followed Marshall. The Courtof Appeals did likewise. That is, theCourt criticized Marshall but ended up

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

Let's now take a quick look at whathappened to Greer and Chrobak onremand.

You recall that the final result inGreer was that the claimant was permanently and totally disabled as a result of the two injuries and that the matter was finally remanded to the Commission to decide two things: One, thedegree of disability that the claimantsuffered during his employment withthe respondent and, Two, the ultimateliability of the Second Injury Fund. Yourecall that the Second Injury Fund wasto be responsible for all disability in excess of what the respondent employerwas to pay. The Full Commission onremand (Op. Del: 4-14-81) found thatChicago Mill and Lumber Companywas to be responsible forthe Scheduleand that the Second Injury Fund wasresponsible for all additional amountsbut proceeded to hold that Greer's disability was one other than permanentand total and placed a "cap" on theclaimant's total disability and awardedhim $37,800.00, the maximum thenpayable under law.

The maximum that Greer could thenrecover would be 450 weeks of disability. Further, the Commission foundthat the disability as a result of the second injury was 40% to the right lowerextremity (i.e. 40% of 175 weeksequals 70 weeks) and the employerpaid 70 weeks. Thus, if we are going tofollow strictly the letter of Greer, whatwe should do is find out the amount ofdisability that Mr. Chrobak suffered asa result of the injury with HarrisonFurniture Company and then hold theSecond Injury Fund liable for the difference. That is indeed simple enough.

Following Greer, Chrobak's injurywould be treated as being "one otherthan permanent and tota'" and a "cap"placed on his award of 450 weeks butsince he was injured one year laterthan Mr. Greer, award him benefitsunder Sec. 10(b) not to exceed$50,400.00. Remember, Mr. Greer received only $37,800.00 as a cap butthis was because he was injured inJanuary of 1978 and the maximumamount of compensation at that timewas $37,800.00 as opposed to themaximum of $50,400.00 applicable onOctober 11, 1979 when Chrobak wasinjured for a disability other than permanent and total.

On remand by the Commission tothe AU, the Judge simply had to figureup the disability that was allributable tothe claimant's last employment. Sincethe claimant received an injury to histhree fingers this requires nothing morethan totalling up the anatomical loss ofthese three fingers, require the respondent to pay this amount and thenorder the Second Injury Fund to pay thedifference. Or, following Greer strictlyto the leller, the employer in Chrobakwould pay the same 70 weeks as didthe employer in Greer and the SecondInjury Fund would be exposed to thesame 380 weeks. Simple. As long asthe Administrative Law Judge was ofthe same persuasion as the Commission was in Greer. He wasn't. Basically, the Law JUdge in Chrobak onremand found that Mr. Chrobak waspermanently and totally disabled as hehad found prior to the case going onappeal and as the Full Commissionand the Court of Appeals so found. Hehowever did not find that the disabilityshould be one "OTHER than permanent and total" and thus have a capplaced on the award in the amount of$50,400.00

Anyway, correct or not, on remand,the Law Judge concluded that the effect of Greer was to follow the spirit, ifnot the leller, of the 1979 and 1981Amendments. It should be kept in mindthat the Court of Appeals in Chrobakdid not indicate whether the maximumamount should be under Section 13 asa disability "other than permanent andtotal" or whether it should be underSection 10 of the Act. The Law Judge,right or wrong, pointed out in his opinion that nowhere in the Greer orChrobak cases was there any intention whatsoever to treat the disability ofthe claimants as being other than permanent and total and stated that if theCourt was following the new 1979 and1981 Amendments that Chrobak andGreer would have both been entitled toreceive permanent and total disabilityand not have their respective conditions treated as a disability "Otherthan permanent and total" and "capped" at the smaller figure.

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

all of a sudden the Second Injury Fundwas held responsible for tremendouslyhuge awards there heretofore hadbeen either the responsibility of the carrier either in whole or in part or hadresulted in smaller awards to theclaimant by virtue of the rule of apportionment? No maller, J am advised thatChrobak has been sellied so that caseis over.

This perhaps is a good time to makea distinction between the Death andPermanent Total Disability BankFund and the Second Injury Fund.They are two different funds with entirely different functions. As we mentioned at the beginning of the talk, thereis a difference between the Second Injury Law and the Second Injury Fund.Likewise, there is a difference betweenthe Second InjUry Fund and the Deathand Permanent Total Disability BankFund. The Death and Permanent TotalDisability Bank Fund is found at 811310(c)(2). It is designed to compensate employees after the $50,000.00cap is met and as of March 1, 1981,$75,000.00 is the maximum cap. Thus,a claimant who is permanently and totally disabled is able to receive theapplicable compensation rate for anunknown number of weeks. Now it is amathematical certainty simply by dividing the number of applicable weeks bythe claimant's compensation rate as tohow long that particular person will receive indemnity benefits from the insurance company. But what happensafter the $50,000.00 (or $75,000.00)limit has run? Again, we are not talkingabout cases where there is applicationof the Second Injury Fund. What we aretalking about is that once the$50,000.00 has run, who will make indemnity payments to this permanentlyand totally disabled worker? Let's seefrom an example as to how the Permanent and Total Disability Bank Fund issupposed to work.

If our friend again, Harry, is permanently and totally disabled and he hasearned wages entitling him to a compensation rate of$100.00 per week, hemay expect to draw compensation for500 weeks. Very simply, he draws$100.00 a week for 500 weeks and theinsurance company kisses him goodbye after paying the statutorymaximum. But wait a minute, whenHarry was injured, he was only 20years old. If he receives compensationfor 500 weeks, or approximately 9V2years, is he going to be a ward of the

Government at only age 30? No, at thispoint, the Permanent and Total Disability Bank Fund kicks in and picks up thesame $100.00 compensation rate forHarry for as long as he remains totallyand permanently disabled, probably forlife.

LEGAL RESEARCH& WRITINGBy Licensed Attorney

Former Research EditorUALR Law JournalFormer Assistant

Reference LibrarianUALR Law Library

References FurnishedOn Request

Contact: N. MARIAN EPPERSON, Attorney at Law, 1700 First National Building, Litlle Rock, Arkansas 72201.Phone: 378-0112 or 378-0106.

LABORRELATIONSMANAGER

Capable of negotiating and administering positive collectivebargaining agreements.Minimum two years experience inactive labor relations environment. Send resume with salaryhistory to Fleming Companies,Inc., Greg Belsheim, P.O. Box26647, Oklahoma City, qK73126


ARKANSASBAR fOUNDATION

by: Randall W. Ishmael

appointed to review the Constitutionand By-Laws, with a view to updatingsome of the functions of the Foundation. A report on their findings andrecommendations will be made in ournext column. f--

ru, It' 1,,,1 w r "1111&"" . Ill" 'lUI" IIh.",. ",' ~ 1" "II h.·aulif"I ..·.)· of 1"'''0'''''1( II ("r"..... c..ll"~I1". 1'1..-fltlllil)' ",,,,,I I,," "'..". 1I1.'....·.. i ... ;.,. or "1Ic1, r.' .....",·

th ...n,·... 1'1... !'lift i,. " .. t ..1i ill thO' .""",,,1"110"". Mrmo-rilll O....k 1'1"1. "r,,"It~·. i" I." .1 ..,I....li1l1". ~I ..m..rilll"ilh m"y I.......", to II", Arkllll~a. Rllr C.·III'·", 11...uw",,,rlltl.'.r,l (b.. t....·) "ftllt' Ark......u Uar F"ufltlil-Ii"" i~ f....",.I.",1 Ie 1'....."'1'11,. t1.'lh"r.·d "1'0" ....cri,1I §..r Ii,," ",rmuri.1 Ilill.

IWE "'"C"''''OWLEOGE WITH G*AT[;I'l,)t. AW*[;CIATION

T,..IE RIECIE''''' 01' A GIENIEROUS Mt:MOR1AL G'FT

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~TilE AHKANSAS B/\H FOUNDATION

tWO WEST MAHKIL.\~I

lIl"U: HOCK, A.RKANSAS 72201

I

Space does not permit the recounting of the many other projects of theArkansas Bar Foundation. The threeselected cover public legal education,Bar discipline and standards for criminal justice. What is more important isthe par excellence of the treatment ofthese subjects and the permanentcontribution to the Law.

We are not content to "rest on ourlaurels." Two committees have been

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

(1) "You and the Law" is a T.V.series of 1Dcolor 3D-minute film to beintroduced late in February 1983 onEducational T.V. in Arkansas. Theseries has been prepared under theauspices of the School of Law, University of Arkansas, with funding by theArkansas Bar Foundation. AssociateDean David Malone serves as producer and moderator. Each film is shotin different locales with lawyers fromacross the State. Each subject istreated for the lay person, and is independent of the others. Changes can bemade in each film, as the related lawchanges. Three more subjects areproposed for future filming.

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

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

"The idea of a bar foundation couldhardly be classified as revolutionary.Indeed, bar foundations of varioustypes have been in existence for manyyears, and have been employed for anumber of differing purposes. With afew notable exceptions, however,bar foundations have tended to bepassive organizations, often seekingnothing more than a single purpose related to the tax advantage it could provide. According to the 1978 surveytaken by the National Conference ofState Bar Foundations, it is evident thatmost bar foundations have amountedto little more than rather inactive committees of the state or local bar association. It frequently has no genuine autonomy from the bar, and its ambitionsoften stopped with its acting as a depository for a few memorial or otherspecial purpose contributions."-TheBar Foundation-Recognizing aProfessional and Public Responsibility (1979)

The Arkansas Bar Foundation's finereputation around the Country is enigmatic to members of the ArkansasBench and Bar, even to those lawyerswho are familiar with it. However, mostlawyers know little about "the" Foundation. We want all to know "all" about ourorganization.

The Arkansas Bar Foundation is oneof the notable exceptions. It is an ongoing organization-ever growing,developing and producing. In fact, inThe Bar Foundation, the ArkansasBar Foundation is reported as one of, ifnot the, best among the state barfoundations--even its Constitution andBy-Laws are published in the Appendices "as the way to go."

c...c:-<

ARKANSAS BARASSOCIATION

SEVENTH ANNUALWORKERS' COMPENSATION

INSTITUTE

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FRIDAY, MARCH 4, 1983CAMELOT INN

LITTLE ROCK, ARKANSAS

1983 WORKERS' COMPENSATION INSTITUTE

REGISTRATIONREGISTRATION FEE .....•.•.••.....•.•........•.•.... $50.00

I (Includes luncheon, coffee breaks, and Institute).IIo

~ GUEST LUNCHEON TICKETS @ $9.00 __

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ffilNAME _

ADDRESS _

Mail REGISTRATION With Check To:

ARKANSAS BAR ASSOCIATION400 West Markham

Little Rock, Arkansas 72201

LEGAL ECONOMICSBy: Kline D. Strong

Time/Accounting/Billing Programs: A Tax TrapFor starters, consider the difference

between a 'time /accounting and billing' package and a fully-integrated office accounting program-<:alled theGeneral Ledger or 'GL' for short. Although a good so-called 'billing' package is indispensable, it alone leavesmuch to be desired and-if not carefully monitored-<:an lead to calamitous consequences. The deficienciesof the typical 'billing' package will beillustrated before the hidden haymakeris discussed.

The Typical Billing PackageFor a GL program to function satis

factorily in any business, the 'billing'sub-system must be near foolproof andvery efficient because so much 'lifesustaining' paperwork is involved. Thisis particularly true of lawyers where'services' need to be so fully describedas contrasted to merchandise sold byunits bearing substantial markupswhich are paid for without explanationsof any kind. So keeping track of timeand of 'advances'-the so-called clientcosts advanced by lawyers-is bothessential and tedious for without accurate records of these data, the preparation of client billings would be chaotic.

In fact, worse than chaotic, becauseempirical, irrefutable statistics showthat timekeepers NET what nontimekeepers GROSS-about 40%morel

So a good TAB system-Time /Accounting & Billing-must include suchfundamentals as...

• proof by screen display that thetimekeeper, the client, the manerand the legal-service time are allcorrect when data is entered,not weeks later when a bill is prepared;

• standard 'rates' must be modifiable by timekeeper both whentime is recorded and later when adraft bill is prepared for review


before being (1) changed or (2)mailed;

• client 'matters' must be kept andbilled separately so 'tax-deductible' payments will not be lostthrough commingling with personal expenses-and for a hostof other good reasons;

• non-check advances such aslong distance telephone andphotocopy expenses-where aseparate check is not written foreach client/matter beingcharged-must be easily andaccurately chargeable whenmade but subject to be 'writtenoff' during the billing process iftheir 'then totals' are out-of-Iinewith the final fee; so-called retainers or other client prepayments-and any other creditbalances-must be subject toallocation as between (1) clientadvances and service time andalso (2) among the lawyers rendering services, so that productivity reports are accurate.

Deficiencies in the TypicalTAB Package

Even if the time /accounting /billingpackage performs all of these 'billing'procedures perfectly, it would bedefineably deficient in that. ..

• a TAB subsystem has nothing atall to do with the assets, liabilitiesand equity accounts of the balance sheet or

• the income and expense accounts of the profit and lossstatement. ..

hence, all ofthese vital records mustbe kept manually. As bad as this situation is, the mingling of computerprepared bills and manually-maintained books may produce an evenmore formidable problem-the taxtrapl

The Tax TrapEveryone knows that 'advances' of

client costs by lawyers are in reality'loans' on open account. As such, theyare not reportable as income whenreimbursed by the client. Thus, whenthe 'billing' system itemizes such 'advances' on client bills separately fromfee income-and they are repaidonly fee income is reported as taxableincome.

Now, all of this is perfectly properprovided the GL accounts are alsoadjusted, but then that's the problemisn't it-the computer does not haveanything to do with these GL accounts. So what happens?

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

2. The Problem. When the computer'bills' the client, its job is done. Butthe aura of computer 'perfection' lingers longer and the secretary /bookkeeper may well ignorethe repayment of 'advances' since,as everyone knows, these are not

"Continued on page 85

EXECUTIVE COUNCIL NOTESBy Annabelle ClintonSecretary-Treasurer

\

Minutes Of The Executive Council MeetingThe Executive Council met on De

cember 11, 1982, and addressed thefollowing issues:

YOUNG LAWYERS SECTIONPROJECTS: The Executive Councilwill recommend to the House of Delegates a project sponsored by theYoung Lawyers Section which will provide for the pro bono representation ofthe low-income elderly in Arkansas.The Disaster Relief Committee hasmade the necessary arrangements forresponding to requests for legal service teams in disaster areas so designated by the President as a result ofthe recent tornados and flooding. TheYoung Lawyers Division of the American Bar Association will have an affiliate outreach regional program at HotSprings, Arkansas, in March, 1983.The Council approved the allocation of$1,000.00 to the Young Lawyers Section for payment of expenses incurredby that Section's Executive Council inattending the ABA outreach program atHot Springs.

FTC AND LSC: The Counciladopted a memorial on lawyers and theFederal Trade Commission urgingU.S. Senators Dale Bumpers andDavid Pryor to support and vote for HR6995 or Senate 2499 with the McClureAmendment attached, which bills re-

A Tax TrapContinued from page 84

fee income for tax purposes. Then,when tax returns are prepared, oniythe accumulated 12-month totals offee income are included but the entire totals of the telephone andphotocopy expense accounts arededucted. In sum, advances repaidare not included for tax purposes butthe same amounts are deducted asexpenses.

3. Examples. Smith & Jones, a 4-manfirm, advance $400 a month on theaverage for telephone and photocopy expenses allocable to clients.

strict the jurisdiction of the FederalTrade Commission with regard tolawyers and other professionals regulated by state regulatory authorities.With regard to the national Legal Services Corporation, President Shaverreiterated that the Association supports LSC but would not become involved in the controversy over restricting its activities and funding.

BANKRUPTCY REFORM: TheCouncil requested the Creditors'Rights Committee to submit a resolution, in alternative forms, for consideration by the House of Delegates at itsmid-year meeting. Alternative A favorsenactment of Federal legislation providing for the appointment of additionaljudges who are qualified to exercisethe Federal judicial power under ArticleIII of the Constitution of the UnitedStates. Alternative B favors deferral ofenactment of permanent Federal legislation to correct constitutional infirmities of the Bankruptcy Reform Act of1978 until the organized bar of Arkansas and the United States have had anopportunity to develop and adopt recommendations concerning such legislation.

LEGISLATION: The Association'slegislative package has been preparedand will be filed at the proper time. Re-

If the clients had paid these expenses independently as theywere incurred, no tax implicationswould have arisen whatsoever, but ifSmith & Jones deduct the entire$4,800 annual amount as expensesbut do not include this sameamount as income when repaid,they have in reality claimed $4,800in expenses to which they were notentitled.

4. The Answer. The answer is not todiscontinue the use of a good TABsystem, the answer is to acquiresoftware which will perform all of thebookkeeping functions for the office,

gional briefings regarding the Association's legislative package have beencompleted. However, LAWPAC contributions for the support of lobbying efforts by the Association total only$2,600.00 as of December 1, 1982.The Council requested the Jurisprudence and Law Reform Committee torefer to the House of Delegates at itsmid-year meeting a proposed constitutional amendment to remove jurisdiction for juvenile matters from the countycourt. The Council voted to support theArkansas Judicial Council's proposedamendments to the judicial retirementlaw.

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

t-including preparation of fully-aajusted GL accounts, as well ashandling all TAB functions properly.Thus, in a fully-integrated dataprocessing system, when telephone, photocopy or other 'expenses' are charged to clients, theyare automatically deducted fromthe appropriate expense accounts. Then, if these 'charges'now booked properly as client'advances'-are later reduced during bill preparation or 'written off' asuncollectible, they are properly deducted at that time as bad debt ormiscellaneous expense. i--


LAW SCHOOL NEWS

Dean J. W. LooneyAssistant Dean Ellen Brantley

SCHOOL OF LAW, UNIVERSITY OF ARKANSAS AT UTILE ROCKFACULTV NEWS

Dean Lawrence H. Averill, Jr. hasrecently published two articles. His article "Valuing Oil and Mineral Interestsfor Estate Planning Purposes," appeared in volume 17, issue 2 of theLand and Water Law Review.Another article, "How to Value TradedSecurities for Transfer Tax Purposes,"has been published by Prentice-Hall,Inc. in Successful Estate PlanningIdeas and Methods. Dean Averillserved as cochairman of the MidyearMeeting of the Association and spokeon Estate Planning Drafting Techniques.

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

Professor Fred Peel continues hisvisiting professorship at the College ofWilliam and Mary during the springsemester, and Professor SusanWebber remains at Louisiana StateUniversity. Donaghey DistinguishedProfessor Robert R. Wright is servingas Distinguished Visiting Professor atthe University of Cincinnati. All three ofthe visitors will be returning to UALR inthe fall of 1983.

An article by Professor M. E. Mullins, "Creation Science and McLean v.Arkansas Board of Education: TheHazards of Judicial Inquiry into Legislative Purpose and Motive," has beenpublished in the most recent issue ofthe UALR Law Journal.

Several faculty members attendedthe Association of American LawSchools meeting in Cincinnati, Ohio,January 5-8. Among those attendingwere Professors Fenton Adams, RuthBrunson, Ken Gould, James W.Spears, Norman Stein, and RobertWright.


EIGHTH CIRCUIT TO SIT ATSCHOOL OF LAW

A panel of judges of the Eighth Circuit Court of Appeals will sit in theSouth Courtroom of the Old FederalBuilding the afternoon of February 2.The panel will be Chief Judge DonaldLay, Judge J. Smith Henley, andJudge Richard S. Arnold. The Courtwill hear three arguments and thenconduct an informal session with students and faculty.

NEW SCHOLARSHIPSTwo new scholarships have been

donated to the School of Law. TheBrian MacMillan Scholarship wascreated in memory of a 1979 lawschool graduate by his friends and family. It goes to a Trial Advocacy student.

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

ALUMNI ENTERTAINEDDean Lawrence H. Averill and his

wife, Suzanne, entertained law schoolalumni at a party at their home in October. Cohosts for the party were thePresident, President-Elect, and PastPresident of the UALR Law SchoolAssociation, Mike Bearden, DianeMackey, and Frank Whitbeck. Although UALR School of Law wascreated in 1975, the graduates of itspredecessors, the Arkansas LawSchool and the Little Rock Division ofthe University of Arkansas School ofLaw, are considered alumni and areactive in the organization. Dean Averillhas already announced his plan tomake this an annual event, and plansare currently being made for an alumniget together this spring.

TRELEASE TO GIVEALTHEIMER LECTURE

Professor Frank J. Trelease ofMcGeorge Law School, University ofthe Pacific, will deliver the Ben J. Altheimer Lecture on Friday, April 8,1983. Professor Trelease is DeanEmeritus of the University of WyomingCollege of Law and a widely knownscholar in the field of water law. Hereceived the BA and LL.B. degreesfrom the University of Colorado and theS.J.D. from the University of Wisconsin.

Dean Trelease will speak on "Arkansas Water Law: Needs and Choices."The lecture will be held at 7:30 p.m. onApril 8, in the South Courtroom of theOld Federal Building at the law school.A reception honoring Dean Treleasewill be held in the Law Center followingthe lecture. All members of the Association are invited to attend the lectureand the reception.

Dean Trelease is the author of numerous articles and casebooks on waterlaw and natural resources law, including Water Law, (3rd Ed. 1979, WestPUblishing Company). He has acted asa consultant to the States of Alaska,Nebraska, and Wyoming on reformand revision of water laws, and as general consultant to a number of cities,industries and companies on water lawand litigation. He served the federalgovernment as General Counsel forthe Missouri Basin Survey Commission, and as consultant to the PublicLand Law Review Commission, theNational Water Commission and theNational Commission on Water Quality. He was Associate Reporter to theAmerican Law Institute's Restatementof Torts, 2d, for the modernization ofthe chapter on riparian rights. In theinternational field, he is Reporter for theNatural Resources Law Sections of theEncyclopedia of Comparative Law,

and he has been employed as an expert by the United Nations Food andAgriculture Organization and Office ofTechnical Cooperation to draft a waterlaw for Jamaica, to recommendimprovements of the water law of thePhilippines, and to revise the water law

of Swaziland.From 1942 to 1977, Dean Trelease

was associated with the University ofWyoming. He served as Dean of theCollege of Law from 1960 to 1971. Hehas taught as a visiting professor at theUniversities of Arizona, Colorado, New

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

SCHOOL OF LAW, UNIVERSITY OF ARKANSAS, FAYETTEVILLE

Tommy L. BakerPresident

and Drug Law this fall and in the springwill offer a new course dealing with thelaw and the public's health.

Two Financial CentreLittle Rock, AR 72211

224-5845

ritiesInc.

ker.'Y=--="

services Offered

Video Recorded DepositionsPrivate Investigation

Accident AnalysisCourt Room Video

Undercover Investigation

THREE JOIN FACULTVFOR SPRING

Three new professors have joinedthe law school faculty to teach duringthe spring semester. Lonnie Beard, agraduate of the University of ArkansasSchool of Law and from NYU (LL.M. inTaxation) will teach Federal Taxationand Estate Planning. Allen Hoberg, agraduate of the North Dakota School ofLaw and a member of the first group ofLL.M. graduates in agricultural law, atthe University of Arkansas, will assistwith a USDA funded research project,teach an undergraduate agriculturallaw course, and assist in teaching Agricultural Finance and Credit. JamesMaurer, who recently retired to Northwest Arkansas after 30 years in corporate law will teach the course in Corporations. He is a graduate of Stanford

Law School. '"

PRODUCT LIABILITY SYMPOSIUMThe Arkansas Law Review and the

School of Law sponsored a ProductsLiability Symposium in October whichattracted a number of Arkansas practitioners as well as law students and faculty. Featured speakers includedProfessor Jerry J. Phillips of the University of Tennessee, a recognized authority in the products liability field. Alsofeatured were Federal District JudgeHenry Woods, Phil Carroll of the Rosefirm and Win Drummond of theMcMath, Leatherman Law firm, all whohave had extensive experience inproducts liability litigation.

The symposium follows an earlierprogram at the law school organized byBill Wilson of Little Rock as a part of thecourse he taught at the law school thisfall dealing with products liability. Thatprogram featured a panel discussion,by JUdge Henry Woods along with OtisTurner of Arkadelphia and Nick Pattonof Texarkana.

the School of Law Appellate Advocacyand Legal Writing Program.

ROB LEFLAR APPOINTEDProfessor Rob Leflar has been

named as the consumer representative on the U.S. Food and DrugAdministration's Immunological Devices Advisory Committee. ProfessorLeflar along with Professor Neil Hamilton introduced a new seminar in Food

OXFORD SCHOLARS NAMEDFour outstanding third year students

have been selected to participate in theC. W. Oxford Lecture Series named inhonor of Dr. Charles W. Oxford, VicePresident for Academic Affairs. The1983 Oxford Scholars are PallHoffman, Bobby Pryor, Scott Ransickand Danny Richey.

APPELLATE ADVOCACY FOCUSDuring the week of November 15-21 ,

the law school focused on appellateadvocacy with two major events.

First, Senior Federal Judge J. SmithHenley and his law clerks, Beth Enosand Casey Kincaid, served as judgesfor the final rounds of arguments forthose students in the fall semester appellate advocacy course. Two arguments were heard by the judges featuring the teams of Billy Parker andMark Pennington; Tom Falivene andDavid Hardin, Teresa Adams andDiana Blackman; Sallie Laux and AndyLydick.

HARTMAN HOTZ LECTURES INLAW AND LIBERAL ARTS

A major gift from Dr. and Mrs. H.Palmer Hotz has established a lectureseries in the fields of law and liberal artsin honor of the late Hartman Hotz, aprominant Arkansas attorney. The income from the gift will be used annuallyto invite persons with distinguishedprofessional reputations to campus forperiods of from two days to one semester to present lectures, conduct classesor seminars and engage in discussionswith students and faculty of the University. A committee, representing theSchool of Law and the J. William Fulbright College of Arts and Sciences,will be formed to plan the lectures andselect the individuals who will participate in the series.

Second, teams from 13 law schoolsin the Southwest visited the campus forthe Region 10 Preliminary Roundofthe33rd Annual National Moot CourtCompetition. Members of the University of Arkansas team competing in thetournament were Kitty Gay of Fayetteville, Carol Goforth of West Fork andGreg Stephens of Conway. CindyJones of Friendwood, Texas was thealternate. The tournament drew moreparticipants than any in recent yearsaccording to Doug Carson, director of

July 1983/Arkansas Lawyer/8?

OYEZ · OYEZ II

Little Rock lawyer JOHN BARRON,JR. was elected to a two-year term onthe State Delegates Board of the Arkansas Trial Lawyers Association.OTIS D. STONE, retired after 38 yearswith the federal government, openedhis office for the general practice of lawin Hot Springs. Garland County CircuitJudge HENRY M. BRITT was electedto the Board of Trustees of The Coilegeof the Ozarks recently. RAYMOND R.ROBERTS is the new trust officer forthe First National Bank in Rogers. H.DAVID BLAIR of Batesviile, was recently inducted into the American College of Trial Lawyers. LINDA BOONEof Heber Springs spoke to the HeberSprings Business and ProfessionalWomens Club on wiils and estate planning. Attorneys WESLEY J. KETZ, JR.and DAVID M. CLARK have moved to345 Main Street, Batesviile, to newlyremodeled offices. T. J. HIVELY, formerly with the two, became circuitjudge on January 1st. STEVE DEMOTT is the new instructor of businesslaw and director of the Smail BusinessDevelopment Center at HendersonState University. He is a former deputyprosecuting attorney for the 9th Judicial District East. In honor of DAVIDSOLOMON'S birthday, his family recently donated 20 volumes of the Harvard Law Review to the Phillips CountyLaw Library. PEGGY BUNN has joinedthe law firm of Poilard and Cavaneau inSearcy. She is a 1982 graduate of theUniversity of Arkansas at Little RockSchool of Law. BLAIR ARNOLD hasbeen appointed to the IndependenceCounty Election Commission. He replaces another Batesviile lawyer, JohnPurtle, who was unopposed as aDemocratic nominee to the City Council. VELDA PATRICE PRICE andCURTIS L. NEBBEN have joined thestaff of the Arkansas attorney general.JEFF SLATON, former vice presidentand general counsel of the bank ofYeilviile, has opened a law office at 324East Emma in Springdale. KAY WESTYOUNG of West Memphis, spoke to a


By: Carol UtleyCommunications Director

class at Forrest City Middle Schoolabout shoplifting and possession of alcohol and drugs as part of a programsponsored by the Junior Auxiliary'sYouth Awareness Program in that city.DENNIS C. SUTTERFIELD hasopened a law office at 107 South Boulder in Russeilviile. He was graduatedfrom the University of Arkansas Schoolof Law. JAMES W. CULLUM has beenselected as one of the OutstandingYoung Men of America. He was nominated by a men's civic organization inClinton. James E. Briil, Chairman of theAmerican Bar Association'sEconomics of Law Practice Section,announced the appointment ofTHOMAS D. LEDBETTER as computer committee chairman. CLYDE DICKENS CALLIOTTE of Little Rock, received the Distinguished Alumni Awardrecently from Southern Arkansas University in ceremonies held at the SAUcampus. Wright, Lindsey and Jenningsannounces that LAWRENCE B.BURROW formerly senior vice president and manager, trust division ofWorthen Bank and Trust Company,has joined the firm as counsel. H.BRADLEY WALKER, R. STEVENJONES, SAMUEL WOLFF and GENEA. LUDWIG have become associatedwith the firm located at 2200 WorthenBank Bldg. in Little Rock. The law finmof (Steve) BELL and (Gary) VINSON inBatesviile has relocated to 154 SouthThird Street in Batesviile. Little Rockattorney S. GRAHAM CATLETT wasguest speaker at the October meetingof the Little Rock Board of Realtors.TONY YOCOM of Hope, a recentgraduate of the University of Arkansasat Little Rock School of Law, has joinedthe firm of Pilkinton and Pilkinton inHope. GARLAND HURST of Sheridanhas opened his office for the generalpractice of law. He is a graduate of thelaw school in Fayetteviile. MAJORDAVID F. BARTON, United States AirForce, recently addressed members ofthe Fort Walton Beach, Florida Optimist Club. GLOVER, SANDERS,

PARKERSON & HARGRAVES nowhave a law office in Hot Springs Viilage.JUDY DESIMONE spoke to the BetaChi Chapter of Epsilon Sigma AlphaInternational in Pine Bluff about law asa career. PHILIP E. KAPLAN of LittleRock, was elected chairman of theboard of the National Conference ofChristians and Jews. STEVE DAVIShas joined the law finm of Meadows andElcan in Harrison. He was graduatedfrom the University of Arkansas Schoolof Law where he served as editor of theArkansas Law Review. Assistant Attorney General MATTHEW W. FLEMING was sworn in as a special assistantUnited States attorney for the EasternDistrict of Arkansas in November. Hehas been with the attorney general'soffice since 1981. JIM BURNETT hasmoved his law practice to 117 FrontStreet in Lonoke. BOB GANNAWAYof Little Rock, addressed the 28th annual banquet of the Van BurenChamber of Commerce in November.State Insurance CommissionerW. H. L. WOODYARD III has resignedfrom the commission to enter the private practice of law. RICHARD A.GARRETT and WILLIAM C. HARBOUR have opened a new law office at101 a NW Third Street in Bryant. BOBBRANCH of Paragould has been appointed to the Supreme Court Committee on Professional Conduct. NEDMETCALF of Batesviile has been promoted to assistant vice president ofFirstSouth and will be director of theassociation's community marketing.KIM SMITH of Fayetteviile, has beenelected president of the ArkansasProsecuting Attorneys Association.DAVID RUSH and BILL WALTERS ofGreenwood have formed a partnershipfor the practice of law. GILBERT L.GLOVER II of Little Rock is the newexecutive director for Legal Services ofArkansas. He previously served theorganization as senior staff attorney forthree years. JOE ROSS of Little Rock,spoke to the residents of Jessie PoweilTowers, a retirement home, on "A Citi-

zens Rights as a Voter." He also instructed students at Rose City JuniorHigh School who were participating in amock trial. Once a month, Ross andCol. Ransick address the patients inthe drug program at Fort Roots Hospital through a legal orientation session.This offers the patients a chance to askquestions and obtain free pamphletspublished by the Arkansas Bar Association. The program was enacted over ayear ago and has reached many of thehospital's patients in need of legal information and direction. ROBERT C.COMPTON, WILLIAM I. PREWETI,FLOYD M. THOMAS, JR. andJOSEPH HICKEY announce the formation of Compton, Prewett, Thomasand Hickey at 423 North Washington,EI Dorado. EUGENE D. BRAMBLETIand JAMES M. PRATI, JR. announcethe formation of the law partnership ofBramblett and Pratt at 146 WashingtonStreet, Camden. W. H. ARNOLD IIIannounces the reorganization of thepartnership of Arnold and Arnold inTexarkana at Suite 508 State LinePlaza, Texarkana, with THOMAS S.ARNOLD. RICHARD L. ARNOLD andMORRIS S. ARNOLD are of counselwith the firm. RICHARD F. HATFIELDof Searcy and RICHARD A. WILLIAMS of Little Rock were recentlyelected to the American College ofProbate Counsel. Both are active in theProbate Law Section and have chairedthe Taxation, Trust and Estate Planning Section of the Arkansas Bar Association. RICHARD L. MAYS of LittleRock, attended the American BarAssociation's Second Annual Educa-

ARS

Natural Resources LawInstitute

Arlington HotelHot Springs, ArkansasFebruary 24-26, 1983

tional Conference on Prepaid LegalServices held in Boston, November4-6, 1982. TARV;N and BYRD inHamburg held an open house in December celebrating the opening of newoffices located at 204-A East Lincoln.The new partners are TIMOTHY R.TARVIN and JOHN RICHARD BYRD.KELVIN WYRICK of Texarkana, wasguest speaker at the December 14meeting of the Hope Kiwanis Club. Hespoke to the group about the role of thechancery. DAN E. BARTELL of NorthLittle Rock has joined the firm of Thurman and Associates at 301 NorthBroadway in North Little Rock. JERRYJONES of the Rose Law Firm in LittleRock, spoke at the annual meeting ofthe Arkansas Highway Users Conference held at the Sheraton Hotel in December. JON SANFORD, prosecutingattorney-elect for the fifth judicial district, announces that JAMES R.MARSCHEWSKI and JAMES R.PATE both of Russellville, will be deputy prosecutors for Pope County.CHARLES R. DOUGAN of Little Rock,recently purchased the Lonoke RealEstate and Abstract Company inLonoke.

CLARK COUNTY BARASSOCIATIONPresident-Don P. ChaneySecretary-Treasurer-Steve Beck

ARKANSAS ASSOCIATION OFDEFENSE COUNSELPresident-Ben CorePresident-Elect-John C. DeaconTreasurer-Steve MathewsSecretary-Robert L. Henry Jr.

Workers' CompensationInstitute

Camelot HotelLittle Rock, ArkansasMarch 4, 1983

Long Range PlanningConference

Red Apple InnEden IsleMay 5-7,1983

INDEPENDENCE COUNTY BARASSOCIATIONPresident-Jerry PostVice-President-John Purtle

LAWRENCE/RANDOLPH COUNTYBAR ASSOCIATIONPresident-Wm. David MullenVice-President-Dick JarboeSecretary-Treasurer-David Throesch

ST. FRANCIS COUNTY BARASSOCIATIONPresident-Steve RoutonSecretary-Treasurer-Brad J. Beavers

TEXARKANA BAR ASSOCIATIONPresident-John F. StroudVice-President-Judge Charles BlielTreasurer-James NuttSecretary-Robert E. Dodson

WHITE COUNTY BARASSOCIATIONPresident-Chris RaffVice-President-Mike MillarSecretary-Treasurer-Watson Bell

COLUMBIA COUNTY BARASSOCIATIONPresident-Bill FinneganVice-President-W. A. Eckert IIISecretary-Elliott CleggLaw Day Chairman-Steve Crane

Annual MeetingArlington HotelHot Springs, ArkansasJune 8-11, 1983

Fall Legal InstituteFayetteville HiltonFayetteville, ArkansasSeptember 8-9, 1983

Practice Skills SeminarCamelot HotelLittle Rock, ArkansasOctober 13-14, 1983


'f

rJ\

Effective Assistance

Of Counsel

And The

Shotgun Approach

To

Framing Issues:

More Is Not Always BetterBy: David E. Howe

The court appointed attorney representing a criminal defendant oftenmay not find himself in a positionwhich he considers enviable, forseveral reasons. In many cases, suchan attorney will have had little or noprior experience in criminal trial work.Thus, he will often be required to spenda greater than usual amount of timepreparing his client's defense, simplyby reason of his need to familiarizehimself with the applicable law andprocedure. Further, the court appointed attorney would probably preferto devote that time to his establishedclients. There is, however, one otheraspect of criminai defense work that israpidiy becoming a primary factor contributing to the unattractiveness of thatwork, namely, the increasing numberof allegations of ineffective assistanceof counsel that are being made by convicted criminal defendants.'

It is not difficult to guess at the factorsthat might motivate a prisoner to allegeineffective assistance. One of the primary motivating factors would, ofcourse, be the prisoner's honest beliefthat his counsel could have and shouldhave done a better job at trial. Thisbelief may often be erroneous, but thisdoes not alter the fact that the prisonerin good faith believes he should nothave been found guilty. However, evenwhere the prisoner does not have agood faith belief that he was renderedineffective assistance, he may never-


theless allege ineffective assistancesimply because he has nothing to loseand everything (freedom or new trial) togain if he succeeds.

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

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

-In one recent federal courtcase, petitioner's habeas counsel alleged that trial counsel had rendered ineffective assistance by failing to raise a particular legal issue.This argument was based on a recent Supreme Court decision. Onejudge observed that habeas counselhad also represented the petitionerin his request for state post-conviction relief, and that this particularlegal issue had not been raised inthat proceeding. When habeascounsel was questioned about this,he replied that he had not at thattime known that the issue was available, because the Supreme Courtdecision being relied on had not, atthat time, been rendered.' Yet hewas asserting that trial counsel hadrendered ineffective assistance byfailing to raise the identical issue attrial!

-In another recent case,petitioner alleged that he had beenrendered ineffective assistance byhis counsel's failing to call three witnesses that would have testified inhis defense at trial. The trial record,however, revealed that one of thesewitnesses had in fact appeared andtestified extensively for the defendant, and both the prosecution's anddefense counsel's notes revealedthat the other two witnesses had leftthe scene of the crime ten minutesbefore the crime had occurred, andcould not identify the defendant or

recall whether he had been presentor absent at the time they were atthe scene. An adverse finding onthis issue was nevertheless appealed.

-In another recent case,petitioner had been represented byone counsel at trial, by a secondcounsel in the state post-convictionproceeding, and by yet a third counsel at the start of his petition for federal post-conviction relief. The thirdcounsel withdrew after the magistrate's report was filed, and a fourthcounsel was appointed. The fourthcounsel immediately alleged thatthe petitioner had received ineffective assistance from all three previous attorneys.The trial attorney is aided somewhat

by the standards of persuasion imposed by the courts on ineffective assistance allegations. Briefly, thestandard in the Eighth Circuit is thatthe petitioner must show that his attorney failed to exercise the customary skills and diligence that areasonably competent attorneywould exercise in the circumstances.' Thus, counsel is not forcedto live up to the defendant's expectation that he have the skills of a ClarenceDarrow.' In addition, even if counsel isfound to have rendered ineffectiveassistance, the petitioner must alsoshow that he was materially prejudicedthereby, for it is not every mistake thatwill alter a verdict.' A heavy burden isthus placed on the defendant to overcome the presumption that counselwas competent.'

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

It would thus appear that a reductionin the number of frivolous or merillessineffective assistance claims would bewell received by many members of thebar. However, it is also clear that theavailability of habeas corpus reliefbased on ineffective assistance ofcounsel should not be abolished. Theright to a fair trial is fundamental to ourjUdicial system, and adequate representation by counsel is a necessarypart of that system.' Further, it can notbe doubted that the rendition of competent legal assistance is the primary duty

of our profession, and that it is also ourduty to police the profession.' And thisduty rests on each practicing memberof the legal profession, as well as onthe profession as a whole. But one stillwonders what a criminal defenselawyer can do to free himself from vexatious and frivolous allegations of ineffective assistance.

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

The appeal of this approach is obvious. First, if counsel has raised an issue, he can not later be alleged to haverendered ineffective assistance by notraising it. In addition, it may be thoughtthat by raising several defenses, theattorney may decrease the likelihoodthat his client will later think he wasineffective. And finally, the ABA Codeof Professional Responsibility makes itclear that an attorney will not be disciplined merely because he has raisedan issue that is of questionable legalvalidity, so long as there is a good faithargument that can be made in supportof the issue."

This approach, however, shouldgenerally be avoided, for severalreasons. First, the burden on judicialadministration would be manifeslly increased. This increase, moreover, isnot likely to work to the defendant'sadvantage. For example, the raising ofnumerous merilless issues may arguably divert the reviewing judge's attention from those issues actually havingmerit, and it is also possible that thejudge who is forced to sort throughtwenty frivolous issues in order to findthe three or so issues that might havesome merit is not going to be in a receptive frame of mind when he considersthose three." Further, counsel's arguments with regard to the meritous issues are also likely to be diluted by hisdevotion of time and/or space in hisbrief to frivolous issues.

It is also apparent that the shotgun approach should not beadopted by the trial lawyer, becausethis approach is simply not advisa-

ble from a tactical viewpoint at tria!.It takes no great feat of clairvoyance topredict that the trial lawyer raising several relatively merilless issues at trialmay soon find himself confronting ajury that is either asleep or hostile. As afurther example, it does trial counsellittle good to place the character of thedefendant at issue when he knows theprosecution has several "bad act" witnesses waiting in the wings. Finally,where an issue is patently frivolous, it ispossible that the attorney raising thatissue is ignoring the ethical ideals, if notthe disciplinary standards, governinghis profession."

Despite these considerations, it isapparent that habeas counsel, at least,are still tempted to employ the shotgunapproach when framing issues, and itis also apparent that prisoners may stillbe tempted to allege ineffective assistance of counsel even where they haveno good faith belief that they were, infact, rendered inadequate assistance.It is possible that the courts or the various bar associations may attempt toalleviate this problem by altering theburden of proof placed on thepetitioner, by imposing time limits orother limits on the availability of habeasrelief, or by imposing sanctions on attorneys raising meritless issues. Suchactions, however, may be inadvisable, because they may unduly hinderthe petitioner's ability to obtain relief,and they may also impermissibly hinder counsel's ability to adequately represent his client. Consequenlly, theprobability that such actions will betaken is remote, and the criminal defense attorney's best defense will stillbe the defense of due diligence, supported by documentation.

In this regard, the attorney shouldalways take his file with him when hevisits the defendant, and he should besure to write down the names of allpotential witnesses and defenses discussed. He should also be sure at leastto telephone all potential witnesses,and to write down the substance oftheir potential testimony. Finally, the attorney should be sure to discuss trialstrategy with his client, and to writedown the course of action agreed to, aswell as the reasons for not further pursuing alternative courses of action.

Although this "documentation" solution may appear to be adequate orcumbersome, in reality, it may not be.All it calls for is that the attorney exercise thoughtfulness and foresight in histrial preparation, so that he will, in fact,

continued on page 92


David E. Howe is a graduate of Dartmouth College and a cumlaude graduate of the Creighton University School of Law, and hasbeen admitted to the Arkansas, Nebraska and Minnesota Bars.From 1981 to 1982, Mr. Howe served as law clerk to the HonorableJ. Smith Henley, Senior Judge of the United States Court of Appeals for the Eighth Circuit. He is currently a member of the law firmof Baker, Miller, Mills and Murray in Dallas, Texas.

Counselcontinued from page 91

be able to adequately represent hisclient, and so that he may later be ableto justify his actions. This is expected ofan attorney anyway, and should not betoo much to ask.

Finally, it is hoped that this article willremind the potential habeas attorneythat, at least as applied to ineffectiveassistance considerations, more is notnecessarily better. It is always thebetter approach to stress those issues having merit, rather than to dilute them by reference to the frivolous. 1S

FOOTNOTES1. Statistics from the Administrative

Office of the United States Courts indicate that in 1980, 1,322 appeals involving state and federal habeas corpuspetitions were docketed in the UnitedStates Courts of Appeals, with 70 ofthese appeals haVing been docketed inthe Eighth Circuit. 11980] ANN. REP.,DIRECTOR OF THE ADMIN OFFICEOF ,HE UNITED STATES at 366-67Table B-7. In 1981, 1,602 such appealswere docketed in the Circuit Courts,with 101 of these having been docketed in the Eighth Circuit. 11981 ] ANN.REP., DIRECTOR OF THE ADMIN.OFFICE OF THE UNITED STATES atA-12 Table B-7. This reflects a oneyear increase of 21% overall, and 22%for the Eighth Circuit.

These figures also reflect only the tipof the iceberg, because they do nottake into account those petitions in theUnited States District Courts that havenot been appealed, nor do they takeinto account state court cases involvingpetitions for post-conviction relief.

Empirical research further revealsthat in 1981, the Eighth Circuit published at least 21 options in caseswherein ineffective assistance ofcounsel had been placed in issue. Thisfigure, moreover, does not take intoaccount those docketed appeals thatwere later either dismissed or decidedwithout published opinion. Thus, an estimate that at least 20% of all federalhabeas petitions include ineffective

assistance of counsel issues may betaken as a conservative one.

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

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

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

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

6. See Comer v. Parratt, supra.7. See Eldridge v. Atkins, 665 F.2d

228,232 (8th Cir. 1981). The standardsgoverning ineffective assistanceclaims in the Arkansas courts are, ifanything, more exacting than thoseemployed by the Eighth Circuit. In Arkansas, the petitioner must:

prove by a preponderence of theevidence that his attorney has by hisacts or omissions made the proceedings 'a farce and a mockery ofjustice,' or that [petitioner's] representation by counsel was 'so patently lacking in competence oradequacy' that it is the court's dutyto correct it. Sheppard v. State, 255Ark. 40, 498 S.w.2d 668 (1973).The burden lis] on the [petitioner] toovercome the presumption that hisattorney was competent. Clark v.State, 255 Ark. 13,498 S.w.2d 657(1973).

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

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

386 U.S. 738 (1967).9. See generally, Wade, Public Re

sponsibilities of the Learned Professions, 21 La. L. Rev. 130, 134(1960).

10. Typical allegations of ineffectiveassistance can include allegations thatcounsel failed to adequately interviewthe defendant, failed to keep the defendant informed of the progress of thecase, failed to interview witnesses,failed to subpoena witnesses, failed tochallenge the jury selection process,failed to move for change of venue,failed to raise various defenses, failedto demand investigations into competency or sanity, or failed to object to theintroduction of evidence or to theprosecutor's conduct during trial. Thislist is by no means all-inclusive.

11. In this respect, cases such asEngle v.lsaac, 102 S.Ct. 1558 (1982)and Scott v. State, 592 S.W.2d 122(Ark. 1980) may have the unfortunateeffect of providing additional incentivefor the use of the shotgun approach inthe initial state post-conviction petition.Under Engle, for example, it is at leastarguable that the petitioner could show"cause" for his failure to raise an issuein the state court by showing that hisstate habeas counsel rendered ineffective assistance. Thus, if the petitioner'sstate habeas counsel is aware of thispossibility, he may be tempted to usethe shotgun approach as a means ofprecluding such arguments at a laterdate.

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

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

David E. Howe


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You will learn powerful and readily understandable forensiccommunication skills that can be applied in your practice immediately. You will enhance your knowledge in the following areas:

Pacing a, leading to ne. Establishing rapportawaren... Eyewitness testimonyaeframing of understandings Persuasive communicationsArgument development Jury selectionVoir dire EnminationHypnotic investigation Opening/closing argumentsJury behavior

Dr. Stevens and Richardson are associated with the Southwestern Human services Institute. They each have strongbackgrounds in psychology including private practice. Soth haveUniversity faculty experience in addition to recent activity inFederal and State CoW'tS with involvement in criminal. personaJiI\jW'y. worlanan's camp and other cases. Stevens' advanceddegree is from Vanderbilt and Richardson's is from the Universityof Missouri.

Registration of 8250 covers both daYS and materials. The firstsession on March 11th will begin at 9 o'clock AM and ends at 5PM The second day will end mid-afternoon with a Q & A opportunity untll 5 o'clock- Upon receipt of your registration. detailswill be forwarded rega.rding location of hotel meeting site nearthe Reunion Center.

Checks are payable to Southwestern Humanservices Institute and mailed to their office at324 W. Pershing Blvd. North Little Rock.Arkansas 72114. (501) 753-5180.

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least 25 ineffective assistance issueswere raised.

14. The oath required of all candidates for admission to practice beforethe courts of Arkansas states, in part, "IDO SOLEMLY SWEAR:... I will notcounselor maintain any suit or proceeding which shall appear to me to beunjust, nor any defense except such asI believe to be honestly debatableunder the law of the land..." But seeAnders v. California, 386 U.S. at744-45.

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

Member of the Arkansas & Texas Bar

LL.M. TAXATION

Expanding Oklahoma City A. V.law firm seeks recent or Maygraduate with LL.M. Taxation.Practice limited to tax, real estateand syndications. Competitive salary. Submit resume, transcriptsand salary requirements c/o TheArkansas Lawyer, 400 West Markham, Little Rock, Arkansas 72201.

I I


The recompense of a man's hands shalf be renderedunto him.

3Jn memoriam

EDWARD J. CUNNINGHAM

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

He was a member of the ArkansasTrial Lawyers Association, the BaxterCounty, Arkansas and American BarAssociations. He was in private practice in Mountain Home.

He is survived by his wife, PhyllisMiddlebusher Cunningham; a son,Mall Eddins of Mountain Home; adaughter, Keli Eddins of MountainHome, and a sister, Ramona Cun·ningham of Bismarck, N.D.

EDWARD F. McFADDIN

Edward Fitzgerald McFaddin, aged87, of Little Rock, a retired ArkansasSupreme Court Justice, died Sunday,July 18, 1982.

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

McFaddin was a veteran of WorldWar I. He was a past director of RotaryInternational, a member of the XVClub, a member of the First UnitedMethodist Church and a 32nd degreeMason.

Survivors are his wife, Mrs. MatildaMcCammon McFaddin; threedaughters, Mrs. L. Cotton Thomas ofLittle Rock, Mrs. G. F. Wynne of Warren and Dr. Marsue Johnson of Denton, Tex.; nine grandchildren and ninegreat-grandchildren.

DAVE E. WITT

Dave E. Witt of Little Rock, diedSunday. July 18, 1982. He was aformer Little Rock city attorney in the1950s and a veteran of the Navy. Hewas a member of the Pulaski Countyand Arkansas Bar Associations andthe Trinity United Methodist Church.

He is survived by his wife, WilboumBurnel Witt, and a brother, Dale D. Wittof Little Rock.94/Arkansas Lawyer/July 1983

Proverbs 12:14

THOMAS J. BONNER

Thomas J. Bonner, aged 63, of LittleRock, president of Stebbins andRoberts, Inc., died Friday, August 20,1982.

He was a former partner in the lawfirm of Spitzberg, Bonner, Mitchell andHays. He had been the attorney for theLittle Rock Water Works from 1949 to1973 when he resigned to becomepresident of Stebbins and Roberts.

Bonner was born in Newport andwas graduated from the University ofArkansas at Fayetteville and the U of ALaw School.

He was a member of SI. Mark'sEpiscopal Church and a formermember of the vestry of SI. Mark's. Hewas a member of his county bar associalion, the Arkansas and AmericanBar Associations, the Country Club ofLittle Rock, Rotary Club and KappaSigma Fraternity. He was a Wond WarII veteran.

Survivors are his wife, JoClaireAdamson Bonner; a daughter AnneClaire B. Martin of Little Rock; twobrothers, Don Canos Bonner of LittleRock and Rev. Lyle Bonner ofMcKinnleyville, Cal.; two sisters,Elizabeth Green of Newark, Del., andDora Neptune of Dallas, and a grandchild.

WILLIAM M. LEE

William Mayo Lee, aged 69, died Friday, September 3, 1982, at his home inClarendon following a long illness.

He was a graduate of ClarendonHigh School and the University of Arkansas. He served as a Lieutenant inthe Coast Guard during Wond War IIand was a member of the AmericanLegion, the Veterans of Foreign Wars,and a Mason. He was a member oltheClarendon First United MethodistChurch where he served on the Boardof Stewarts.

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

was a past president of the stateProsecuting Attorneys Association.

In 1976, he received the ClarendonChamber of Commerce Award for Manolthe Year. Lee was cited for his unselfish work in securing induslry forClarendon.

Survivors are his wife, Mrs. MargaretJohnson Lee; three sons, Mayo Lee ofWashington, D.C., David and PerryLee of Clarendon; a daughter Mrs. AnnLee Mills of Clinton, Mo.; a sister, Mrs.Boyce Lee Tolson of Fairfield Bay, Arkansas; and three grandchildren.

ARNOLD M. ADAMS

Federal Bankruptcy JUdge Amold M.Adams, aged 69, of Lillie Rock, diedSunday, November 7, 1982.

He was a native of Batesville andwas graduated from Arkansas Collegeand the University of Arkansas LawSchool.

Judge Adams practiced law in Mountain Home until 1942 when he enteredthe Army to serve during Wand War II.After his discharge in 1946, he wasappointed as assistant state attorneygeneral for five years.

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

Judge Adams served in the NationalGuard for 40 years and was a Mason.He was a member of SI. Mark's Episcopal Church in Little Rock.

He is survived by his wife, WrenettaSouthard Adams; a son, Steve Adamsof Fayetteville, and two grandchildren.

JAMES E. EVANS, SR.

Springdale Municipal Judge JamesE. Evans, Sr., aged 62, died December10, 1982, in a local hospital.

He served on the bench for 25 yearsand was graduated from the Universityof Arkansas School of law in 1951.Judge Evans served two terms asSpringdale city attomey before becoming municipal judge.

He was born November 1, 1920, inHeber Springs. He was a member ofthe Robinson Avenue Church of Christand a veteran of World War II.

Survivors are his wife, Mrs. EdnaEvans of the home; two sons, JimEvans Jr. and Gary Evans, both ofSpringdale; three daughters, Mrs.Sandra Brown of Clarksville, Mrs. Deniese Evans of Tulsa, Okla., and Mrs.Beverly Cobb of Lubbock, Tex.; andseven grandchildren.

ADDENDAby C. E. Ransick

Editor

World Peace Through Law CenterWe were honored this year by an

invitation from the Honorable CharlesS. Rhyne, World President olthe WorldPeace Through Law Center, to appearon the program for the Conference onthe Law of the World to be held inCairo, Egypt, September 25-30,1983-an invitation we declined forpersonal reasons. At Mr. Rhyne's request, we will furnish the Center futureissues of The Arkansas Lawyer in return for a free subscription to the Center's The World Jurist. There follows,for the edification of recent admittees tothe Bar, a review of the Center's history.

OrganizationThe World Peace Through Law

Center [Le Centre de la Paix Mondialepar Ie Droit-El Centro para la PazMundial Mediante el DerechoJ wasfounded in 1957, originally as a SpecialCommittee of the American Bar Association. In that year, the Hon.Charles S. Rhyne had become thePresident of the ABA. In 1963, theSpecial Committee within the ABA wasgiven a status independent of, butclosely associated with the ABA, and itbecame a worldwide organization. At ameeting in Athens, Greece, sponsoredby the ABA, the World Peace ThroughLaw Center was established, with Mr.Rhyne as World President, an office hehas continued to hold down to the present day. The Center is a non-politicaland non-profit institution and its participants speak as individuals rather thanas representatives of a particular country or ideology.

Basic Viewpoints and GoalsConsidering the increasing threat of

war between nations, with its calamitous consequences for all mankind, anoverWhelming desire for peace has

grown among the people of the world.This desire is probably stronger nowthan any such desire in all history.Peace is the work of justice, but thevital need for an adequate internationalsystem of law remains the greatest gapin the legal structure of civilization.Here a great opportunity will bewon-or lost-to ensure peace underlaw. This is the ultimate goal of theWPTLC.

The Center is the first world-wideventure to combine the efforts ofjudges, lawyers, law professors, andothers throughout the world into an effective cooperative endeavor to mold afuture legal order for humankind thatwill foster peace by helping tostrengthen the world's legal system,both its law rules and its legal institutions (like the International Court ofJustice) and by evaluating world lawand developing a new internationallegal machinery to provide for thepeaceful settlement of disputes between nations under the rule of law, yetto maintain national sovereignty. TheCenter's efforts of fostering worldpeace through law are expressed in allits activities, like its biennial Conferences and its publications.

SupportThe Center and its cause have been

given cordial support by AmericanPresidents of both political parties,beginning with President John F. Kennedy and continuing thereafter. TwoChief Justices of the U.S. SupremeCourt have been associated with theCenter. Support has come from chiefsof state of most of the countries of theworld. The Vatican has sent a representative to each of the biennial Conferences that the Center has held invarious countries over the years, andthe relationship with the Vatican hasbeen cordial and continuous.

Associated OrganizationsSeveral Associations have been

created after the Center was founded.Currently the most active ones are theWorld Association of Lawyers, theWorld Association of Judges, theWorld Association of Law Professors, and the World Association ofCenter Associates. Membership inthese Associations includes membership in the Center. The Associationshave established a number of Sectionsand Committees dealing with a greatvariety of issues of international legalconcern such as the Section on HumanRights (WALl. the Committee on Criminal Law (WALl. the Committee onCriminal Justice Processes and Procedures (WAJ), and the Committee onCooperation with Lawyers on Continuing Legal Education (WALP).

MembershipMembership is comprised of jurists,

Attorneys-General, Ministers of Justice, Supreme Court Justices, and justices of lower courts, professors of law,attorneys, law students, and a numberof others from all over the world, whoare interested in international legal issues. The Center and its nationalbranches and its affiliated Associationsare operating in more than 155 countries, with a total membership of about100,000.

MeetingsEvery two years, the Center stages a

Conference in one of the major cities indifferent areas of the world. The Conferences, which are conducted primarily in the English language, are attended by representatives from most orall of the countries concerned, including the Vatican. During these Conferences, which revolve around a certainpreselected theme, ideas areexchanged-principally through panel


discussions, demonstration trials, andspeeches-on some of the criticalproblems of our time, and formalresolutions are compiled which mayhasten the formation of internationallaw.

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

Formal Relations with otherInternational Bodies

The Center has observer status withthe United Nations.

PublicationsThe Center puts out numerous pUb

lications, including two periodicals: abimonthly newsletter, The WorldJurist and a quarterly journalLaw/Technology.

Herewith is an interesting advisoryethics opinion of the Tennessee Supreme Court's Board of ProfessionalResponsibility.

FORMAL ETHICSOPINION 82-F-28Inquiry is made concerning thepropriety of an attorney charging interest on accounts more than 30days delinquent if notice of the intentto charge interest on such accountsis sent to all clients, and the chargingof interest is limited to billings madeaf1er such notification.

Formal Ethics Opinion 338 of theCommittee on Ethics of the AmericanBar Association states that there is noimpropriety in the use of credit cardsfor payment of legal services and expenses provided certain conditions arefully and completely observed.

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

It is the opinion of this Committeethat there is no impropriety in the use ofcredit card plans for payment of legalservices and expenses provided thefollowing conditions are fully and completely observed:

1. All publicity and advertising relating to a credit card plan shall be

96/Arkansas Lawyer/july 1983

THE CAIRO CONFERENCEThe World Peace Through Law

Center and its affiliates, the WorldAssociation of Judges, the WorldAssociation of Lawyers, the World Association of Law Professors, the WorldAssociation of Law Students and theWorld Association of Center Associates, will hold its Eleventh Conference on the Law of the World in excitingCairo, Egypt, September 25-30,1983-eminent jurists from over 140countries gathering in the heart of thethriving capital of Egypt-to join in thechallenge of establishing peace in ourworld through the rule of law and itsinstitutions.

The Eleventh Conference, which willhave as its theme "The Universal LegalPrinciples as a Basis for World Peace",boasts a truly impressive program ofpanel discussions and seminars led bythe outstanding jurists from the fourcorners of the globe. In addition to thetraditional celebration of World LawDay, there will be special luncheons, abanquet and a compelling Demonstra-

Ethics Opinionssubject to the prior approval in writing of the Ethics Committee of theBoard of Professional Responsibility.

2. No directory of any kind shall beprinted or published of the names ofindividual attorney members whosubscribe to the credit card plan.

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

4. A lawyer shall not encourageparticipation in the plan, but his position must be that he accepts the planas a convenience for clients whodesire it; and the lawyer may notbecause of his participation increase his fee for legal services rendered the client.

5. Charges made by lawyers toclients pursuant to a credit card planshall be only for services actuallyrendered or cash actually paid onbehalf of a client.

6. In participating in a credit cardprogram the attorney shall scrupulously observe his obligation to preserve the confidences and secretsof his client.

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

tion Trial argued before some of theworld's most distinguished Chief Justices by some of its ablest advocatesupon issues which they will decide.

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

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

Optional tours will also be availablefor trips around Egypt and to Israel,Italy, and Greece. For detailed information, contact: WPTLC Travel Coordination Center, 50 E. 42nd Street, Suite2200, N.Y., N.Y. 10017 (212-557-8472/73). t--

exceed the applicable formula ratespecified in TCA 47-14-103 for written contracts signed by the party tobe charged.

It is opinion of this Committee thatthere is no impropriety in an attorneycharging interest on accounts morethan 30 days delinquent provided thefollowing conditions are fully and completely observed:

1. Notice of the intent to chargeinterest on such accounts shall besent to all clients.

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

3. The maximum effective rate ofinterest utilized in computing suchinterest shall not exceed the ratespecified in TCA 47-14-121 as therate of post-judgment interest.

In any and all events an attorneyshall not resort to overly zealous actions to obtain payment of fees. Whereprocedures for arbitration of fee disputes exist, attorneys are encouragedto utilize them rather than resorting tolitigation or self-help measures whichmay have the appearance of takingundue advantage of the lawyer-clientrelationship.

June 18, 1982

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