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January 1989

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The Paralegal in Law Practice

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CITY. STATE. ZIP 58] I'---- -'- ..J

January 1989Vol. 23, No.1

OFFICERS

Philip E. Dixon. PresidentDavid M. "Mac" Glover. President-ElectSandra Wilson Cherry, Sec.-TreasurerJack A. McNulty. Council Chair

William A. Martin. Executive DirectorJudith Gray, Assistant Executive

Director

EXECUTIVE COUNCIL

Madison P. Aydelott IIIMark CamhianoH. Murray ClaycombRonald D. HarrisonRobert L. Jones IIIJames H. McKenziePaul D. McNeillMartha M. MillerR. Gary NutterRobert G. SerioJames M. Simpson Jr.Carolyn B. Witherspoon

LaARKANSAS

SPECIAL FEATURES

23

6Creditors' Rights in

Bankruptcy,by Nelson V. Shaw 7

12Probate Law,

by Jean Stockburger 16and Coleen Barger

REGULAR FEATURES

The President's Report

Point of View/Letters

Law, Literature & Laught(i!r

Congressional Update.by Bill Massey

•

EX-OFFICIO

Philip E. DixonDavid M. "Mac" GloverJohn F. Stroud Jr.Sandra Wilson CherryJack A. McNultyEdward Boyce

EDITOR

Ruth M. Williams, Director ofCommunications

The Arkansas Lawyer (USPS 546-040) ispublished quarterly by the Arkansas BarAssociation. 400 Wes+ Markham. LittleRock. Arkansas 72201. Second classpostage paid at Little Rock, Arkansas. Inall counts. POSTMASTER: send addresschanges to The Arkansas Lawyer. 400West Markham, Little Rock. Arkansas72201. Subscription price to non-mem­bers of the Arkansas Bar Association$15.00 per year and to members $10.00per year included in annual dues. Anyopinion expressed herein is that of theauthor, and not necessarily that of theArkansas Bar Association or TheArkansas Lawyer. Contributions to TheArkansas Lawyer are welcome andshould be sent in two copies to theArkansas Bar Center, 400 West Mark­ham. Little Rock. Arkansas 72201.

All inquiries regarding advertisingshould be sent to The Arkansas Lawyerat the above address.

The Paralegal in Practice, 22by the Pcrralegal Committee

28 Disciplinary Actions

31 In Memoriam

34 The Developing Law

38 Executive Director's Page

39 Young Lawyers' Update

40 Arkansas IOLTA Program

41 In-House News

ON THE COVER:The use of paralegals in thepractice of law has steadilyincreased in the last decade. InArkansas. the possibility existsfor a paralegal training programin the University of ArkansasSystem by 1990. In "The Para-legal in Practice" the ArkansasBar Association's ParalegalCommittee offers lips on hiringparalegals -- from establishingguidelines and determiningareas of assistance to compen­sation and assimilation of para­legals in the law office.

January 19B9/Arkansas Lawyerll

THE PRESIDENTS REPORT

An Exciting YearBy Philip E. Dixon

Thus far, it has been an exciting,very busy and meaningful year aspresident.

My most recent computer print­out reflects that approximately 21hours per week are being devotedto the affairs of the Arkansas BarAssociation. I do this gladly andwillingly because of the outstand­ing contributions made by themembers, committees, sectionsand staff of our Association.

In addition to the many commit­tee and staff meetings, telephoneconferences and daily correspon­dence, my activities during 1988have included working with,speaking to or participating in theW. Harold Flowers Law Societymeeting in Heber Springs; barleadership retreat at Lake Grea­son; Arkansas Bar AssociationAnnual Meeting Conference; Judi­cial Disability Commission; Ameri­can Bar Association Annual Meet­ing in Toronto, Ontario; FederalCourt Naturalization Ceremony;Missouri Bar Association AnnualMeeting in St. Louis, Missouri; FallLegal Institute in Fayetteville;Arkansas Bar Association Execu­tive Council meetings; SupremeCourt Admission Ceremony;Arkansas Bar Association House ofDelegates meeting in Fayetteville;

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21Arkansas Lawyernanuary 1989

St. Francis County Bar Associationmeeting in Forrest City; ArkansasJudicial Council meeting in Jones­boro; luncheon for lawyer-legisla­tors sponsored by the Arkansas BarAssociation; Senior Physicians ofArkansas; Bar Leaders Conferencein Little Rock; Fourth Judicial Dis­trict Trial Practice Seminar atDeGray State Park; CentralArkansas Commercial Bankers;University of Arkansas, Fayet­teville Law School Committee;Pulaski County Medical Society;and the Oklahoma Bar AssociationAnnual Meeting at Tulsa, Okla­homa.

The Bar Leaders Conferenceheld at The Capital Hotel on Octo­ber 28 was a huge success. Morethan 80 bar leaders from across thestate attended the full-day session.Thirty-one local or county bar asso­ciations were represented. togetherwith committee and section mem­bers of the Arkansas Bar Associa­tion and specialty bar associations.Phillip Carroll put together anexcellent program. The speakersincluded David Matthews; MorrillH. Harriman Jr.; Martha M. Miller;Robert McCord; Lynn Foster;

Charles A. Morgan; Mac Glover;and Rodney Slater of our Associa­tion and George Buckley of theAmerican Bar Association. I trulybelieve that the immediate andfuture benefits of this Conferencewill be significant.

Past President Bob Compton ofEI Dorado will lead a group of"blue ribbon" trial attorneys in aone and one-half day "mock trial"at the annual meeting in HotSprings in June, Garland Coun­tians will serve as jurors and thetrial will proceed from voir dire tofinal verdict, with outstanding andexperienced trial lawyers partici­pating in each phase of the case.In addition, a "mini-Gridiron" pre­sented by the Washington and Ben­ton County Bar Associations willbe featured at the annual meeting.I had the opportunity to enjoy theshow at the Fall Legal Institute. Itwill provide an evening of fun, tal­ent and laughs. Also in keepingwith our theme -- "All Arkansas" -­the Friday night banquet andextravaganza will highlightArkansas foods, including catfish,fried chicken, rice and other delica­cies. The entertainment will fea­ture the singing and musical tal­ents of judges and lawyers fromacross the s tate with ProfessorDent Gitchel. of the University ofArkansas at Little Rock School ofLaw, serving as master of cere­monies. Mark your calendar nowand plan to attend a meaningful.educational and fun-filled annualmeeting.

A word of praise. It is a genuinepleasure to work with your presi­dent elect, Mac Glover. He isalways so willing to help me andthe Association in every possibleway. His contributions are greatlyappreciated.

All of you are doing a great job.Keep it up and it will continue to bean exciting year.o

•

POINT OF VIEWILETTERS

Courtesy and AdvocacyTHOUGHTS

OFASMALL TOWN

LAWYER

I am a "small town lawyer." Insaying that, I recognize that

many lawyers would classify mem­bers of the Wichita bar as "smalltown lawyers." But what I mean isthat I REALLY am a small townlawyer. That doesn't mean that Iam as folksy as Jimmy Stewart, noram I well known for funny storiesabout pigs and mules and farmers'daughters. It simply means that Ipractice law in an authentic smalltown. We have a real courthousewhere we occasionally have realtrials (sometimes with real juries),and we have real judges who real­ly do administer real justice. Otherthan the fact that we could hold ourlocal bar meeting in the front seatof a 1957 Thunderbird, we do manyof the same things as the "citylawyers." However, there is a dif­ference between the rural andurban practice.

Contrary to what our city broth­ers and sisters may think, thingsdon't move much slower (or for thatmatter much faster) than they do inthe city. The days are the samelength in Smith Center as they arein Wichita, and each morningbrings with it yesterday's phonemessages, usually stuck to the bot­tom of a dirty coffee cup. The big

Editor's Note:James L. Bush of Smith Center,

Kansas, population 2.240, is a mem­ber of the Windscheffel & Bush lawfirm. Our thanks to William R. Wil­son Jr" of Little Rock for his assis­tance in obtaining this article.

difference is not in what we do, butin how we go about doing it. It wasjust the other day while making thelong trip back from bankruptcycourt in Topeka that I finally fig­ured out what's missing from theurban practice of law. The onething that seems to be much morecommon out here on the openplains where we have (get) to workwith the same people every day iscourtesy.

My former partner, now retired,personifies casual courtesy. Hispersonality is something of a blendof urban sophistication and countrycharm that allows him to feel com­fortable in virtually any situation,whether its swapping true storieswith the chief justice or "true" taleswith one of the local fishermen. Helooks and sounds like what every­one believes a lawyer should lookand sound like, right down to theunruly tuft of snow white hair thattops is head. Because of this per­fect blend of personality with pro­fession, he never bas to give muchthought to professional courtesy; itis part of him. Not all of us are solucky. Compared to my formerpartner, who is blessed with one ofthose "Hail Fellow Well Met" per­sonalities and meets his "closest"and "best" friends wherever hegoes in the state, I am a relativewallflower. As a wallflower in var­ious courts throughout the state, Ifrequently have the opportunity to

By James L. Bush

observe others in action, and mygeneral impression is that we arebecoming a rather rude and dis­courteous lot.

The discourtesies range from thesimple absence of pleasantniceties all the way to downrightoutrageous conduct. Unlike thedays of yore when opposing coun­sel (no matter how ill-advised) wasreferred to as "learned," today'scourtroom comments are morelikely to be something like, "oppos­ing counsel is obviously ignorantof the law:' a rather inflammatoryaccusation in the presence of one'sclient. It seems that shakinghands is also becoming a thing ofthe past unless the other attorneyhappens to be a close family mem­ber about to embark on an around­the-world journey in a hot air bal­loon. I personally admit somefailing in this regard, but general­ly try to excuse it by blaming theother person for not offering his orher hand first. I also have to fre­quently remind myself to ignoremy earlier training that one doesnot shake hands with a ladyunless she offers her hand first. anobviously outdated and chauvinis­tic rule. I suppose that politicianshave given the custom of shakinghands a bad name. In any event, itdoes add a degree of warmth andcourtesy to any professional trans­action. Even boxers shake handsbefore they try to beat each other'sbrains out.

I learned at a very early age thatit was not polite to call people

January 1989/Arkansas Lawyer/3

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names, unless of course it was thenames that their parents gavethem, which could still get a per­son in trouble if it was a name the"namee" didn't happen to be par­ticularly fond of. Although I am nota prude and have. on occasion,referred to someone (sometimeseven another lawyer) as a stub­born, no good, lying, cheating, dogkicking, SOB, '@!!@%& and /@&$, Ihave never had the courage toactually call anyone that to his orher face. That is attributable notso much to a high degree of gentili­ty on my part, but rather to my pre­viously acquired instincts for self­preservation. I am therefore,amazed at the number of attorneysthat freely call each other, andworse yet, their clients such non­endearing terms. For a professionthat is widely recognized for itsability to utilize the entire Englishvocabulary (sometimes in a singledocument), it seems a shame thatwe can't be more creative whenaddressing one another in anger. Iseriously doubt that opposingcounsel becomes more amenableto settlement by virtue of an unre­alistic characterization of his orher parentage. I think we could doour profession a great service andperhaps even speed up the processof justice a bit at the same time ifwe would strive a little harder tobe more dispassionately passion­ate in arguing the interests of ourclients.

Consideration seems to beanother victim of our endless questto obtain tactical advantages overour adversaries. It seems thatmaximizing the inconvenience ofour adversaries has become a com­monly accepted litigation tactic.Hearings and discovery are oftenscheduled at inconvenient timesand in inconvenient locations inorder to increase the chances thatthe adversaries will be unable orunwilling to attend. Judges all toooften encourage this type of con­duct by failing to utilize theresources available to them inscheduling telephone hearing con­ferences or requiring the submis­sion of matters on written briefs.Out here on the plains where every

courthouse is separated by milesof open highway and the term"bypass" usually refers to a seri­ous heart operation, nothing ismore discouraging than to travelseveral hours to attend a hearingwere the primary accomplishmentis a consensus that there are unre­solved issues that should beaddressed in another he=ing. I amoften bemused al the comments ofthe "city lawyers" who, uponarrival in our courtroom, bemoanthe early morning departure timeand endless hours of drivingrequired to get "way out here."

Those lawyers that frequentlymake such trips fully understandthe vastness of our state and cangenerally be relied upon to keepunnecessary travel to a minimum.Unfortunately, there are manymembers of the bar, particularlythose employed with governmentalagencies, that travel only in an ele­vator or whose travel plans are pri­marily concerned with finding aparking space close to the court­house door. Many of these lawyersseem perplexed at the frustrationexpressed by counsel who hastraveled four hours to get to courtto resolve an issue that could havebeen resolved by 10 minutes ofearnest telephone conversation.There have been occasions when Ihave had to travel more than 400miles simply because anotherattorney was too busy to return aphone call. It is on such occasionsthat the temptation to address theother lawyer in something otherthan polite terms is the greatest.

We attorneys are rather imageconscious. We are concernedabout what we wear, how westand, how we speak, how andwhen we should smile, even whatkind of pen we should have in thepocket of our tastefully matcheddress shirt or blouse. We havebeen repea tedly told that we arehow others perceive us. We don'twant the judge, the jury or anadversary to get the wrong impres­sion of us, so we carefully mold animage that fulfills our individualimpression of what we think weare. When I want the judge or juryto perceive me as bold or decisive,

•

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Not only would the practice oflaw be made more enjoyable byreducing the hostility and rude­ness, we might even find the pro­cess to be more efficient

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a solution, I would suggest that allof this time and effort in attempt­ing to make an impression on oneanother is somewhat a moot point.Canon 7 of the Code of Profession­al Responsibility obligates us torepresent a client zealously withinthe bounds of the law. Therefore,unlike the barnyard rooster whomust puff his feathers and strut hisstuff to show how tough he is, wedon't have to prove anything to one

I wear a red tie with my conserva­tive grey suit and crisp white dressshirt. I don't know that the tie isparticularly effective on either thejudge or jury, but it makes me feelbold and decisive. By the simpleact of wearing a certain tie, I havebecome what I want to portray.Although our concern with imageis not altogether bad, it may havereached the point where we arereluctant to be polite or courteousout of fear that such courtesy maybe misconstrued as a sign ofadversarial weakness or it maybreak the image that we are striv­ing to create. Sometimes we eventry to mold an image by the way inwhich we interact with one anoth­er. For example, we small townlawyers have a tendency to berather cliquish when out-of-townlawyers are around. I suppose thatthis is an unconscious attempt onour part to make the stranger feel alittle more uncomfortable on ourturf. After all, if the stranger feelsas comfortable as we do, we willlose the home town advantage.Bankruptcy practitioners showtheir unique mastery of thebankruptcy system by constant ref­erence to rule and code sectionnumbers. Woe be to the outsiderunable to drop a couple "Rule 2004Exams" or "Section 341 Hearings"into the casual courthouse conver­sation. Tax practitioners are theworst. They can make completesentences without using any wordsat all. Ironically, our zeal in mak­ing a certain impression may infact work against us more than wemay realize. The novice bankrupt­cy practitioner may have readilyagreed to a deposition of his client,but may have some doubt about a"Rule 2004 Exam." An attorneyprosecuting or defending a person­al injury claim is going to try evenharder to win the case, and restorehis or her injured ego, if the otherattorney has acted rudely or disre­spectfully toward him or her. Adefense attorney is probably notgoing to become more generous bybeing characterized as a "stingybastard."

Lest I be accused of simply iden­tifying a problem without offering

LAW, LITERATURE& LAUGHTER

(cited hereinafter as "LLL")

Correction time!In the October column ("From

Catty to Snippy"), a typographicalerror (hereinafter referred to as"typo") occurred somewherebetween my office and the printshop, The amount of judgment theCraighead County jury awardedConnie Clayton against Kemp forthe loss of Kali the alley cat was$250, not $2560. I certainly hope thenumber of cases filed over catkillings did not shoot up dramati­cally as result of this ghastly error.

Speaking of typos, for some timenow I have been collecting errorsin transcription that go beyond theordinary, ho-hum garden variety.I'm talking about the creation ofnon-word words. Clerical helpnew to the legal field always comeup with some great ones, but evenseasoned court reporters add theirshare.

A classic, in my opinion. wastranscribed by a recently hired sec­retary at a law firm with which Ilabored some years back: "In orderto protect yourself from a claim ofusury, the Rule of Thurn is to becompletely certain that no compu­tation known to man will yieldgreater than ten percent perannum interest." Such a Rule isright up there with the One in Shel-

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MistranscriptionGems and"Real Lawyers"News

By Vic Fleming

ley's Case and the One againstperpetuities.

A veteran court reporter blessedme with this gem, taken from abank officer's deposition. "Q:What documents had you preparedin conjunction with the proposeddeed in lieu of foreclosure transac­tion?" "A: An Agreement for aStopple and a Warranty Deed."She was not asked what size orbrand of Stopple the agreementwas for.

Not long ago, I proofread a letterin which I was trying to coerce myopponent into a settlement, only tofind this language: "This is the

second time you have referred tothis case as being an appropriateone to settle for the costs of thefence."

Quite recently, I received apleading from a colleague in whichreference was made to the "Uni­form Contribution Amongst Tort­feasors Act." That may not havebeen a typo, now that I think aboutit.

Here's one from a letter Ireceived a few years ago, onewhich I am sure was not a typo, butrather an accurate transcriptionthat was signed without question:"As soon as I get chait of my client.I will call you." The lawyer gotaholt of me on the phone the nextday, as I recall.

Occasionally, such non-typosoccur when one's longhand cannotquite be deciphered. One of mycurrent trusted employees, typing abrief in which [ wished to point outthe distinguishing characteristicsof a case, came up with this frommy handwriting: "In the presentcase, there are two disfunctions: ..."The boss' handwriting being one ofthem.

Another current assistant ofmine may just have something of ahearing problem. I asked that sheprocure for me "Iile marked" copiesof a document. I almost signed theletter reading "Please send me fivemore copies of the mortgage."

Real Lawyers ...And now, the fast breaking news

for "Real Lawyers." Absent someunforeseeable complications, bythe spring of 1989 Real Lawyers DoChange Their Briefs, by yours truly,should be rolling all the presses ofRose Publishing Company. Writtensome two years ago, this hook isnot a collection of LLL columns. Itis, rather, a penetrating analysis oflegaldom. Or something like that.Watch for it.D

e>Copyrigbt 1989 by Vic Fleming

A GENERAL PRACTITIONER'S PRIMER

Creditors' RightsIn Bankruptcy

There are a few areas in the practice of lawthat remain unaffected by the increasing numberof bankruptcy filings.' The general practitioner

is often requested by business and commercial clientsto provide them with basic representation as creditors

in bankruptcy court. While the United StatesBankruptcy Code often favors the debtor, there are several

remedies available to both the secured andunsecured creditor.'

r=-'~-----­I

By Nelson V. ShawShortly after the debtor files his

or her bankruptcy petition, thecreditors will receive a documententitled "Order for Relief and Meet­ing of Creditors."3 This documentwill provide the creditors with per­tinent information including: thechapter of bankruptcy in question;the filing date of the bankruptcypetition; the filing dates for section523(c) compliants; information con­cerning the first meeting of credi­tors; and various other informationconcerning the bankruptcy action.

Meeting of creditorsThe meeting of creditors is to

occur in not less than 20, but notmore than 40, days from the date ofthe debtor's petition.- The creditorwill receive at least 20 days' noticeof this meeting. It is not mandatorythat the creditors attend this meet­ing: however, by failing to attend,the creditor loses a valuable oppor­tuni ty to gain information madeunder oath by the debtor.

January 19S9/Arkansas Lawyer/7

A G ENE R A L PRACTITIONER'S PRIMER

Proof of claim

As soon as possible, the creditorshould file a proof of claim usingthe format given in Official FormNos. 19, 20 or 21. The proof ofclaim is a document designed todocument the debt owed to thecreditor and should include the fol­lowing:

-Identification of the person fil­ing the claim and hislher con­nection with the claimant;

-As assertion of the amount ofthe deht;

-A statement of the basis onwhich the debt is founded;

-An attachment of any writingupon which the claim is found­ed;

-An attachment of the debtor'saccount if the claim is foundedon an open account;

-The disclosure of any judg­ment rendered on the claim inanother court;

-An assertion that all pay­ments on the debt have beencredited;

-The enumeration of setoffs;-The specification of the secu-

rity, if any; and-The nature 01 the case.The proof of claim should be

filed by creditors as individualsand not as a class.' In Chapters 7and 13 cases, the proof of claimmust be filed within 90 days afterthe first date set for the section 341meeting.6 The court will set thetime within which claims must befiled in a Chapter Il case.'

While a secured creditor is notrequired to file a proof of claim,he/she would be wise to "err on theside of caution" and file the proofof claim. This is true even if thecreditor is notified that the debtor'scase is a "no asset case." The rea­son for this caution is based onseveral possibilities:

-The debtor's information maynot accurately reflect the claim;

-The case may be converted

8/Arkansas Lawyernanuary 1989

from a Chapter II case to aChapter 7 case which requires aclaim in order to participate inthe estate, or;

-Assets may be located andsubsequent notice may inadver­tently be forgotten.

A claim properly filed is presum­ably allowed as filed unless it isobjected to by a party in interest.The objecting party then has theburden of proof to rebut the validi­ty of the claim.'

Notice of appearanceUnder section 1109(b) of the

Bankruptcy Code and BankruptcyRule 2002, the creditor can requestthat notice of all proceedings begiven to him. This notice is usuallyrequested by simply filing a noticeof appearance and requesting thatthe creditor be given notice pur­suant to section lI09(b) of the Codeand Rule 2002. By filing this notice,the creditor can monitor everyaction taken in the bankruptcyaction. This particular "remedy"should be considered in everybankruptcy action.

Motion to lift stayOne of the most widely used of

all creditors' remedies is theobtaining of relief from the section362 automatic stay. Once a debtorfiles a petition, an automatic staytakes effect.' This stay stops near­ly every action that may have aneffect on the property of thedebtor's estate.

This action is taken by the credi­tor's filing a motion to terminate,lift or modify the stay.l. Thegrounds for obtaining relief fromthe stay aTe "for cause" andinclude, but are not limited to:

-Lack of adequate protection;ll-The debtor's lack of equity in

the property;l2-The desire by the creditor to

permit another tribunal to com­plete an action;13

-The continual delaying tactics

of the debtor {and the lack ofadequate protection);"

-The debtor's lack of "goodfaith";l5

-The collateral sought is notnecessary for reorganization;16

-The debtor's failure to make10 mortgage payments;l7

-The debtor's abandoning 01mortgaged real property;l.

-The possibility of irreparableinjury occurring to thecollateral;l9

-Failure to insure the collater­al; 20 or

·A combination of any of theabove.21

The party opposing the motionfor relief from the automatic stayhas the burden of proof on allissues except the issue of whetherthe debtor has equity in the proper­ty subject to the motion. The partyseeking relief has that burden."The facts of each case will helpdetermine whether relief is to begranted."

Motion to dismissUnder section 707 of the

Bankruptcy Code, the bankruptcycourt may, after notice and a hear­ing. dismiss a case "for cause." Ina Chapter 7 case involving anindividual, the court may dismiss acase on its own motion if the courtbelieves the debtor is abusing thebankruptcy law."

As used under II USC section362, "cause" can be a number ofthings. "Cause" may include:

-Unreasonable delay by thedebtor;

-A material default by thedebtor in the implementation ofa plan;

-Failing to follow the rules ofthe court or revocation of a planwith the subsequent denial ofconfirmation of subsequentplans.25

In addition, the following"cause" could be considered fordismissal under section 707:

A GENERAL PRACTITIONER'S PRIMER

-Nonpayment of any requiredfees;

-Substantial abuse of theCode; or

-A case filed in "bad faith.""The dismissal of a case has the

effect of undoing everything thatthe bankruptcy process may haveaccomplished, i.e., lifting the auto­matic stay, An order of dismissalwould also vacate most of theorders mandated by the bankrupt­cy court. 27

Further, under section 305 of theBankruptcy Code, the bankruptcycourt can decline to hear a mattereven though it has jurisdiction.The doctrine of abstenlion undersection 305 is appropriate wherethe interests of the parties are bestserved by allowing the dispute tooccur (or to continue) in anotherforum.

Motion to convertThe Bankruptcy Code under sec­

tions 706, 1112 and 1307 providesmeans for converting a case fromone chapter to another, The stan­dards for converting a Chapter 11or a Chapter 13 case to Chapter 7are centered on basically twoalternative elements:

-The debtor is being dilatory,or

-The rehabilitation effort is notfeasible and won't work.

A Chapter 7 action can be con­verted to a Chapter II action underII USC section 706. After a requestis made by an interested party andnotice is given, the court will set ahearing on whether the caseshould be converted, The court hasthe discretion on whether the caseshould be converted,28

It is important for the creditor tomove promptly when seeking aconversion to a Chapter 7 case.Otherwise, the continued operationof a business at a loss will meanthe debtor's estate will dwindle tothe point that there will be nothingavailable for creditors.

Objection to discharge

The general rule is that unlessthe trustee or a creditor objects tothe debtor's discharge or to the dis­chargeability of a certain debt. adischarge will be granted.29 Undersection 727 of the Bankruptcy Code,there are eight grounds for denialof a discharge:

-The debtor is not an individu­al;

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

-The concealment. destructionor falsification of records;

-Knowingly presenting falseinformation to the court;30

-The debtor has committed abankruptcy crime;31

-The failure to explain a loss ofassets;

-The debtor refuses to testify;or

-The debtor has received a dis­charge in a case commencedwithin six years preceding thepresent bankruptcy case.

The creditor has the burden ofproof in a complaint objecting todischarge." The creditor mustprove five elements in order to pre­vail on the fraudulent causes ofaction:

-The debtor made the repre­sentations;

-The debtor knew the represen­tations were false;

-The debtor made the repre­sentations to deceive the credi­tor;

-The creditor relied on the rep­resentation; and

-The debtor was damaged."

Appointment of trusteeUnder section 1104 of the

Bankruptcy Code, a party in inter­est, at any time before confirma­tion and after notice is given, mayrequest the appointment of atrustee in a Chapter 11 proceeding.

Under Chapters 7 and 13, a trusteeis automatically appointed." Thecourt, under section 1104, mayappoint a trustee "for cause,"which includes:

-Fraud;- Dishonesty;-Incompetence;-Gross mismanagement; or-Failure to maintain books and

records, with the suffering ofcontinuing 105s.35

As under sections 362 and 707 ofthe Bankruptcy Code, thebankruptcy court will look at thefacts of each case to determinewhether a trustee should beappointed for cause under section1l04(a)(l) of the Bankruptcy Code,"or in the interest of creditors undersection 1I04(a)(2) of the Code," Themovant for the appointment of atrustee has the burden of proof byclear and convincing evidence,38

In the event a trustee is notappointed, an examiner may benamed if such is in the best inter­est of the creditors or it the debtorhas in excess of $S million in unse­cured, non-trade debt.'" The exam­iner's role is usually limited to aninvestigative function and can pro­vide an oversight function.

ReaffirmationThe debtor can promise to pay

an existing debt and keep theproperty securing that debt pur­suant to II USC section 524, Thedebtor must execute a reaffirma­tion agreement and his attorneymust sign an affidavit stating hehas fully informed the debtor ofthis agreement. Both documentsmust be filed with the court andare subject to the court's approval.

Additional remediesCreditors should be aware of the

following remedies:-Trade creditors have the right

to reclaim goods after an actionis commenced;40

-An involuntary bankruptcy

January 19B9/Arkansas Lawyer/9

A GENERAL PRACTITIONER, s PRIMER

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

1980)." In re Hinkle. 14 SOOO. 202 (Banb. E.D.PA. 198I); In re Tainan. 48 Bankr. 250 (E.D.PA. 1985) and. In re Dabney. 4S Bankr. 313(E.D. PA. 1985) (arrearage should exceedthree months).IS In re MacCubbin. 21·Bankr. 233 (Bankr.M.D. PA. 1982).19 In re Montgomery MalL Ltd. Partner­ship. 704 F2d 1173 (lOth Cu. 1983).20 The use of this "cause N is effective. espe­cially when used in conjunction with thelack of adequate protection.21 Tl9 F'2d. 1008.22 11 U.S.C. section 362.23 House Report No. 95-595 Congress. FirstSession (l977) page 34.24 11 U.S.C. section 7rJl.25 11 U.S.C. sections 1112. 1208 and 1307;see also In re Missouri. 23 Bankr. 78 (Bankr.E.D. Ark. 1982); Matter of Odom Enterprises.Inc.. 22 Bankr. 785 (Bankr. E.D. Ark. 1982)... 13 8ankr. 578; 13 Bankr. 1003: 42 Bankr.474.27 11 U.S.C. section 349.21 See 11 U.S.C. section 'lC6. Notes of Com­mittee on the Judiciary Senate Report No.95-989; In re Mead. 28 Bankr. 1000 (Bankr. ED.PA. 1983); In re Providence Television Ltd.Partnership. 75 Bankr. 139 (Bankr. N.D. ILL.1987)." II U.S.C. sections I 12(b) and 1307(b)." In re Woodhull. 30 Bankr. 83 (Bankr. E.D.Ark. 1983).31 These crimes include the making of afalse oath or account. the use or presenta­tion of a false claim and the giving orreceiving of money for acting or forbearingto act. See the Legislative History to 11U.S.C. section 727 and also. see 18 U.S.C.section 152.32 U.S.C.S. Court Rules. Bankruptcy Rules.Rule 4005.3] In re Locke. 50 Banb. 443 (Bankr. E.D.Ark. 1985); In re Kerr. 58 Banb. 171 (Banla.E.D. Ark. 1985); In re Hunt. 30 Bankr. 425(Bankr. M.D. Tenn. 1983).34 II U.S.C. sections 701. 702. 703 and 1302.~ In re Harlow. 34 Bankr. 668 (Bankr. E.D.PA.I984).36 In re Colby Constr. Corp.. 51 Bankr. 113(Bankr. S.D. N.Y. 1985); In ra La Sharene.Inc.. 3 Bankr. 169 (Bankr. N.D. GA. 1980).:r1 In re Concord Coal Corp.. 11 Bonier. 552(Bankr. S.D. W. VA. 1981).311 In re Pots and Company. Inc., 20 Bankr.3 (Sonkr. E.D. PA. 1981)." 11 U.S.C. section 1104(b)40 11 U.S.C. section 546(c} and (d).41 11 U.S.C. section 303(b); 50 Bankr. 443: Inre Garland Coal and Mine. 67 Bankr. 514(Bankr. W.D. Ark. 1998).42 11 U.S.C. section 554.43 In r. Ozark Restourant Equipment Co..41 Bankr. 476 (Bankr. W.D. Ark. 1984).remanded 61 Bankr. 750.

Southeut Arbn...lorraine Hall(!lOl) 366-7506

Co'!'., 817 F2d 625 (10th Cu. 1987); however.see In re American Reserve Corp., No. Erl­1768 (7th Cir. 2/18188).6 U.S.C.S. Court Rules. Bankruptcy Rule.Rule 3002(c).7 U.S.C.S. Court Rules. Bankruptcy Rule.Rule 3002(cX3).8 In ra Farmers Co-op 01 Arkansas andOklahoma. Inc.. 43 Bankr. 619 (Banla. W.D.Ark. 1984).9 11 U.S.C. section 362. Also see David M.Lira. Bankruptcy 64-66 (1988).10 U.S.C.S. Court Rules. Bankruptcy Rule.Rule 9014: In re Coin, 3S Bankr. 904 (S.D. N.Y.1983).II See In re Marchand. 61 Bankr. 81 (Bankr.E.D. Arle. 1986); In re Glover. 17 Bankr. 161(Banh. E.D. Ark. 1982); In re HoUman. 51Bankr. 42 (Bankr. W.D. Ark. 1985).12 17 Banla. 161.13 In re Bailey. 11 Bankr. 199 (Bankr. E.D. Va.1981): 3S Bankr. at 910.14 In re GSVC Restaurant Corp.. 3 Bankr.491 (Bankr. S.D. N.Y. 1980).IS In re Little Creek Dev. Co.. Tl9 F2d 1008(5th Cir. 1986). In re William., 42 Bankr. 474(Bankr. E.D. Ark. 1984). See the followingcases for discussions on lack of "goodfaith"; In re Eden Associates. 13 Banh. 578(Bankr. S.D. N.Y. 1981); In re Jenkins. 13Bankr. 1003 (Sonkr. W.D. Ark. 1981).16 In re Sulzer. 2 Banler. 630 (Banh. S.D. N.Y.

FOOTNOTESIn 1987. there were 5.695 bankruptcy peti~

Hons filed in Arkansas (all chapters).~ The House Report on the United StatesBankruptcy Code stated "This (bill) is notprimarily a debtor's bill. .." H.R. Rep. No.595. 95th Congo (1977).3 11 U.S.C. section 341.4 U.S.C.S. Court Rules. Bankruptcy Rule.Rule 2003(0).S See Sheftelman va. Standard Metals

action is feasible in somecases;u

·Abandonment to a party witha possessory interest may bepossible;" and

•Avoidance of a transfer by thedebtor pursuant to II USC sec­tion 544.42The recent development of

American jurisprudence hasshown that a general law practicedevoid of bankruptcy business is ararity, and in all likelihood is oneheaded for exlinclion.o

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lOaTH CONGRESSUNUSUALLY PRODUCTIVE

Aproductive 100th Congressadjourned sine die on October22 in time for members to

return home to campaign for re­election on November 8. The list ofits legislative accomplishments isimpressive. For the first time in IIyears work was completed on all13 regular appropriations bills bythe time the fiscal year ended atmidnight September 30, and leg­islative logjams broke allowingthe enactment of several landmarkbills, some of which had been bot­tled up for years. Here is a briefsummary of some of the legislativeaccomplishments of the 100thCongress.

Anti-drug Bill, Responding toelection-year pressures and a gen­uine concern about our nation'sgrowing drug problem, the 100thCongress in its last official actbefore adjournment passed a $2.6billion measure to combat drugtrafficking and abuse. The billincludes a death penalty provisionfor major drug traffickers who killwhile carrying out a drug deal. Itcreates a cabinet-level drug czar,generally stiffens penalties fordrug users and dealers and autho­rizes substantially more money for

Editor's Note:Bill Massey; a native of Malvern,

is chief counsel to U.S. SenatorDale Bumpers. Massey received aJ.D. from the University of ArkansasSchool of Law; Fayetteville in 1973and a LL.M from the GeorgetownUniversity Law Center in 1985.

121Arkansas Lawyer/january 1989

treatment and rehabilitation pro­grams.

Under one of its more controver­sial provisions. beginning inSeptember 1989, convicted drugusers and dealers could have eligi­bility for federal benefits, includ­ing college loans and housingguarantees, taken away by courtorder. The bill also contains toughnew child pornography provisions.But due to budget restraints, only$500 million was appropriated toimplement the bill, split roughlyhalf for interdiction and half forrehabilitation and treatment. (H.R.5210, Pub, L, No. 100-690)

Technical Corrections Tax Act.In its waning hours, Congress cor­rected numerous typographicaland technical errors in the 1986 taxreform act and the 1987 budget re­conciliation bill. but it didn't stopthere. Included in the so-calledtechnical corrections bill were alsodozens of tax breaks, including thefollowing: a new exclusion fromincome for interest earned on U.S.Savings Bonds that low- and mod­erate-income parents use tofinance children's college; exemp­tions for farmers and other off-roadusers from collections of an excisetax on diesel fuel; liberalization ofthe capitalization rules for artistsand writers and photographers;continuation of the research anddevelopment tax break for busi­ness; renewal of tax credits forlow-income housing; extensionthrough 1988 of employer exclu-

By Bill Massey

sions for employee education andlegal assistance and through 1989of various energy credits and thetax exemption for mortgage rev­enue bonds,

Also included in the legislationwere Senator David Pryor's"Taxpayer's Bill of Rights" andSenator Dale Bumpers' legislationadding 540 historically significantacres to the Manassas BattlefieldPark in Virginia. (H.R. 4333, Pub. L.No. 100-617)

Omnibus Trade Legislation.After three years of negotiationswith the White House and postur­ing on both sides, a major tradebill became law in August 1987. Inaddition to toughening section 201(the escape clause) and 301 (unfairtrade practices of foreign govern­ments) of the 1974 Trade Act, thebill contained rather comprehen­sive provisions dealing with manyissues related to trade and interna­tional competitiveness, includingforeign debt. business bribery andother foreign corrupt practices, cur­rency matters, patent law and edu­cation. Several controversial pro­visions -- such as those requiringdisclosure of foreign investmentsin the U.S. and mandating retalia­tion against nations that maintainlarge trade deficits with the U.S. -­were dropped from the final pack­age. (H.R. 4848, Pub. L. No. 100-418)

Fair Housing. In 1980, during thelame duck session of the 96thCongress, efforts to bring up fairhousing legislation in the Senatewere successfully filibustered andthe legislation died. For the next

seven years no serious effort wasmade to enact the bill. Finally,after arduous negotiations amongmembers 01 Congress, civil rightsactivists, the Reagan Administra­tion and the National Associationof Realtors, a compromise wasreached. The new law lor the firsttime hars discrimination in thesale or rental 01 housing againstthe handicapped or families withyoung children. The bill givesHUD new enforcement and litiga­tion authority when mediation failsto resolve a complaint. Any partycould choose a trial in U.S. districtcourt or the case could be handledby an administrative law judge ifall parties agreed. The ALJ wouldhave the power to decide the case,impose fines and issue injunctions,(H.R. 1158, Pub. 1. No. 100-430)

Welfare Reform. Reform of ournation's 50-year-old welfare lawswas accomplished after heatednegotiations and substantial com­promise on all sides. Under the$3.3 billion compromise. some wel­lare recipients will be subject towork requirements for the firsttime, and child care and medicalcoverage will be extended to fami­lies that are successful in securingemployment and leaving the wel­fare rolls. In addition, the legisla­tion would substantially strength­en child support enforcement byrequiring states to meet strict fed­eral standards and would requirestates to offer education and jobtraining programs to welfare recip­ients. (H.R. 1720, Pub. 1. No. 100­485)

Clean Water. On February 4,1987, by an overwhelming margin,Congress overrode PresidentReagan's second veto of a $20 bil­lion water pollution control bill.While Reagan viewed the bill as a"budget buster," Congress saw themeasure as landmark environmen­tal protection legislation. Themeasure ended seven years of con­tentious wrangling betweenCongress and the administration

over federal aid for local sewagetreatment plants and other waterprojects. The bill reauthorizedthrough 1994, $18 billion in aid (55percent federal share) for sewageplant construction and set limits onwastewater discharges into water­ways. (H.R. I, Pub. L. No. 100-4)

Drought Reliel lor Farmers.Responding to a devastatingdrought, Congress passed a broadmeasure to provide relief to farm­ers and livestock producers whowere the hardest hit. Under thebill. any farmer who lost 35 percentor more of any crop is eligible forpayments equal to 65 percent 01either his projected lederal subsidyor the projected market price forhis crops. The cost of the bill isanticipated to be in the range of $5billion. (H.R. SOlS, Pub. L. No. 100­387)

Civil Rights. On March 22. 1987.Congress voted to override thePresident's veto of landmark civilrights legislation designed to over­turn the 1984 Supreme Court deci­sion in Grove City College v. Bell.In the Grove City case. a 6-3 major­ity of the Court surprised civilrights advocates by ruling thatwhen an entity receives federaldollars, only the "program or activ­ity" which actually gets the aid,not the entire institution, is barredfrom discrimination. The new law,known as the Civil RightsRestoration Act of 1987, amendslour civil rights statutes to makeclear that even if only part of aninstitution receives federal aid. theentire institution is prohibited fromdiscrimination. (Pub. 1. No. 100­259) See Massey. CongressOverrides President's Civil RightsVeto. 22 The Arkansas Lawyer 156(1988)

Intermediate Range NuclearForces Treaty. In May 1988, by avote of 93-5, the Senate consentedto the ratification 01 the UnitedStates-Soviet Union treaty requir­ing the elimination within threeyears of all ground-launched

nuclear missiles with ranges of 300to 3400 miles. In practical terms,the Soviets will be required todestroy roughly 1600 warheads,and the U.S. roughly 400. It was thefirst major arms reduction agre'e­ment of the Reagan Administra­tion.

Highway and Mass TransitReauthorization. Without a vote tospare, on April 2, 1987. the Senatelollowed the House's lead andvoted 67-33 to override thePresident's veto of a highway reau­thorization measure totaling $88billion. The President had chargedthat the five-year package was"pork barreling" at its worst. butthe bill had strong bipartisan sup­port. The enacted measure autho­rized $70 billion for highway con­struction and $18 billion for masstransit programs. Included in thebill were authorizations 01 particu­lar interest to Arkansas, includingimprovements in Highway 71 andWaldron Road in Fort Smith and inthe Jonesboro and Pine Bluff areas.(H.R. 2. Pub. L. No. 100-17)

Veterans. On March 15. 1989. aCabinet-level Department ofVeterans' Affairs will begin takingcare of the needs of the nation's27.4 million veterans under theterms of Pub. L. No. 100-527.Veterans' organizations had beenpushing for years to elevate theVeterans' Administration to cabinetstatus. A separate bill ends adecade-long struggle to grant theright to judicial review for veter­ans' claims. The legislation cre­ates a new Article I court. the U.S.Court 01 Veterans' Appeals, to hearappeals by veterans from "clearlyerroneous" decisions of the Boardof Veterans' Appeals and repealsthe existing and anachronistic $10cap on attorneys' fees. Veteranswill be allowed to pay theirlawyers a "reasonable fee." (S. 11.Pub. 1. No. 100-XXX)

Medicare Catastrophic Cover­age. Ever since the enactment ofthe Medicare program in 1965. con-

January 19891Arkansas Lawyerll3

carns have been raised about itsfailure to protect against the threatof astronomical medical billsencountered by the very seriouslyill. In the largest expansion of theprogram since its creation.Congress partially met these con­cerns by capping the amount thenation's 32 million Medicare bene­ficiaries are required to pay underPart A (hospital and home healthcare) and Part B (physician andother outpatient costs).

Previously, there was no ceilingon beneficiary out-of-pocket costs.For example. hospital coveragebegan to phase out after 60 daysand ended after 150 days. Underthe new law, Medicare picks up theentire hospital bill after the benefi­ciary pays a single annualdeductible, and helps to pay forprescription drugs as well. Thecost of the new coverage is paid forby Medicare recipients, and isbased in part on each one's federalincome tax liability. (H.R. 2470,Pub. L. No. 100-360)

Notification of Plant Closings.On August 3, 1988, PresidentReagan allowed legislation guar­anteeing workers advance notifi­cation of closings and layoffs tobecome law without his signature.Beginning February 3, 1989,employers with 100 or more full­time employees must give employ­ees 60 days' advance writlen noticeof a "plant closing" (an employ­ment loss of 50 or more employees)or "mass layoff" (generally a layofffor six months or longer of one­third of a workforce but no lessthan 50 employees). (S. 2527, Pub.L. No. 100-379) See Massey,Employer Notice of Plant ClosingsBecomes Law, 22 The ArkansasLawyer 205 (1988)

SBA Minority Business Reform.Responding to the Wedtech briberyscandal and other abuses underthe so-called 8(a} program,Congress for the first time hasrequired minority-owned business­es to compete for contracts award-

l4lArkansas Lawyerl)anuary 1989

ed by the Small BusinessAdministration. Under the 8(a) pro­gram, SBA enters into contractswi th other federal agencies andsubcontracts the work to minority­owned businesses. The non-com­petitive nature of the program hadproved to be an easy target forthose willing to bribe and usepolitical influence to secure lucra­tive contracts. In addition torequiring competitive bidding forcontracts over $3 million and beef­ing up criminal penalties for thosewho abuse the program, the newlaw requires firms to secure anincreasing percentage of theirbusiness from non-8(a) sourcesover the nine years they partici­pate in the program. (H.R. 1807,Pub. L. No. 100-590)

Price Anderson Act Amend­ments. Congress cleared a IS-yearreau thorization of the Price­Anderson Act. which limits the lia­bility of public utilities for nuclearreactor accidents. The coveragefor a single accident wasincreased from $700 million toroughly $7 billion. Also, utilitiescould be fined up to $100,000 a dayfor violations of Energy Depart­ment safety regulations. (H.R. 1414,Public L. No. 100-408)

Military Base Closings. At theclose of the session Congress man­aged to send to the White Houselegislation that will lead to theclosing of several military bases.The legislation is a recognition byCongress that some bases havebecome superfluous or obsolete.The new law authorizes an inde­pendent commission to recom­mend for closure a list of bases byDecember 31, 1988. The list wouldbe submitted to the secretary ofdefense on a "take it or leave it"basis, would not be subject toamendment and would take effectunless rejected in toto by the secre­tary of defense or by legislationpassed by Congress and signed bythe President. (S. 2749, Pub. L. No.100-526)

Insider Trading. Responding tothe case of Ivan R. Boesky and itsaftermath, Congress beefed uppenalties for insider trading. Civiland criminal penalties for tradingstocks using material non-publicinformation will be increased -- upto 10 years imprisonment or $1 mil­lion in fines for criminal violations,and for civil violations, $1 millionor treble the profits gained or loss­es avoided. Also, the SEC wouldbe authorized to pay bounties forinformation leading to convictions.tH.R. 5133, Pub. L. No. loo-XXX}

Regulatory Fairness Act. Thislegislation, championed bySenator Dale Bumpers, corrected alongstanding inequity in theFederal Power Act. A utility com­pany petitioning for a rate increaseis entitled by law to begin collect­ing the higher rate after 60 days.When a company filed a petitionfor a rate reduction. however, thereduced rate did not go into effectuntil approved by the FERC, per­haps months or even years later.There was no provision in previouslaw for a refund of higher rates col­lected in the interim. TheRegulatory Fairness Act correctedthis inequity by allowing FERC torequire utilities to refund thoseamounts ultimately found toexceed a just and reasonable rate.tH.R. 2858, Pub. L. No. 100-473)

Elementary and SecondaryEducation. In April 1987, Congressreauthorized most federal elemen­tary, secondary and adult educa­tion programs for five years. Thelegislation increased funding forlow-income students and the hand­icapped and set up a new programto encourage students to stay inschool. It also included a nonger­mane amendment by Senator JesseHelms to outlaw pornographicphone services. (H.R. 5, Pub. L. No.100-297)

FIFRA Reauthorization. Afteryears of wrangling, Congress wasable to pass a non-controversialreauthorization of the Federal

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Insecticide, Fungicide andRodenticide Act, dropping provi­sions to pre-ampt stricter statestandards for pesticide residues infood and to hold farmers liable fordamage caused by pesticides theyapplied according to label instruc­tions. The act legislates a nine­year schedule requiring chemicalcompanies to test their products,under scrutiny by the Environmen­tal Protection Agency, to determineadverse health effects. (S. 659, Pub.L. No. 100-532)

Medical Laboratory Standards.Following media reports of seriousand fatal diseases going undetect­ed because of pervasive clinicallaboratory errors, Congress enact­ed legislation requiring labs tosecure federal certification. endurefrequent inspections and meetstrict proficiency standards.Coverage also includes the morethan 100,000 labs in physicians'offices. (H.R. 5471, pub. L. No. 100­578)

Japanese-American Internment.Americans of Japanese descentimprisoned during World War IIwere offered an apology and $1.25billion in reparations under legis­lation signed into law on August10, 1988. The roughly 60,000 sur­vivors of the 120,000 interned dur­ing the War will each receive atax-free payment of $20,000 underthe new law. (H.R. 442, Pub. L. No.100-383)

Polygraph Protection. Privateemployers are prohibited fromrequiring employees or applicantsto submit to a polygraph test inmost circumstances under legisla­tion enacted in June 1988. The pro­hibition would not apply to federal.state or local governments, nor tosecurity companies or those thatmake and market controlled drugs.Lie detector tests would not bebarred when an employer has areasonable suspicion that anemployee has engaged in illegalwork-related conduct such asembezzlement. In no event could

the results of such a test be used asthe sole basis for discharge or dis­cipline. (H.R. 1212, Pub. L. No. 100­347)Casualties of the 100th Congress

Scores of bills, however, died orwere killed before adjournment,including legislation dealing withthe federal minimum wage, workernotification of hazardous sub­stances, a waiting period for thepurchase of handguns, clean air,parental leave, day care, banking

deregulation, the savings and loancrisis, product liability reform,campaign finance reform, stockmarket regulation, corporatetakeovers, access to health care bythe uninsured, textile quotas, air­line consumer protection. pensionreform and mandatory drug test­ing. These issues and others,including our staggering nationaldebt. will be considered when theIOlst Congress convenes at noonon January 3, 1989.0

January 1989/Arkansas LawyerllS

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

By Jean D. Stockburgerand Coleen Barger

This article will cover legislationpassed in the 1987 GeneralAssembly; review selected deci­sions of the Arkansas SupremeCourt and the Arkansas Court ofAppeals in 1987-88 and outlineproposed legislation for 1989.

When a field of law is largelystatutory. it is susceptible to quickand drastic changes. The legisla­ture can make sweeping revi­sions and when it does, the courtsare called upon to interpret thenew provisions or to harmonizethem with the existing body ofcase law:

161Arkansas Lawyernanuary 1989

ADOPTION LAWIn the Matter of the Adoption of

S.I.B.. 294 Ark. 598, 745 S.w. 2d 606(1988). The girl was 15 and preg­nant. She didn't tell the child'sfather about her condition and hedidn't ask. It had been just a briefsexual encounter, and when thebaby boy was born. she gave himup for adoption. When the adop­tive parents filed a petition foradoption, the probate court. on itsown motion, stayed the proceedingpending notice to the biologicalfather of the child, An appeal wentto the Arkansas Supreme Court fora determination of whether noticeto the father is mandated by theEqual Protection and Due ProcessClauses of the United States Con­stitution.

The Supreme Court held thatnotice to the father was notrequired in this case, as he met

none of the statutory criteria thatwould entitle him to such notice. 1

The Court noted that the Due Pro­cess Clause protects a father only"when the father acts like a fatherand takes on some of the responsi­bilities of fatherhood:" Equal Pro­tection was likewise inapplicablebecause a mother who wishes togive up the child for adoption anda father who has never establisheda relationship with a child are notsimilarly situated.

The Court said that since theputative father in S.I.B. did notavail himself of the existing statu­tory procedure to establish hispaternity', nor take any other affir­mative action to confirm his father­hood, he was not entitled to noticeunder either constitutional provi­sion.

In making its decision, the Courtrelied on holdings of the U.S.

Supreme Court in Quilloin v. Wal­cott' and Lehr v. Robertson', caseswhich upheld the adoption of achild over the objections of the nat­ural father who had not legitimat­ed the child or established a custo­dial. personal or financial relation­ship with it.

In a concurring opinion, JusticeThomas A. Glaze expressed hisreservations about the adequacy ofArkansas' statutory notice provi­sions, pointing out that althoughthe Court's holding was based inlarge part on analogies to Lehr, thefather in Lehr had not taken advan­tage of New York's "putative fatherregistry" -- a statutory scheme thatenables putative fathers to protecttheir interests in their children bysimple registration.' Justice Glazeindicated that under Arkansas'present scheme, those interestswill not be afforded that kind ofprocedural due process, and thatthe law may be constitutionallysuspect. He advocated the enact­ment of a law similar to New York'sin order to ensure the constitution­ality of Arkansas' adoption-noticestatutes.Putative Father Registry Act

The Arkansas Bar Associationwill propose legislation in 1989 toenable participating unmarriedfathers to receive notice of adop­tion proceedings and to ensurefinality of adoption decrees.

A father's name may be filed ina "Putative Father Registry" in oneof two ways:

-He may file a Notice of Intent toClaim Paternity with the ArkansasDepartment of Health prior to anyadoption or guardianship proceed­ing involving the child; or

-The man's name may be sup­plied to the Department of Healthby a court clerk following any formof judicial proceeding that has theeffect of establishing paternity orordering the man to pay child sup­port.

The legislation sets out the fol­lowing categories of fathers whoare entitled to notice. Theseinclude fathers who have:

-Been adjudicated in Arkansasor in another jurisdiction to be thechild's father or support provider;

-Filed a timely registration withthe Putative Father Registry;

-Been recorded on the child'sbirth certificate as the father;

-Held themselves out to be thechild's lather while openly livingwith the child and the child's moth­er at the time adoption is sought; or

-Been identified by the motherin a written, sworn statement.1987 Revisions of theAdoption Statutes7

The 1987 General Assemblyrevised Ark. Code Ann. §9-9-1O I toclarify the procedure for surrenderof custody of a minor by a hospitalwhen a petition to adopt or a peti­tion for guardianship in a pendingadoption has been filed. Thestatute provides that the courtshall issue an order directing thehospital to surrender physical cus­tody of the minor to the petitionersor to the agency or attorney actingfor either, and relieves the hospitalfrom any liability to any person forcomplying with such an order.'

Section 9-9-102 provides that inall custodial placements by theArkansas Department of HumanServices in foster care or adoption,the child's minority race or minori­ty ethnic heritage shall be givendue consideration, with preferencebeing given to placement with rel­atives, families of the same racialor ethnic heritage as the child orfamilies who are knowledgeableand appreciative of the child'sracial or ethnic heritage. Similarconsiderations will be used wherea child's genetic parents express aparticular religious preference forplacement.9

Amendments to §§9-9-302 and 9­9-303 apply to children in publiccustody. Section 9-9-302 authorizesthe director of a licensed childplacement agency to serve as theguardian of the person and estate,with power to consent to adoptionfor any child whose parents haveentered their appearance andagreed to authorize the agency.1O

Section 9-9-303 extends tolicensed child placement agenciesthe petition and review procedurespreviously available to the Depart­ment of Human Services forappointment of a guardian for a

minor child. II

Sections 9-9-50 I to 505 re-enactthe Voluntary Adoption RegistryAct of 1985 in order to incorporatethe rules and regulations recentlypromulgated by the Departmentand available from it uponrequest. 12

Revocation of Consent to AdoptionBruce v. Dillahunty, 293 Ark. 479.

739 S.w. 2d 522, reh'g denied (987).The day alter she gave birth to ababy girl. the 16-year-old and herparents executed separate con­sents to adoption and release ofcustody, with the understandingthat the baby would be privatelyplaced with a married couple.Three days alter executing the doc­uments, the mother telephoned theattorney representing the prospec­tive parents in order to revoke herconsent and regain custody of thechild. The baby was not released.Shortly therealter, the mother of thechild engaged an attorney and for­mally revoked her consent by affi­davit. but the child remained in thecustody of the adoptive parents.Two weeks later the mother andher parents, as next friends, peti­tioned the probate court for a writof habeas corpus, alleging that theconsent documents they signedwere fatally defective since theydid not contain a statementacknowledging that such consentmay be revoked within 10 days ofits execution, pursuant to therequirements of Ark. Stat. Ann. §56­220 (now codified at Ark. Code Ann.§9-9-220 (987)). The chancellordenied the petition, ruling that thecited authority applied only to"agency" adoptions, and that pri­vate adoptions were governed byArk. Stat. Ann. §56-208 (Ark. CodeAnn. §9-9-208 (987)).

The Arkansas Supreme Courtdeclined to adopt the proffered dis­tinction between private and agen­cy adoptions. asserting that thereis "no logic" in permitting a minorto relinquish her rights in a privateadoption setting, "where she is nei­ther protected by a guardian adlitem nor told of her right to revokeher relinquishment. and then pro­viding such protections when anagency is involved. "13

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justice David Newbern, writingfor the majority, stressed that theappeal was not over the adoption,but rather the writ of habeas cor­pus. The majority felt the use ofthe habeas doctrine was appropri­ate when there had been no tempo­rary custody order and no filing ofa petition for adoption. The Courtdiscussed three cases in whichplenary custody hearings resultedin denials of the writ sought by thenatural parent against parties whohad physical custody of the child. I<

The three cases were determined,however, by findings of fitness ofthe adoptive/custodial parents andbest interests of the child, and inBruce, the Court noted the lack ofreference to allegations of unfit­ness or hearings concerning thebest interests of the child. IS TheCourt concluded that the chancel-

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lor had no basis for denial of thewrit, and the case was reversedand remanded for the entry of anorder consistent with the opinion.

The Court was deeply dividedover the reasoning in Bruce. jus­tice Glaze. in a concurringopinion," disagreed with the impli­cation of the majority opinion thatthe adoptive paren ts would berequired to obtain a court order ofcustody in addition to the legallyexecuted consent by the baby'snatural parent(s) before they couldprevail on a habeas corpus chal­lenge. He saw the issue to be thelawfulness of the consent executedby the mother, not the lawfulnessof the adoptive parents' custody.

In a strongly worded dissent,justice Darrell Hickman accusedthe majority of misreading thelaw." justice Hickman under­scored the stipulated voluntarinessof the consent given by the motherof the child and her parents, stress­ing that "[a] valid lawful consentwas granted, it has not been with­drawn in a proper proceeding, anduntil it has been, the custodians ofthe child have a superior legalright."

In a separate dissent, justice M.Steele Hays expanded on a pointmentioned by justice Hickman -­that no hearing had yet been heldto determine the best interests ofthe child)' justice Hays felt thatthe majority had overlooked themost important considerations:

oThat the best interests of thechild must be considered by thecourt before a consent to adoptionmay be withdrawn; and

oThat it was the petitioners' actin surrendering the child, ratherthan that of the prospective par-

ents, that occasioned the presentlitigation.

In view of the debate spawnedby Bruce, the Probate and TrustSection is considering drafting abill for the General Assembly toclarify the issue of revocation ofconsent in private adoptions.GUARDIANSHIP

In 1987, the Arkansas SupremeCourt ruled that the state's tempo­rary guardianship procedureswere an unconstitutional violationof due process.'" The legislatureresponded by passing Act 535 of1987,21 which provides that upon acourt's finding of imminent dangerto the life or health of an incapaci­tated person, or risk of loss, dam­age or waste to his property, a tem­porary guardian may be immedi­ately appointed for a period of notmore than 90 days, provided thatthe ward is personally served withnotice of the order within 72 hoursof its entry. Notice to the wardmust include copies of the petition,the temporary order and order ofappointment, notice of a hearingdate and, if the ward is over theage of 14, a statement of his rights.The statement of rights mustadvise the ward of his right to berepresented by counsel, to presentevidence in his own behalf, tocross-examine adverse witnesses.to remain silent. to be present andto subpoena any professional whoprepared an evaluation of theward.22

A full hearing on the merits ofthe temporary guardianship mustbe held within three working daysof the entry of the order. As thestatute is worded, it creates thepossibility of holding the hearingon the same day that notice isgiven. an outcome which was notintended. The legislature maywish to re-draft the pertinent sub­section so that the full hearing willnot take place until a certain num­ber of days have elapsed since thenotice was given.Other Revisions toGuardianship Statutes

oArk. Code Ann. §28-65-103 wasamended to clarify the confusionresulting from the repeal of Act 345of 1983. The effect of the amend-

18/Arkansos Lawyer/January 1989

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should have dictated an oppositeresult, referring to the well-estab­lished rule that a particular deter­mination of incompetency is onlyprima facie evidence of continuedincompetency, and that such a pre­sumption may be rebutted by proofto the contrary.PROPOSED LEGISLATION INDECEDENTS'ESTATES

The Probate and Trust Sectionhas drafted three bills affectingArkansas' Probate Code. The firstprovides for probate of wills and

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ment is to validate all guardian­ships established between July 4,1983, and June 28, 1985.23

oThe professional evaluationstatute, Ark. Code Ann, §28-65-212,has been amended to excuse therequirement of such an evaluationprior to the hearing, when theguardianship appointment isbased on the ward's minority, dis­appearance, detention or confine­ment by a foreign power, or when atemporary guardianship issought."Recent guardianship case law

In Winters v, Winters," a doctorwho had been injured by electricalshock agreed to his wife's appoint­ment as guardian of his estate inorder for him to receive $6500 permonth in disability payments.Despite the existence of theguardianship, the doctor continuedto conduct his own business affairsand made all of the couple's finan­cial and investment decisions.Each of the wife's annual account­ings was confirmed without objec­tion of the husband. When maritaldifficulties later developed, thehusband petitioned for terminationof the guardianship, restoration ofhis competency and a finalaccounting by the guardian. Uponthat accounting, the. husband fileda number of exceptions. Findingthat the husband had performedthe major part of the financial deci­sions during the challengedaccounting period, the trial courtoverruled all but one of the excep­tions and declared the wardestopped by his own actions fromraising objections.

The Arkansas Court of Appealsheld that although a guardian ofan estate has the same duties andresponsibilities to his ward as atrustee has to his beneficiary,where the beneficiary or ward iscompetent and has "full knowl­edge of his rights [and] consents to,or acquiesces in, an improperinvestment by the trustee, [hel can­not complain thereof or recoverfrom the trustee for loss or depreci­ation in value of that investment."26

The Court refused to find meritin the appellan t's argument thathis adjudicated incompetency

January 19891Arkansas Lawyer/19

appointment of a personal repre­sentative or administration of theestate, where the purpose is toestablish title to the decedent'sdevisees in real property. Where adecedent dies intestate, tbe peti­tion may ask for a determination ofthe decedent's heirs and theirrespective interests in the dece­dent's real estate. in accordance

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with the procedures already pre­sent in Ark. Code Ann. §28-53-101for determination of heirship.

A second bill proposes to amendArk. Code Ann. §28-4l-101 to reducethe value of small estates that maybe collected without administra­tion to the prior figure of $25,000.The bill restricts the use of tbesmall estates affidavit procedureto distributees of personalproperty."

The third bill proposes to amendthe non-claim statute and statutegoverning notice of appointment ofpersonal representatives byextending the claim period fromthree to six months." One effect ofthis bill is to repeal Act 1007 of1985, which shortened the non­claim period. In studying this pro­posal, the drafters discovered thatmany of the related statutes werenever amended when the non­claim period was shortened,'" andthey have carefully worked to elim­inate any such inconsistencies inthe new statutory scheme.

The drafters deliberately chosenot to amend the statute prescrib­ing the time limit for filing willcontests,31 set at three months, asthey saw no reason to tie in thisprovision with the nonclaim

statute.In light of the recent U.S.

Supreme Court decision overturn­ing Oklahoma's non-claim statutefor violation of due process," theproposed notice statute has beenrevised to read. "Within one (I)month after the first publication ofthe notice, a copy of the noticeshall also be served upon eachbeir and devisee whose name andaddress are known and upon allunpaid creditors whose names,status as creditors, and addressesare known to or reasonably ascer­tainable by the personal represen­tative in accordance with §28-l­112(b}{l), (2) or (3). The burden ofproof on any issue as to whether acreditor was known to or reason·ably ascertainable by the personalrepresentative shall be upon thecreditor claiming entitlement tosuch actual notice.""

Where such a creditor receivesactual notice from the personalrepresentative within 30 days ofthe expiration of the nonclaim peri­od, the creditor shall have an addi­tional 30 days after the expirationof the six-month limitation inwhich to file any claim.Oklahoma Nonclaim StatuteViolates Due Process

The Oklahoma case involved acreditor's due process challenge tothe adequacy of notice by publica­tion. Tulsa Professional CollectionServices. Inc. v. Pope, --- U.S. ---, 108S.C!. 1340,99 L.Ed.2d 565 (1988). Thedecedent had been hospitalized forseveral months prior to his death.When he died, his widow wasnamed executrix of his estate and,following tbe prescribed statutoryprocedure, she published notice tocreditors in the local newspaper.The notice stated that any claimsagainst the estate had to be filedwitbin two months of the first pub­lication of notice. The appellant.the hospital's assignee, did not filea claim within the notice period,but instead relied on an Oklahomastatute requiring the personal rep­resentative to pay the expenses ofthe last sickness of the decedent.The trial court rejected the collec­tion service's claim as time-barred.On appeal, the collection service

raised the due process issue, argu­ing that the probate processinvolved state action and thatnotice by publication was bothinadequate and an unconstitution­al deprivation of a property rightwithout due process.

The U.S. Supreme Court agreedwith the appellant. relying on thelandmark cases of Mullane v. Cen­tral Hanover Bank & Trust CO.34 forthe proposition that state actionaffecting property must be accom­panied by notification to interestedparties. and Mennonite Board ofMissions v. Adams.35 for the rulethat due process requires actualnotice to any party whose nameand address are reasonably ascer­tainable. The Court used a balanc­ing test to weigh the interest of thecreditor. whose right to payment isforever cut off by the passage ofthe nonclaim period. and the inter­est of the state in the prompt reso­lution of probate proceedingsagainst the burden imposed by arequirement of actual notice. TheCourt concluded that actual noticewas not inconsistent with the goalsof the nonclaim statute andstressed that notice by mail is notonly inexpensive and efficient. butalso routinely employed through­out the probate process.Recent Arkansas Cases inDecedents' Estates and Wills

Wills-Davis v. Aringe. 292 Ark. 549.

731 S.W. 2d 210 (1987) -- Divorcerevokes provisions made in favorof ex-spouse. even where will exe­cuted prior to marriage;

-Smith v. Estate of Smith. 293Ark. 32. 732 S.w. 2d 154 (1987) -­Altering rule that devise of fee sim­ple cannot be cut down by subse­quent vague or general language ­- where conveyance is made pur­suant to joint wills. contractualnature of such wills controls;

-Conkle v. Walker. 294 Ark. 222.742 S.w. 2d 892 (1988). -- Althoughlost will generally established inchancery court action. probatecourt has jurisdiction to establishlost will incident to administrationof estate.

Illegitimates' right of inheritance-Boatman v. Dawkins, 294 Ark.

421.743 SW. 2d 800 (1988) -- The 180­day time limit on illegitimate'sright to assert claim againstfather's estate does not violateEqual Protection Clause of theFourteenth Amendment.

Escheat- Newton County v. West. 293 Ark.

461. 739 SW. 2d 141 (1987) -- Title toescheated property passes to coun­ty of residence as of date of dece­dent's death. not when probatecourt enters its order of escheat.The escheat statutes were amend­ed in 1985 to provide for property toescheat to county and no longer tostate.36

When a field of law is largelystatutory, it is susceptible to quickand drastic change. The legisla­ture can make sweeping revisionsand when it does. the courts arecalled upon to interpret the newprovisions or to harmonize themwith the existing body of caselaws. The General Assembly andthe courts brought about manychanges in adoption, guardianshipand decedents' estates in Arkansasduring the last two years -- someminor, some dramatic -- andlawyers who work in these areasneed to be ever vigilant to adapttheir practice accordingly.o

FOOTNOTES, 294 Ark. at BOO. 745 SW. 2d at B07., Id. at 601, 745 S.W. 2d at 608., Ark. Code Ann. §9-1O-104 (1987) pro­vides that a putative father may peti­tion the county court to establish hispaternity. A petition to determine heir­ship, however, must be brought in pro­bate court. See Henry v. Johnson. 292Ark. 446. 730 S.w. 2d 495 (l987l.• 434 U.S. 246 (1978)., 463 U.S. 248 (1983).• 294 Ark. at 605. 745 SW. 2d at 609(Glaze, J.. concurring).7 The 1987 amendments to the adop­tion statutes are collected in the 1987Supplement to Volume 29 of theArkansas Code Annotated.• Ark. Code Ann. §9-9-101 (Supp. 1987)., Id. §9-9-102." Id. §9-9-302." Id. §9-9-303." Id. §§ 9-9-501 to 505." Bruce v. Dillahunty. 293 Ark. 479. 482,739 SW. 2d 522. 524 reh'g denied (1987)." See Verser v. Ford. 37 Ark. 28 (1881);Washaw v. Gimhle. 50 Ark. 351, 7 S.w.389 (1887); and Massey v. Flinn. 198 Ark.279. 128 S.w. 2d 1008 (1939)." 293 Ark. at 484. 739 S.W. 2d at 525.

" Id. at 485, 739 S.W. 2d at 525 (Glaze.J.. concurring)." Id. at 487, 739 SW. 2d at 526 (Hick­man, J.. dissenting)." Id. at 490. 739 S.w. 2d at 528 (Hick­man. J., dissenting)." Id. at 491, 739 SW. 2d at 528 (Hays. I..dissenting).., In the Matter of Evatt. 291 Ark. 153.722 S.w. 2d 851 (1987). For an excellentdiscussion of the decision. see"Guardianship Reform: Five Years ofChange: by ludge Ellen Brantley. 21Arkansas Lawyer 100 Guly 1987)." Codified at Ark. Code Ann. §28-65­218 (Supp. 1987).D See Ark. Code Ann. §28-65-213 (l987).Note, however. that professional evalu­ations are no longer required prior to ahearing on a temporary guardianship.See Ark. Code Ann. §28-65-212(a) andtext accompanying note 24 infra." Ark. Code Ann. §28-65-103 (Supp.1987)." Ark. Code Ann. §28-65-212 (Supp.1987)... 24 Ark. App. 29. 747 S.W. 2d 583 (1988)." Id. at 35. 747 SW. 2d at 586." Ark. Code Ann. §28-41-101 (Supp.1987). This value is presently set at$50.000, but the second bill proposed bythe Probate and Trust Section would re·establish the prior $25.000 limit. Seetext accompanying note 28. infra." Compare Ark. Code Ann. §28-41­101(0) (Supp. 1987)." See Ark. Code Ann. §§28-40-111(Supp. 1987) and 28-50-101 (1987)... See. e.g.. Ark. Code Ann. §§28-50-104.109. 110 and 113 (1987)." Ark. Code Ann. §28-40-113 (1987).3Z Tulsa Professional Collection Ser­vices. Inc. v. Pope. --- U.S. ---. 108 S.C!.1340. 99 L.Ed.2d 585 (1988) (holding thatdue process requires actual notice toreasonably ascertainable creditors ofthe estate). See discussion at textaccompanying note 33, infra.D Compare Ark. Code Ann. §28-40­111(aX4) (Supp. 1987l." 339 U.S. 306. 70 S.C!. 652. 94 L.Ed. 865(1950)." 462 U.S. 791, 103 S.C!. 2706. 77 L.Ed.2d180 (1983)." See Ark. Code Ann. §§28-13-101 to112 (1987).

Editor's Note:Jean D. Stockburger of Little

Rock is a partner in the Mitchell,Williams, Selig and Tucker lawfirm and is the outgoing chair ofthe Arkansas Bar Association's Pro­bate and Trust Section. ColeenBarger. an associate at Mitchell.Williams, Selig and Tucker. is a1988 graduate of the University ofArkansas at Little Rock School ofLaw.

lanuary 19891Arkansas Lawyer/21

221Arkansas Lawyerflanuary 1989

THE

PARALEGAL

IN

PRACTICE

he use of paralegals in the practice of law

has steadily increased in the last decade. To respond to this market demand, educational institu­

tions have increased the number of training programs available for those interested in pursuing

careers as paralegals. Arkansas is no exception. The Arkansas Bar Association is currently work­

ing with the University of Arkansas System to develop a paralegal training program by 1990 which

will ensure qualified professionals are provided to the bar.

No matter the size, law firms utilizing paralegals have determined that they can be an economic

asset and, if properly utilized, a tremendous aid to a lawyer's ultimate work product. By definition,

a paralegal is a professionally trained legal assistant who should be recognized as a part of the

professional staff. In addition to possessing a basic knowledge of legal concepts, the paralegal

should possess self-motivation, patience and a willingness to adapt to different styles

By the Paralegal CommitteeAnnabelle Clinton, Chair

January 19891Arkansas Lawyer/23

• THE.ROLE

OF THEPARALEGAL

and situations. He or she shouldbe trained to assist the lawyer inorganizing, developing, reviewingand preparing information relatingto a legal matter. In most lawfirms, paralegals will have contactwith clients and should also pos­sess good communications skills.And they must be mature enoughto recognize their role as a profes­sional in the law firm.

The role of a paralegal in a lawfirm will depend upon the area ofassignment. In a large firm, a par­alegal may work in a designatedsection of the firm and be limitedto performing certain types oftasks. In a smaller firm, a parale­gal may assume a broader roleencompassing a variety of activi­ties. Either way, the paralegalshould be fully informed about hisor her role and have specificguidelines to follow in carrying outresponsibilities. Without specificguidelines, the paralegal mayhave a difficult time understand­ing his or her role, and the firm willhave a difficult time effectively uti­lizing the paralegal's services.

oThe lawyer should identifyfrom the outset the paralegal's lim­itations and possible uses. He orshe should ensure that the parale­gal understands the subject matterinvolved in a particular situationand fully understands the task tobe performed. Although thoroughinstructions may he time consum­ing for the lawyer, the additionaltime will be beneficial to all con­cerned.

One method of providing basicguidance to paralegals is to utilizewritten guidelines. The guidelinesshould provide the paralegal witha basic understanding of his or herrole with respect to tasks, report­ing, authorily and evaluation ofperformance. II used properly,

241Arkansas LawyerlJanuary 1989

ESTABLISHING GUIDELINES

written guidelines can be veryhelpful to both the paralegal andthe law firm.

-Although trained in basic con­cepts, the paralegal's role shouldnever include the exercise of alawyer's professional judgment.The paralegal should not beplaced in a position to decide whatinformation takes priority overother information or to make deci­sions which affect the client. Thisis obviously a function that theclient expects the lawyer to dis­charge and a function the lawyershould never attempt to delegateto a paralegal. Although some­times a fine line exists in the aleaof professional judgment, thelawyer should take great care toensure that the paralegal's roledoes not include the assumption ofthis type of authority.

oThe paralegal should beinstructed on ethical considera­tions. Rule 5.3 of the "Model Rulesof Professional Conduct" provides:

"With respect to a nonlawyeremployed or retained by or associ­ated with a lawyer:

"(a) a partner in a law firmshall make reasonable efforts toensure that the firm has in effectmeasures giving reasonable assur­ance that the person's conduct iscompatible with the professionalobligations of the lawyer:

"(b) a lawyer having directsupervisory authority over the non­lawyer shall make reasonableefforts to ensure that the person'sconduct is compatible with the pro­fessional obligations of the lawyer;and

"(c) a lawyer shall be responsi­ble for conduct of such a personthat would be a violation of therules of professional conduct ifengaged in by a lawyer if:

"(I) the lawyer orders or, with theknowledge of the specific conduct.ratifies the conduct involved; or

"(2) the lawyer is a partner in thelaw firm in which the person isemployed, or has direct superviso­ry authority over the person, andknows of the conduct at a time

when its consequences can beavoided or mitigated but fails totake reasonable remedial action."As noted in the comment to thisRule, it is the lawyer's obligation toensure that the legal assistantfully understands the ethicalaspects of his/her employmentbecause the attorney will be heldaccountable.

oEvaluations of paralegalsshould be performed on a regularbasis. The paralegal is entitled toknow how his or her work is beingaccepted and the law firm willbenefit if problem areas are identi­fied. Evaluations may be per­formed by each lawyer following aproject using a standard form or, inthe alternative, the responsibilityof supervising the paralegal'sprogress may be delegated to acommittee. Regardless of themethod used, evaluations of workproduct. time devoted to a project.creative methods and thorough­ness are vital to the improvementof the paralegal and must be doneon a regular basis.

In sum, the role of the paralegalis largely left to the discretion ofthe firm. II organized effectively,the use of paralegals can be atremendous asset to the lawyerand the law firm,

AREAS OF ASSISTANCE

As stated earlier, regardless ofthe size of the law firm, paralegalscao provide assistance in a varietyof ways. The following lists pro­vide a basic guide to some of theways law firms are using parale­gals in specific areas of the law.

LITIGATIONOrganize and maintain litiga­

tion files.Draft discovery pleadings and

organize documents.Index and summarize deposi­

tions.Interview clients and witnesses

and take photographs.Organize and prepare exhibits.Obtai!) and summarize medical

records, accident reports andother factual information and

physical evidence.Have subpoenas issued and

served.Abstract testimony for appeals.Basic legal research (shepardiz­

ing, copying cases, etc.).Obtain and prepare informa­

tion on jury panel.Assist in scheduling.

CORPORATE LAWAssist in preparing and filing

standard partnership documentsand amendments.

Assist in preparing and filingstandard fictitious name docu­ments and amendments.

Assist in preparing and filingstandard incorporation docu­ments and amendments.

Prepare minutes of meetings ofshareholders and directors.

Prepare waivers and notices ofmeetings.

Prepare resolutions approvingacquisitions.

Help prepare "buy-sell agree­ments."

Prepare bills of sale.Assist in preparing closing doc­

uments and assist at closings.UCC lien searches.Prepare and file UCC financing

statements for secured transac­tions.

Help prepare SEC reports (proxystatements, 10K. etc.).

REAL ESTATE LAWReview title reports.Help prepare deeds, notes/mort­

gages.Help prepare leases.Prepare applications for real

estate tax exemptions.Conduct index searches of pub­

lic records.Order title insurance.Prepare legal description for

surveyPrepare memorandum of leas­

es.Prepare draft assignment of

leases.Prepare mortgage satisfactions.

• Assist at real estate closings.Prepare draft agreements of

sale.Prepare draft loan applications.Prepare and process mortgage

foreclosures.

ESTATES AND TRUSTSPrepare peti tions for probate of

will and attend probate proceed­ings.

Collect, inventory and valueassets of the decedent.

Apply for medical insurancereimbursement and social securi­ty benefits.

Maintain estate records andfinancial aspects of estate.

Prepare postmortem tax plans.Help prepare tax returns.Attend lRS estate tax audits.Prepare accounting, petition for

adjudication and schedule of dis­tribution.

Terminate decedent's affairsand arrange for final distributionof assets to beneficiaries.

Maintain trust records.Prepare fiduciary income tax

returns.Help prepare accountings and

related court documents.Distribute assets at termination.

TAX LAWPrepare draft individual tax

returns.Prepare draft corporate tax

returns.Prepare draft partnership tax

returns.Prepare draft exempt organiza­

tion returns.Prepare tax projections and tax

shelter calculations.Prepare draft applications for

tax exempt status.

SECURITIESProofreading registration forms.Blue sky fili~gs of registration

papers.Blue sky research.Respond to inquiries from state

securities departments.Legal investment memoran­

dums.Prepare standard auditor

response letters.Maintain security form files.Maintain files and monitor com­

pliance.

Unlike an associate lawyer, theparalegal must understand thatjob progression may not exist with­in a law firm. Likewise, the firmmust recognize that a major com·

HIRING

ponent of motivation -- job progres­sion -- does not exist for paralegalsand that creative methods of moti­vation may be necessary in orderto encourage professional perfor­mance.

Specific guidelines should bedeveloped relating to the educa­tion and/or experience of appli­cants required to meet the specificneeds you have for the use of aparalegal. Many law firms havedeveloped levels of work assign­ments, with accompanying levelsof salary and benefits, in anattempt to provide a career path forparalegals. These apply to smallerlaw offices, depending on the qual­ifications of the paralegal hired,the type of legal work you under­take and your specific needs.

LevellTasks to be delegated are very

routine and require little indepen­dent thinking. All work should beevaluated by the attorney. Thetasks falling into this categoryinclude title searching, setting upfiling systems, collection work of avery routine nature, routine incor­porations, keeping minute books,docket control. etc.

Background needed:-- No college -- one to two years

college.-- No training -- a couple of

evening courses.-- No experience -- secretarial

experience within the firm.1-evel2Tasks involve more technical

matters and require some ingenu­ity and the ability to think indepen­dently. Work is still subject toreview by others. The tasks thatcan be delegated in this categoryinclude tax work, complex formcompletion, final accounting, resi­dential closings, drafting of inter­rogatories, elementary pleadingsand motions, designing of systemsfor trial. management of cases,drafting various agreements.deeds of trust. etc.

Background needed:A college degree; or

-- Formal paralegal training;

January 19891Arkansas Lawyer/25

The National Association of Legal Assistants, Inc.

and-- No on-the-job experience.Level 3Tasks are handled on a project

basis, where a high degree of tech­nical knowledge is needed and theability to think and work indepen­dently is required. Assignmentsare varied and complex and theperson works under a minimum ofsupervision. Tasks include draft­ing complex legal documents,administration of complex estates,management of paper flow of large

commercial loan closings, leasenegotiations, etc. Many times par­alegals in this category havedeveloped an area of factual expe­rience and can begin to serve asan adviser in a particular areasuch as types of surgical proce­dures, the construction and designof automobiles or machinery, no­fault insurance, characteristics ofdrugs, history of development. etc.

Background needed:-- A college degree; or-- Formal paralegal training;

andSeveral years of on-the-job

experience.To determine the level of parale­

gal needed in your office, youshould refer to the list of areas ofassistance discussed previously(adding new areas in accordancewith your practice) and assess theabilities of the paralegal accordingto their background. A job descrip­tion should be developed beforebeginning the hiring process.Advertising for the position can bedone at colleges and universities,in local papers or at paralegaltraining programs.

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261Arkansas Lawyer/january 1989

COMPENSATION AND PROFIT

The primary motivation for thehiring of a paralegal is the factthat he/she is without a doubt aprofit center. The paralegal billsfor their individual time when theclient is paying on an hourly basis.But the paralegal also plays anoth­er very important role that alsoresults in a profit to the attorneyeven when time cannot be billeddirectly to a client. Training a par­alegal to gather and review infor­mation, both documentary and tes­timoniaL in potential lawsuits orcontingency fee cases results inthe attorney having the time tofocus on other matters. Paralegalsare often more valuable than newassociates because they are avail­able to perform leg work (no courtinterruptions) and they often aremore committed to stay with thelawyer (as opposed to new associ­ates who ofte,n look for betteropportunities). The benefit to theattorney is obviously that he/she isable to prepare cases at less costand to be available to performother work simultaneously.

The paralegal's time should beaccounted for and billed similarlyto that of the attorney when theclient pays on an hourly basis. Thenumber of hours billed by the par­alegal times her hourly rate shouldeasily exceed the salary, expensesand overhead attributable to thatparalegal. The firm should deter­mine the expected number of bill-

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able hours, the expenses and over­head and an hourly rate for its par­alegal. This obviously depends onthe level of paralegal hired andthe type of work performed.

Salaries in Arkansas range from$15.000 (Level I) to $30.000 (Level 3).Compensation is obviously depen­dent on the expertise offered by theparalegal. The same is true withcharges to clients. the range gener­ally being $15 an hour (Level I) to$40 an hour (Level 3).

As an example. assume that youhave hired a legal assistant withLevel 2 training and pay an initialsalary of $18.000. Taxes and fringebenefits will raise your actual costto approximately $23.000. If theparalegal's time is billed at $25 anhour. shelhe will pay for their wayby just billing a total of 920 hoursannually. This breaks down to anaverage of 18.4 hours a week(assuming a two-week vacation). Itcan easily compute to a substan­tial profit to the law firm if the par­alegal's time is appropriatelybilled.

ASSIMILATION

The effectiveness of a paralegalis directly dependent on the profes­sional manner in which he or sheis perceived and treated by theattorney(s) and other support staff.The paralegal should be providedwith full secretarial support. indi­vidual office space. business cardsand flexible hours similar to theattorney to permit night and week­end work. All members of theoffice must fully understand therole of the paralegal since in mostinstances it will be a newconcept.o

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January 1989/Arkansas Lawyer/27

DISCIPLINARY ACTIONSJuly to October

The Arkansas Supreme CourtCommittee on Professional Con­duct from July to October 1988,issued seven letters of repri­mand, two letters of caution, twowarnings and suspended for oneyear the law license of John W.Unger Jr. of Fort Worth, Texas, for­merly of El Dorado. The Com­mittee took no action of a disci­plinary nature on 188 informalcomplaints against attorneysand voted "no action warranted"on eight formal complaints.

JOHN W. UNGER JR.Suspension of License

John W. Unger Jr. of Fort Worth,Texas, formerly of EI Dorado, wassuspended from the practice of lawin September for one year for viola­tion of Rules 1.15,4.1 and 8.4 of theModel Rules of ProfessionalConduct.

Unger agreed to act as the attor­ney of a trust created to pay judg­men t creditors in a bankruptcyproceeding. At the time of dis­tribution, Unger indicated to anattorney involved in the proceed­ing that he was holding 10 percentof the claim as a contingency fundin the event taxes were due. Theattorney said he had numerousconversations with Unger during1987 regarding the distribution ofthe additional $4,000, and that onJanuary 21, 1988, he received a let­ter from Unger explaining that the10 percent hold-back had inadver­tently been spent by him. Ungertold the Committee the loss offunds was totally unintentionaland the result of negligence. Hesaid he would reimburse the par­ties and readily accept a repri­mand. He also offered to provideat least 100 hours of pro bono work.Under the rules of the State Bar ofTexas, any action to suspendUnger's law license would prevent

28/Arkansas Lawyerllanuary 1989

him from practicing in Texas.

JAMES D. HOLLANDLetter of Reprimand

James D. Holland of HorseshoeBend was issued a letter of repri­mand in September for violation ofRules 1.3 and 8.4 of the ModelRules of Professional Conduct.Holland was hired in October 1987to file a lawsuit against his client'sex-wife. The client said Hollanddrafted a complaint and defaultjudgment and told him the papershad been served on his ex-wife.Later, Holland was unable to pro­vide the client with a case number.The client said Holland also toldhim that a court date had been set,but later said the date had beencontinued. Holland contacted theclient in January 1988 and recom­mended that he consider an out-of­court settlement. The clientlearned from the chancery clerkthat his complaint was never filedby Holland.

NAIF SAMUEL KHOURYLetter of Reprimand

Naif Samuel Khoury of FortSmith was issued a letter of repri­mand in September for violation ofRule 1.6 of the Model Rules ofProfessional Conduct. Khoury rep­resented a client in a divorce caseand a child custody case. She saidduring these proceedings her ex­husband submitted an affidavitprepared by Khoury which con­tained inaccurate statements andinformation she had told Khoury inconfidence.

MARC A. KLINELetter of Reprimand

Marc A. Kline of Little Rock wasissued a letter of reprimand in Julyfor violation of Rules 1.3 and 1.4 ofthe Model Rules of Professional

Conduct. Kline was hired in May1986 to file a lien and a lawsuit forhis client. Kline told the client hehad filed the lien and was waiting30 days for the attorney's response.In July 1986, he told the client thelien had an incorrect address andthe sheriff had been unable tolocate the other party. The clientsaid he verified the address andduring the remainder of the yeartried to contact Kline about the lienand the lawsuit, but Kline wouldnot return his calls. The client saidhe learned in June 1987 that hislien had not been filed and thattime had run out to file additionalliens. He said Kline apologized inJune for the error and said anassistant in his office had mishan­dled the case. Kline assured himhe would file lawsuits in bothcases, but did not file any lawsuituntil February 10, 1988. The clientsaid that the suit was filed twoyears after Kline took the case andthat he'd been untruthful with himthroughout that time. He saidKline did not return his phone callsfor months and took action onlyafter he contacted the Committee.

CHRISTOPHER C. MERCERLetter of Reprimand

Christopher C. Mercer of LittleRock was issued a letter of repri­mand in July for violation of Rules1.3 and 1.4 of the Model Rules ofProfessional Conduct. Mercer waspaid a $50 retainer in January 1987to represent a client in a propertymatter. The client said the proper­ty was surveyed at Mercer'srequest at a cost of $350. The clientsaid Mercer made an appointmentwith the surveyor but failed toappear. The client later paidMercer an additional $100. Theclient said beginning in June 1987,he had difficulty contactingMercer. Mercer told him in August1987 that his secretary had notbeen giving him his messages and

had stolen money from him.Mercer told the client several timeshe only needed another two weeksto complete the matter but laterquit taking the client's phone calls.In January 1988, Mercer told theclient everything would be readywithin a few days. This was theclient's last contact with Mercer.The Committee said it has beenadvised that Mercer's license feesare delinquent. His 1987 fees werepaid with a check that wasreturned for insufficient funds andhis 1988 fees have not been paid.

ROBERT F. MOREHEADLetter of Reprimand

Robert F. Morehead of Pine Bluffwas issued a letter of reprimand inSeptember for violation of Rules 1.3and 8.4 of the Model Rules ofProfessional Conduct. Moreheadwas hired in April 1985 to handle alawsuit involving the removal oftimber from his client's land. Theclient paid Morehead $350.Morehead told the client in June1985 that the lawsuit had beenfiled. The client heard nothing fur­ther from Morehead. In September1987 the client learned from theBradley County circuit clerk thatthe case had been dismissed withprejudice in April 1987. Moreheadsaid he filed suit for the client butcould not get him to provideaddresses for service. He said theclient never provided him with thenames of any witnesses or paid thefiling fee. He said a dismissal ofthe case with prejudice is not con­sistent with the rules of civil proce­dure.

HARRELL A. SIMPSON JR.Letter of Reprimand

Harrell A. Simpson JI. ofPocahontas was issued a letter ofreprimand in September for viola­tion of Rule 1.3 of the Model Rulesof Professional Conduct. Simpsonwas hired to represent a client in achild custody case. Simpson toldthe client that his ex-wife's attor­ney would prepare documents tofinalize the court decision giving

him custody of the child. The clientlater learned that neither Simpsonnor the other attorney presentedthe precedent to the court and thecase was dismissed in February1987 for lack of prosecution. Hesaid he discontinued child supportpayments to his wife on advicefrom Simpson in 1986 after hischild moved in with his ex-wife.The client said Simpson has notreturned his phone ca\ls. At thehearing, Simpson acknowledgedthat in hindsight. he should havefollowed up to make sure a prece­dent was filed.

ROBERT R. WHITELetter of Reprimand

Robert R. White of Fayettevillewas issued a letter of reprimand inSeptember for violation of Rule8.4(c) of the Model Rules ofProfessional Conduct. White waspaid $5000 to handle an adoption.The payment was placed in a trustaccount under the agreement thatthe client could change her mindwithin 10 days regarding the adop­tion and be reimbursed the retain­er less any expenses. In a few day,the client told White she did notwant to go on with the adoption.He told her he'd reimburse theretainer in full. When no refundwas received, she made severalunsuccessful attempts to contactWhite. She received a letter inJune 1987 in which he said thecheck would be sent to her within30 days. When the check was notreceived, she wrote a demand let­ter. In August 1987, she received acheck for $4,600. The check waslater returned for insufficientfunds. Since September 1987, theclien t said she has tried unsuc­cessfully to obtain her money fromWhite. She said White has con­stantly promised her the money.

CHARLES L. HONEYLetter of Caution

Charles L. Honey of Prescott wasissued a letter of caution inSeptember for violation of Rule 1.3of the Model Rules of Professional

Conduct. Honey was hired by aclient to handle a foreclosure pro­ceeding on an apartment complexhe owned and to handle a lawsuit.The client said the mortgage com­pany indicated in correspondencewith Honey a willingness to con­sider a deed in lieu of foreclosureon the apartments. Honey agreedto follow through on the company'soffer. The client said Honey tookno action on the offer and foreclo­sure proceedings were instituted.He said he made several requestsfor his file and a return of the feehe'd paid Honey but received noresponse. The client had alsohired Honey to file a lawsuit inNovember 1985. He said Honeywaited a year before filing the suit.The trial was scheduled forNovember 30, 1987 and he tried tocontact Honey in June, July andAugust, but was able to speak withhim only a couple of times. Honeyca\led him on November 19 andsaid he had more than 500 cases tohandle but offered to meet withhim the day before the trial. Sixdays before the trial, the clientsaid he was contacted by anotherattorney who had been trying tomediate a settlement in the case.He said a $6,000 settlement wasaccepted.

TIM D. WILLIAMSLetter of Caution

Tim D. Williams of Conway wasissued a letter of caution in Augustfor violation of Rules 1.3 and 8.4 ofthe Model Rules of ProfessionalConduct. Williams was hired in1985 to represent a client in a claimagainst a roofing company. Theclient said she signed a complaintprepared by Williams in January1986. Over a two-year period,Williams repeatedly assured theclient that everything was pro­gressing nicely and that her casewould come to trial in the nearfuture. She said Williams advisedher in writing that a trial date hadbeen set. She later learnedWilliams did not file the lawsuituntil after the letter to her waswritten.o

January 19891Arkansas Lawyer/29

Charles L. Carpenter

Charles L. Carpenter, age 71, ofNorth Little Rock, the first tenureddelegate in the Arkansas BarAssociation's House of Delegates,died Tuesday. October 11, 1988. ThefoHowing is an edited excerpt ofthe eulogy delivered by his son,Larry Carpenter, at his funeral.

Last Saturday evening I went byto see my father. As we were sit­ting on the edge of the bed talking,he looked over at me and said, ''I'mgoing to die." We talked about thata moment and then he said, "Thisis a hard process." After anothermoment or so he looked at me andsaid, "Don't lean on me." I was alittle puzzled by this because Iwasn't leaning on him at all. I laterdecided that he recognized that hedid not have much time left andneeded what little time he had,free of the needs of others, to him­self.

My father spent his life trying todo what was good and what wasright. Love was his only motiva­tion. I think that he loved the pro­fession of law and enjoyed helpingothers.

When he was admitted to prac­tice in 1941. one of his goals was toreach the 50-year plateau. He fell alittle short of that goal. His vision,though, was for the Arkansas BarAssociation to be instrumental inhelping our profession achieve itshighest standards. In a campaignhe once said, "Some things arelegally right and morally wrongand I have not hesitated in the pastto point out the differences. I havealso pointed out...proposed actionsthat were morally right but legallywrong. I will continue to do this."This vision led him to take posi­tions that were sometimes unpopu­lar and that seemed too strong. Buthe always took these positions outof a sense of duty and respect andlove.

I think he always tried to bringintegrity and humor to his profes­sional activities. He had long beenin favor of a judicial compensationcommission. He felt that compen­sation for our judges and staffshould not be a hostage of the leg­islature (although he would nothave put it quite that way). Whenthe bar began to work on anamendment to accomplish this sev­eral years ago, Bill Wilson said thefirst person he would appoint to theAssociation's committee would beCharlie Carpenter.

Dad also served on the commit­tee that helped determine use ofthe Arkansas Bar Center for socialactivities and as liaison from theAssociation to the ArkansasJudicial Council to help better thetrial system for all of us.

In going through his papers atthe office, I have found numerousinquiries from attorneys andjudges seeking advice on ethical

IN MEMORIAM

questions which are not spelledout in our codes of conduct andrequire guidance.

A few years ago a young attor­ney came by the office, virtually intears. An ethical situation, notspecifically covered in the ruleswhich govern attorneys, had arisenin municipal court. He talked to mydad about what he had seen andwhy he was so upset. Dad did a lit­tle research to see how other stateshad handled the problem and thenpetitioned our supreme court toamend the rules to make clear thatcertain conduct was not accept­able. The court adopted the newrule.

He also loved people. In recentyears my parents traveled to vari­ous places around the world. Oneof these trips was to China. Forseveral years thereafter, hereceived correspondence from ayoung man who had served astheir guide and who sought adviceon several problems. Sometimespeople would come by the officejust to talk or because they neededa shoulder to lean on. One of hislast public appearances wasSeptember 2 when his good friendGeorge Bentley retired from theArkansas Gazette, Dad workedhard to get his strength up so thathe could attend the party forGeorge. The last time he left thehouse was when he taught hisSunday school class onSeptember 4.

Saturday evening Tom's littleboys, Matthew and Mark, went into give high-fives to the man theycalled D-Daddy (Matthew isresponsible for that little corrup­tion, not being quite able to sayGranddaddy when he started talk­ing). Kids don't shake hands any­more, but they said night-night andhe smiled and told them "night­night." Some months before whenMatthew got hurt. Dad sent a noteto Tom about it:

January 19891Arkansas Lawyer/31

"When Matthew pulled the chairover and hurt himself Sundaynight we all rushed to pick him up.I wanted to comfort him and I knowyour mother wanted to comforthim. but you picked him up andtook him into the living room andtalked to him. I wanted to take himand hold him and comfort him butat that point I realized that youwere his father and that it wasyour right and obligation to do this.When I was a boy we looked for­ward to the circus coming to townand the circus parade. At the endof the parade there was always asteam calliope and we knew thatwhen the calliope went by theparade was over. Sunday night Irealized that the calliope wasgoing by and that is as it shouldb "e.

That is very like the part of theBible we all know, a season and atime for every purpose.

Dad loved his profession. hisfamily and his friends. "And of allthe sacraments and of all the sins.the greatest of these is love."o

Judge William H. Arnold

Judge William Hendrick ArnoldIII. age 64. of Texarkana. a formerEighth Judicial Circuit judge. diedSaturday. September 10. 1988.

Judge Arnold served as judge forthe southwest Arkansas judicialdistrict from 1967-71.

Except for the years when hewas a judge, Arnold practiced lawas a partner in the Arnold andArnold law firm in Texarkana.

His practice. which began in1950. included litigation in the fed­eral and state courts in bothArkansas and Texas.

In 1962. he was appointed by theArkansas Supreme Court to theCommittee on Civil JuryInstructions. He served on theCommittee until 1988. TheCommittee drafted and publishedtwo editions of Arkansas ModelInstructions for civil law, a hand­book which came to be a standardfor the conduct of jury trials in civilcases.

321Arkansas Lawyer/january 1989

Judge Arnold was also a mem­ber of the Arkansas State Board ofLaw Examiners from 1959 to 1965and chairman of the Committee onAdmissions to Practice of theUnited States District Court for theWestern District of Arkansas.Texarkana Division. until 1982.

He was a 30-year member of theArkansas Bar Association and aformer president of the MillerCounty Bar Association. He wasalso a member of the American.Southwest Arkansas and Tex­arkana Bar Associations, the StateBar of Texas and Phi Delta Phi fra­ternity.

He was a director since 1955 ofthe Texarkana Federal Savingsand Loan Association and was adirector of Southwest TitleCompany.

Judge Arnold was a native ofTexarkana and the son of WilliamHendrick Arnold Jr. and GraceHendricks Arnold. His grandfather.William Hendrick Arnold. waspresident of the Arkansas BarAssociation in 1906 and, in 1930and 1931. preceded his grandsonas a circuit judge for the EighthJudicial Circuit of Arkansas.

He received his high schooldiploma from Western MilitaryAcademy in Alton, Illinois. in 1940.He withdrew from the Rice Institutein 1942 to enlist in the U.S. ArmyAir Corps. He served in NorthAfrica and Iran during World WarII. After the war, he graduatedfrom the University of Texas atAustin in 1948 with a B.A. degreeand in 1950 with an LL. B.

Judge Arnold was active in theLions Club. the Texarkana Cham­ber of Commerce. the United Fund.the Board of Directors of the Coni­fer Council. Girl Scouts of America.the American Legion. the ElksClub. the Texarkana Pilots Asso­ciation and the Miller-Bowie chap­ter of the American Cancer Society.

A brother, Thomas Saxon Arnoldof Texarkana, survives.D

Wayne R. Cook

Wayne R. Cook. age 76, of LitUe

Rock. died Wednesday, July 13.1988.

Cook was a former member ofthe Chicago Crime Commissionand had worked in the IllinoisAttorney General's Olfice. He wasa former deputy state attorney gen­eral in Indiana and was appointedchairman of the Arkansas Board ofReview by Governor Bill Clinton.

He was a graduate of theUniversity of minois and held amaster's degree in foreign rela­tions from Georgetown Universityand a law degree from IndianaUniversity.

He was a member of theArkansas Bar Association and thePulaski County, Chicago. minois.Indiana and Indianapolis BarAssociations. He was also a mem­ber of the Senior Lawyers Divisionof the American Bar Association.

Cook was a member of theAdjudicature Society, the SeldonSociety. the Army Navy Club andthe Retired Ollicers Association.He was past president of the FirstArmored Division Association.

Cook was a veteran of WorldWar II and recipient of the BronzeStar, the Purple Heart and theMedal of the French Liberation.

Survivors are his wile, Irene G.Samuel; a son, Lou Samuel of LittleRock; a daughter. Bonnie Tallitschof Rothschild. Wis.; a sister,Rosalind Pelman of minois; andsix grandchiidrenD

Lloyd B. McCain

Lloyd Breckenridge McCain, age61. of Little Rock. a former cityattorney for Dumas. died Friday.September 16. 1988.

McCain. a native of LakeVillage. was a former deputy pros­ecu tor for Lincoln and DeshaCounties in Arkansas.

He was a graduate ofSouthwestern College, now RhodesCollege. in Memphis, Tenn .. andreceived a law degree in 1950 fromthe University of Arkansas.

In 1957. he joined the legal stallof the National Old Line InsuranceCo.. as assistant counsel. In 1959.

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He was a 30-year member of theArkansas Bar Association, a mem­ber of the American Bar Associa­tion and a member of Sigma AlphaEpsilon fraternity.

Survivcrs are his mother andstepfather, Mr. and Mrs. E. E."Dusty" Rhodes of EI Dorado; twosons, Victor 1. Nutt III of Humble,Texas, and Stephen A. NUll ofDallas, Texas; and three grandchil­dren.o

member of the American andSebastian County Bar Associationsand the International Associationof Defense Counsel.

Shaw was 32nd-degree Mason, aShriner and a member of SigmaPhi Epsilon. He was a member ofFirst United Methodist Church.

Survivors are his wife, MitziShaw; a son, Richard Bruce ShawJr. of Fayetteville; three daughters,Karen McCaskill of Fort Smith,Kaay Bowman of Sioux Falls, S.D.,and Janet Hickman of Knoxville,Tenn.; his father, Bruce H. Shaw ofFort Smith; a brother, Jay MichaelShaw of Fort Smith; a sister,Lucinda Sangree of Rochester, N.Y.;and seven grandchildren.o

Victor Lee Null Jr., age 55, ofBrinkley, named in 1966 as counselto a United States Senate subcom­mittee, died Monday, October 10,1988.

Null allended Southern StateCollege, now Southern ArkansasUniversity, in 1950-51, enlisted inthe Navy for two years and thenentered the University of Arkansaswhere he obtained a law degree.

He was a retired vice presidentof Gulf and Western Corp., wherehe worked in the firm's internation­al tax and government relationsdivisions.

Nutt was a former deputy prose­cuting attorney for the FirstJudicial District from 1958 to 1963and maintained law offices inAugusta and Searcy.

In 1963, he became an adviser in

Victor Lee Nutt Jr.

John E. McAllister, P.E. EXPERT WITNESSGraduate Electrical Engineer, 34 Years Industrial Experience.Specialist in Industrial Machine Guarding and Safety.

Born 8-29-21, Milltown, N.B. Canada, B.S. in Electrical Engineering,1947, from University of New Brunswick, Fredericton, N.B. Canada.14 years engineering and sales experience with General Electric Co.11 years experience in electric motor winding, industrial control panelmanufacturing and sales. 9 years President of large safety equipmentdistributor specializing primarily in the metal forming indusb)/.EXTENSIVE COURTROOM EXPERIENCE.

John E. McAllister, 9 Sierra Lane, Hot Springs Village, AR 71909, (501) 922-1709

Richard Bruce Shaw, age 59, ofFort Smith, died Wednesday,August 3, 1988.

Shaw was a former president ofthe Sebastian County BarAssociation.

He was senior vice president ofthe Bank of Mansfield, past chair­man of the Fort Smith PlanningCommission, past president of theFort Smith Junior Chamber ofCommerce and a charter memberof the board of trustees of the TownClub of Fort Smith.

Shaw was a graduate ofUniversity of Arkansas School ofLaw.

He was a 33-year member of theArkansas Bar Association and a

he was elected secretary of theCompany's board and became aboard member in 1960. He waspromoted to general counsel in1962 and elected senior vice presi­dent in 1976.

McCain served as vice presi­dent, general counseL secretaryand board member of EquityNational Life Insurance Co. andAmerican Old Line Insurance Co.

He was a 33-year member of theArkansas Bar Association and amember of the American andPulaski County Bar Associations.He was also a member of the LegalSection of the American Council ofLife Insurance, serving as its vicepresident in Arkansas in 1986 and1987. He recently was re-elected tothat position for 1988 and 1989.

McCain was a past president ofthe Little Rock Rotary Club and therecipient in 1985 of the Club's PaulHarris Award.

McCain was a member of theSecond Presbyterian Church.

Survivors are his wife, JaneDavis McCain; a son, DavisMcCain of Memphis; a daughter,Marian Olsen of Clayton, Mo.; hismother, Marian McCain Liston ofLittle Rock; two brothers, RobertMcCain of Denver, Colo., andEdwin McCain of Memphis, Tenn.;and a grandchild.o

Richard Bruce Shaw

January 19891Arkansas Lawyer/33

THE DEVELOPING LAW

Recent Arkansas Tax Cases

the Court looked to federal defini­tions found in 26 U.S.C. §3121 (g) (4)(CXI982).

In resolving the issue of how toapply the agricultural labor exemp­tion for employees who had bothexempt and non-exempt labor, theCourt noted that the agriculturallabor exemption applies only if theemployee in question performs ser­vices that constitute valid agricul­tural labor for at least one-half ofany pay period (a period of notmore than 31 consecutive days), as

stated in 26 U.S.C., L..:.!. §3121(c)(I982).

The Court was unable tomake that determinationbased upon the recordbefore it and remanded thecase to the trial court forfurther proceedings.Property TaxesThe case of Clark v. UnionPacific Railroad Company,et aJ., 294 Ark. 586. 745 SW.2d 600 (1988), dealt with theproper application ofAmendment 59 and Act 848of 1981. The Court held thatnew millage passed afterAmendment 59 was imple­mented cannot be collectedagainst personal property.The Court stated, "Amend­ment 59 provided that theamount of revenue derivedfrom personal property can-

L- -'-'-=="--__-"-' not be increased until the

rates for real and personal proper­ty equalize. It is undisputed thatapplication of the new millagepersonal property would increasethe revenue collected."Tax-Exempt Entities

In Sebastian County Equaliza­tion Board, et aJ. v. The WesternArkansas Counseling andGuidance Center, Inc.. 296 Ark.207. --- S.w. 2d --- (1988). the Courtconsidered whether or not a men­tal health clinic qualified for tax­exemption under the Arkansas

By John C. Lessel

The Arkansas SupremeCourt has rendered severaltax cases in the past 18 imonths. though none is par- Iticularly startling. Some of ,the cases further developthe body of tax law inArkansas. however. ,

The analysis which fol- I

lows groups the cases by ,type of tax under review. Iexcept for the one groupwhich deals with procedu-ral issues. No commonthread can be found inthese cases except the con­tinuation of the SupremeCourt in applying the crimi-nal standard of "beyond a I

reasonable doubt" to a tax- Ipayer who is attempting toestablish his right to anexemption from tax.Employment Taxes

In the case of Ragland v.Pittman Garden Center, et aJ.. 293Ark. 533. 739 S.W. 2d 671 (1987), theCourt held that the exemptionfrom withholding tax for "agricul­turallabor" did not include wagespaid for landscaping serviceswhich occur after the horticulturalproducts are delivered to the cus­tomers' premises. In holding thatArk. Stat. Ann. §84-2075(a) (Ark.Code Ann. §26-51-902(1)) did notinclude the landscaping services,

34JArkansas Lawyernanuary 1989

Constitution, Article 16, Section 5.The Court analyzed the publiccharity exemption granted by theConstitution and held that theCounseling and Guidance Centerqualified despite having a portionof its patients as paying patientsand having a gymnasium andcommunity room affiliated withthe Center. The Court affirmed itsdecision in Burgess. Judge v, FourStates Memorial Hospital, 250 Ark.484,464 S.w. 2d 690 (1971).

The exact opposite conclusionwas reached in Holiday IslandSuburban Improvement DistrictNo. 1 of Carroll County. Arkansas.v, Carolyn Williams, Tax Assessor.Carroll County. Arkansas, et aI.,295 Ark. 442, 49 S.w. 2d 314 (1988).Willi'Ims, the tax assessor forCarroll County, placed the realproperty of Holiday IslandSuburban Improvement DistrictNo. I on the tax rolls of the Countyin 1985. In a suit for declaratoryjudgment filed by the District, thechancellor held that the Districtwas a government entity and thatits fire stations, water system,sewage treatment and administra­tive building were exempt.However, the chancellor found thatthe Districts two goll courses, boatdock, maintenance shop, recre­ational center and campgroundswere not exempt because theywere not used exclusively for pub­lic purposes.

The Court found that the proper­ty was not used exclusively forpublic purposes since the facili tieswere restricted to property ownersof Holiday Island, a membershiporganization whose members wererestricted to property owners in theDistrict. The Court rejected theargument that the public caninclude a large number of propertyholders and that the ability tobecome eligible for use of thefacilities by purchasing propertysomehow made the facilities usedexclusively for public purposes.

The Court also rejected an argu­ment by the District that satisfac­tion of the public purpose require­ment for the issuance oftax-exempt bonds satisfies the

public purpose requirement forexemption from property taxation.The Court noted that the term"public purpose" is not exact.....but has various shades depend­ing upon whether the context iseminent domain, revenue bonds,lending the credit of a politicalsubdivision, or tax exemptionunder §5(b) of Article 16."Sales and Use Taxes

In Ragland v. Dumas, 292 Ark.SIS, 732 S.W. 2d 118 (1987). theCourt held that gravel used for sitepreparation and road constructionat oil and gas drilling si tes wasnot "machinery" or "equipment"under Ark. Stat. Ann. §84-1904(r)(Ark. Code Ann. §26-52-402).Nevertheless, the Court found infavor of the taxpayer on the basisthat the transactions with the con­struction company's customerswere not subject to the grossreceipts tax. The Court noted thatthe purchase of the gravel from itssuppliers by the construction com­pany would be subject to the grossreceipts tax. The use of thosematerials in the construction of theroads and foundations for thedrilling activities was merely inci­dental to the services provided bythe construction company and,therefore, that activity was notsubject to the gross receipts tax.Accordingly, no tax was due.

In Ragland v. Allen TransformerCompany, 293 Ark. 601. 740 S.W.2d133 (1987, reh'g denied) (U.S.appeal pending), the Court drew adistinction between gross receiptstax imposed upon transfers of tan­gible personal property and thatimposed upon itemized services.The Court noted that while Ark.Stat. Ann. §84-l902(c) (Ark. CodeAnn. §26-52-103(a)(3)), defines saleas a transfer of either title or pos­session of tangible personal prop­erty. no such requirement was nec­essary for the taxation of theservices under Ark. Stat. Ann. §84­1903(c)(3) (Ark. Code Ann. §26-52­301(3)(C)), which levies a grossreceipts tax on the service of alter­ation and repair of electricalappliances and devices.

The issue was framed by the

taxpayer's repair of electricaltransformers for both Arkansasand non-Arkansas customers. Ineither case, the company wouldsend its own employees to pick upthe transformers for delivery to itsbusiness location in Fort Smith. Atits Fort Smith shop, the transform­ers were repaired and then trans­ported back to the customer'splace of business. The trans­former company's argument thatthe out-aI-state transactions werenot subject to the gross receiptstax was rejected by the Court. Thetheory advanced by the trans­former company was that no trans­fer of possession of the trans­former occurred within Arkansasin the case of out-of-state cus­tomers and, therefore, the tax didnot apply. The Court rejected arequirement for transfer of proper­ty as a condition to taxation of theservices and noted specific statu­tory exemptions which were pro­vided by the General Assembly forservices performed in-state for out­of-state customers.

The Court also rejected allega­tions of ambiguity and violation ofthe commerce clause.

In Martin v. Riverside FurnitureCorp., 292 Ark. 399, 730 S.w. 2d 483(1987, reh'g denied), the Court heldthat advertising materials whichwere delivered from out-of-statevendors to the Fort Smith office ofthe furniture company where theywere collated, packaged andmailed to sales representativesand dealers located outsideArkansas were subject toArkansas' use tax. The Court heldthat the advertising materials did"finally come to rest" in Arkansaswi thin the meaning of Ark. Stat.Ann. §84-3105(a) (Ark. Code Ann.§26-53-106(b)). It noted that theadvertising materials were notsimply in transit through Arkansasbut that the activities of the furni­ture company in processing thematerials for dispersal was not apart of interstate commerce. Thus,the use tax was properly imposed.

The Court went on to consider apoint that was not addressed byeither party. It noted that the case

Ianuary 19891Arkansas Lawyer/35

of Burlington Northern RailroadCompany v. Ragland. 280 Ark. 182,655 SW. 2d 437 (1983) did not standfor the proposition that SouthernPacilic Co. v. Gallagher, 306 U.S.167 (1939) was no longer goodauthority for determining the issueof whether an item is still withinthe stream of interstate commerce.The Court specifically stated thatany language which it might haveadvanced in the Burlington casethat extended Complete AutoTransit v. Brady, 430 U.S. 274 (1977)beyond the question of whether aforeign entity has sufficient con­nection with the state to allow thestate to impose a tax on the enti­ty's activities, was rejected.

A dissent by Justice Hickmanwould have held that the materi­als did not come to rest within thestate so as to be subject to the usetax.

In Dunhall Pharmaceuticals.Inc. v. State, 295 Ark. 483 (1988), 49S.w. 2d 666, a claimed exemptionfrom gross receipts tax on sales bya corporation engaged in the man­ufacture and distribution of drugsto dentists was rejected by theCourt. Even though Ark. Stat. Ann.§84-1904.3 (Ark. Code Ann. §26-52­406) in the original and amendedform covering the periods in ques­tion provided an exemption fromgross receipts tax on the sale ofprescription drugs by licensedpharmacists, hospitals or dispens­ing physicians, the Court notedIbat a dentist does not meet any ofthe statutory definitions for per­sons whose purchase of the drugswould be exempt. Thus, theclaimed exemption from the grossreceipts on the sales to dentistswas rejected.

The state also asked the Courtto reverse its earlier decision inState v. Dunhall Pharmaceuticals,Inc., 288 Ark. 16, 702 S.w. 2d 402(1986), where the Court placed theburden upon the state to prove thevalue of items withdrawn frominventory and used in the compa­ny's business. In this case, the cor­poration would take sample pre­scription drugs out of its inventoryfor distribution to its salesmen

36/Arkansas Lawyer/January 1989

who in turn would distribute themto physicians and dentists at nocharge. Despite an open invita­tion to the Court to overturn itsearlier decision, the Courtdeclined the invitation and heldthat the failure of the state toprove the value of the inventorywas fatal to its assessment basedupon such withdrawals.

In the case of Tony and SusanAlamo Foundation. Inc. v. Ragland.295 Ark. 12 (1988), 46 SW. 2d 45, theCourt found that meals, clothing,goods and services furnished byretail businesses run by theFoundation are subject to the salestax. Despite the fact that theFoundation is a nonprofit. charita­ble institution authorized to dobusiness in Arkansas. its decisionto operate several businesses inArkansas subjected it to the samestatutory scheme for taxation asbusinesses operated by non-chari­table organizations.

The Foundation made four argu­ments to advance its claim ofexemption. First. it said the trans­actions were not sales. Second, itsaid that if they were sales, theywere exempt from tax. Third, italleged the Gross Receipts Act vio­lated the religious clauses of thefederal and state constitutions andfourth, it argued the statutoryscheme of the Act was discrimina­tory and unconstitutional.

In rejecting the lirst argument.the Court noted that the transfer oftitle or possession of tangible per­sonal property (the food) inexchange for valuable considera­tion (the services of the employees)were involved.

In rejecting the Foundation'sclaim for an exemption, the Courtnoted that no statutory exemptionapplied, that exemptions are to beconstrued in such a way strictlyagainst such exemptions and thatthe simple fact that theFoundation is a religious andchari table organization does notexempt it from paying sales tax.The Court noted that theFoundation did not dispute that itoperated the businesses in ques­tion for profit. Consequently, it

was subject to the same taxationas any other business.

The third argument concerningthe religion clauses of the stateand federal constitutions was alsorejected. Citing ample authorityfrom both state and federal deci­sions, the Court noted that the tax­ation of business income from acharitable or religious organiza­tion did not violate the religionclauses.

Finally, the Foundation arguedthat the Gross Receipts Act was·discriminatory because certaingroups such as the Boy Scouts,Girl Scouts and 4-H Clubs wereexempt from sales tax. However.the Court noted that the argumentwas not applicable since theexemption available for theseorganizations was from sales taxon their purchases, not their sales.Procedural Issues

In the case of Jones v. Ragland,293 Ark. 320, 737 SW. 2d 641 (1987),the Court dealt with TheodoreJones, the individual who hadchallenged the participation bythe Arkansas attorney general inthe Arkansas National Guard. Thefacts revealed that Jones had beenplaced in jail when he refused toproduce records for purposes of anaudit by the state.

In addition to discussing theobligation of taxpayers to main­tain adequate records, the Courtrejected Jones' argument that thethree-year statute of limitationsapplied to his case. Even thoughsome of the tax years were prior tothe enactment of Act 401 of 1979,Ark. Stat. Ann. §84-47l5(a) (Ark.Code Ann. §26-l8-306(a»), the Courtdismissed his argument thatextending the statute of limita­tions to the six-year periodallowed under Act 401 was aretroactive application of the Actbecause he had not raised thatissue at trial. The dissent stronglyargued that the Court was overrul­ing its decision in Ragland v.Travenol Laboratories. Inc.. 286Ark. 33, 689 S.w. 2d 349 (1985), andstated that Jones had raised theissue at trial. The dissent arguedthat the Court should have

addressed that issue and ruled inJones' favor.

In Carroll County v. EurekaSprings School District #21. 292Ark. 151. 729 S.W. 2d I (1987), theCourt held that where a countymistakenly made overpayments oftax receipts to a school district andcity, an action to recover theseoverpayments was an actionfalling within the implied obliga­tion or liability provisions of Ark.Stat. Ann. §37-206 (Ark. Code Ann.§16-56-105). Therefore, the Countycould recover only for overpay­ments made during the threeyears before suit was filed.

In Highland School District v.Travenol Laboratories, Inc., 291Ark. 563, 726 S.w. 2d 670 (1987), theCourt answered the question ofwhether taxes can be collected ina civil suit for fraud in the nega­tive, In that case, a school districtsued two corporations for fraud,alleging concealment of their own­ership of certain real property as a

fraudulent effort to evade propertytaxes. The suit asked for judgmentin an amount equal to what theschool district would havereceived if property taxes hadbeen assessed and collected. TheCourt affirmed the trial court'sdecision that "in the area of taxassessment, levying collection,private causes of action do notexist."

Finally, in American TruckingAssociation, Inc. v. Gray, 295 Ark.43 (1988), 46 S.w. 2d 377, the Courtdeclared invalid the ArkansasHighway Use Equalization Taxbased upon the United StatesSupreme Court decision inAmerican Trucking Association.Inc. v, Scheiner, --- U.S. ---, 107 S.C!.2829 (1987), invalidating a similarPennsylvania tax. In addition, theCourt decided that only theamounts placed in escrow follow­ing the Scheiner case were subjectto refund and that the amount ofattorneys' fees to be paid from the

fund was to be determined by thechancellor on remand.

Conclusion

A couple of other cases whichhad peripheral issues relating totaxation are not covered in theabove discussion. With the contin­ual changing and the increasingcomplexity of both federal andstate tax law, the potential for sig­nificant tax cases increases in thefutureD

Editor's Note:

John C. Lessel of Little Rock is amember of the Mitchell, Williams,Selig and Tucker law firm, Lesselis the chair of the Arkansas BarAssociation's Section of Taxationand a former chair of the PulaskiTax Counsel.

Getcourtroomexperiencenomthestart

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(501) 443-7810

January 1989JArkansas Lawyer/37

EXECUTIVE DIRECTOR'S PAGE

WhithertheUALR Law School?

By William A. Martin

The University of Arkansas atLittle Rock School of Law is in trou­ble. I am not referring to its barexamination pass rate, althoughthat may be a problem, but to theimmediate danger that theAmerican Bar Association maywithdraw its accreditation becauseof inadequate facilities

The Arkansas Law Center andOld Federal Building (OFB) whichhouse the Law School may havebeen adequate for a starting daylaw school and law library in 1974,but they are in no way adequate atthe close of this decade and thestart of another and the AmericanBar Association's inspection teamthat visited in October knows it.

The faculty offices are scatteredover two buildings, making access

ARKANSAS RULES OFEVIDENCE

with Commentary and Annotationsby

Molt Gffalman, Marcia Mcivor, & Cart E. Smffh

The most complete source of material avail·able on current Arkansas evidence law; thecommentary to each rule and each annotationhave been written especially for this book.More than 1,000 annotations in handsome 81/2 x 11 binder; 276 pages: annual supple·mentation at reasonable prices. Satisfac·tion guaranteed; may be returned within 30days for full refund.

Special Introductory Price: $50

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38/Arkansas Lawyernanuary 1989

to some difficult. And the offices inthe OFB are far enough away fromthe main library so as to discour­age its use. More serious still arethe terrible acoustics in the beauti­ful court rooms in the OFB.Students frequently cannot hearwhat's going on, losing any teach­ing benefit of a Socratic dialogue.The classrooms in the Law Centerfare better even though they werenot designed by educators, do notprovide the most desirable atmo­sphere for learning and the wallscreating them were put up after thebuilding was constructed.

Most serious, though, is thegrossly inadequate library space.The beautiful. high-ceiling readingroom overlooking the ArkansasRiver masks the inconvenient anddifficult access to the majority ofthe books. Reaching some requiresclimbing a narrow, winding stair­case to the fifth level and thengoing up or down another set ofsteps. Obviously the library's

architect did not consider the needsof the handicapped or a preferredhorizontal design when construct­ing the library. For the more able­bodied, access to the materials inthe federal depository portion ofthe library or to those books lessfrequently used requires a trip tothe basement of the OFB.

The expansion needs of the lawlibrary cannot be met in the currentfacility. These needs may stabilizein the next 10 to 20 years with theability to put sets of law books oncompact computer disks, but thatwill be too late to save the LawSchool's accreditation.

Since early in this century, thedemand for legal education in cen­tral Arkansas has mandated a lawschool. The question as we facethe next century is whether the LawSchool will be properly supportedand fully accredited to meet thelegal education needs in the cen­tral part of the state.

While the best solution is toexpand the Law Center and keepthe Law School in downtown LittleRock, the reality is that's not goingto happen. The only way to preventlosing the Law School's accredita­tion and damage to its reputationis to implement Ray Thornton'splan to renovate the GIT Buildingin MacArthur Park. Two years ago,the legislature appropriated moneyfor the renovation but placed thefunds in a low priority funding cat­egory. The Law School faculty, U ofA officials and leaders of theArkansas Bar Association know theABA's threat concerning accredita­tion is real. The Governor mustbudget for this project and the leg­islature must fund it in 1989 toavoid disastrous consequences.o

YOUNG LAWYERS' UPDATE

AGratifying andTerrifying Experience

practice law but you are not surewhere or for how long in that location.Check with your printer. There aresome high quality printing methodsthat look like engraving but are muchcheaper. Once you settle into a 100g­term location. you may want to havean engraved plate cut. but remember.you can add new associates but youcannot remove the old ones.

-Office machinery is a book untoitself; however there are a few piecesone cannot live without. The typewrit­er was once the all important tool andwhile it is still quite usefuL it cannotapproach the usefulness of the per­sonal computer. With the reduction inthe price of PC's, I highly recommendthe computer. The photocopy machineis another necessity. Most equipmentcan be leased if you cannot presentlyafford the cash outlay.

-Now for the Internal RevenueService and the state taxing authori­ties -- another of my favorite topics. Iam no accountant. My first bit ofadvice is to find an accountant thatyou can get to know, like and trust.The various taxing authorities will getyou coming and going with employeewithholding, social security. employ­ment security, tax deposit rules andmore. Obtain copies of Circular Efrom the IRS and the state withholdingtables from the Arkansas Departmentof Finance and Administration.Contact the state EmploymentSecurity Division to establish anaccount. And ask your accountant toexplain these to you. Then. cross yourfingers and hope for the best.

For more information aboutopening your practice, getFoonberg's book and read it. Talkto another lawyer who has openeda practice in the last five years.The practical knowledge those twosources can provide is a pearlabove price.o

January I9891Arkansas Lawyer/39

years' experience. This article byno means takes the place ofFoonberg's book. but rather pointsup a few of the possible pitfallsand suggestions:

• Advertising is a hot topic today.regardless of which side of the fenceyou stand on. Your local newspaper.especially in smaller lowns, is achingfor front page news. Notify the paperand invite the reporter to take yourpicture and introduce you on the frontpage to the community.

-The telephone directory is anoth­er good place to get exposure. Try toforecast the future so that you get intothe current directory by the time youstart your practice. You probably can­not afford and may not want a fullpage ad in the yellow pages, but con­sider a small block ad. The cost isminimal and folks seem to like it.

-Stationery is a must in anylawyer's oUice. Foonberg says if youare going to make a million dollarsyou have got to look like you are wortha million. He recommends engravedletterhead. You know you want to

By Edward Boyce

There are few things more grat­ifying than seeing one's words inprint, especially in a topnotch pub­lication like The Arkansas Lawyer.We have a lot to be proud of in theadministrative and editorial staffsof the Lawyer and the Arkansas BarAssociation.

This particular piece was dueat the Arkansas Bar Center onMonday, October 10, 1988. I waswaiting to see what my last articlelooked like before I wrote this one.The Lawyer arrived in my postoffice box on Sunday, October 9. Iquickly thumbed through it and didnot see my article. I checked thetable of contents and was directedto page 229. When I reached page229, the sheet was blank. I thoughtperhaps this was a comment on mystyle or possibly my message, butchecking another copy of the maga­zine in the office, and finding mypiece intact, I realized my articlemade only selected appearances.If you received one of the blanks,now is your chance to appear inThe Arkansas Lawyer - just get outyour pen and start writing.

The Young Lawyers' Section isdevoted to public service and toassisting young practitioners inmaking their careers better.Occasionally we even provideassistance to our older brethren.

Starting a law practice can beone of the most gratifying and terri­fying experiences of one's career.Jay Foonberg has written thedefinitive work entitled How toStart and Build a Law Practice. Myfather, Wayne Boyce, and I startedan office several years ago. Wehad one advantage -- he had 30

ATTORNEY HONOR ROLL

FINANCIAL INSTITUTION HONOR ROLLGuly 19, 1988, to November 3, 1988)

Bobby Shepherd; and ChrisThomas -- and our lay memberscarefully examine the grant appli­cations to ensure that the publicreceives the benefit of the 10LT}\.dollar and that the grantees whoput the 10LTA dollar to use,whether for legal aid to the poor,scholarships or projects to improvethe administration of justice, do soin the most beneficial and costeffective manner.

You may have noticed that mostof the Foundation's grant awardsare administered by institutions.Two reasons account for institu­tions like the legal services pro­grams, the law schools andHenderson State University receiv­ing funds: First, they apply forfunding and second, they are wellorganized.

The 10LTA Foundation wantsdiversity among its grantees. Ourgrant application was intentionallydrafted to assist those with nogrant writing experience. The eli­gibili ty criteria in ten tiona11 yallows an individual or group toapply for funds. When you apply,you must have a purpose whichbenefits the public and you musthave a credible, well-organizedplan to implement that purpose.

In the past year, I've encouragedthose individuals whose ideasseem ripe for 10LTA funding.Arkansas covers a lot of ground,though. I need you to becomeinvolved. You, the lawyers andjudges, know what the needs ofyour community are. If you havean idea which seems tailor-madefor 10LTA, commit yourself now todevelop a plan to implement thatidea. If you need feedback, guid­ance or help in organizing or devel­oping a budget. please give me acall. I want to see that idea trans­formed into results as much as you.

Well. I have to go now. The mail­man just walked in with a packagefor me. I hope it's a good one.o

MOUNTAIN HOMEFirst Federal Savings & LoanAssociationTRUMANNBank of Trumann

award $128,845 in grants last year.That's more than six times theamount granted by the ArkansasBar Foundation last year. By theend of October 1988, we had col­lected $81.076.59 more in 10LTAincome for the calendar year thanwe had collected by the end ofOctober last year.

I am often questioned while vis­iting lawyers out in the state aboutwhy 10LTA grants go to certainrecipients in certain amounts. Isuspect that many more of youhave similar questions. The piv­otal factor in awarding grants isquality. Quality of purpose andmethod are crucial factors in agran t application. Our attorneyboard members -- Jerry Cavaneau;Phil Dixon; Walter Niblock; SamPerroni; Judge Stephen Reasoner;

Guly 19, 1988, to November 3, 1988)

Riddick & RiddickGamer 1. Taylor Jr.MORRILTONScott AdamsGordon & GordonSteve KirkNEWPORTHodges, Hodges & HodgesNORTH LITTLE ROCKMcCracken & SimsSEARCYMargaret Bunn MeadsOdell PollardTRUMANNSteve Inboden

The financial institutions denoted bya double asterisk have expresslywai ved all fees and charges forIOLTA accounts. Those with a singleasterisk have to date provided IOLTAaccounts without charge.

CONWAYClark & AdkissonKenneth FuchsDavid L. ReynoldsTroxell Law OfficeM. Watson VillinesFORT SMITHDaily, West. Core, Coffman &CanfieldJONESBOROLyons & EmersonLITTLEROCKJack D. FilesGiroir Law FirmGeorge N. Plastiras

By Susanne Roberts

ARKANSAS IOLTA PROGRAM

It's time again for the ArkansasIOLTA Foundation, Inc.'s, annualreview of grant applications forInterest on Lawyers' Trust Accounts(I0LTA) funds. Each January, themailman's daily visit is awaitedwith an anticipation akin to that ofa child expecting a gift from hisfavorite aunt. Will this particularpackage contain a special some­thing designed to fulfill a needwhich would otherwise be neglect­ed? Or will it contain somethingchosen in haste, with little caregiven to its propriety or quality?

Let me digress here. TheFoundation is beginning to makebig bucks. Of course, "big" is a rel­ative term, but the Foundation did

40/Arkansas Lawyernanuary 1989

LAW SCHOOLS, A.I.C.L.E. AND HOUSE OF DELEGATES

UNNERSITYOFARKANSASSCHOOLOFLAVV,FAYETIEVTIl.E

By J. W. Looney

Faculty Activities

oRichard Atkinsonspoke at the ArkansasInstitute for CLE's FallLegal Institute on"Transfers to Minors:Alternative Vehiclesand Their Conse­quences."

oJanet Flaccus is co­author of an article inArkansas Farm Re­search entitled "Im­pact of the New FarmBankruptcy Act." Shespoke at the 1988Heartland Labor andEmployment Law Insti­tute in Kansas City.

oRobert Laurence'sarticle "Marlinez, Oli­phant and FederalCourt Review of TribalActivity Under theIndian Civil Rights Act"was published in theCampbell Law Review.

oDick Richards' co­authored, three-volumetreatise on EmploymentDiscrimination and hisco-authored casebookhave been publishedby Little Brown &Company.

oLonnie Beard, JohnCopeland, Janet Flac-

cus, Jake Looney, DonPedersen and LL.M.graduate assistantRobert Smith spoke atthe Arkansas Agricu­ltural and RuralLeadership Program,"Issues in AgriculturalLaw.

oCarlton Bailey, MortGitelman and RayGuzman conductedtraining in August ontrial evidence for staffattorneys and privateattorneys affiliatedwith Arkansas LegalServices.

eDon Pedersen wason the program plan­ning committee for theannual meeting of theAmerican AgriculturalLaw Association. AlHoberg spoke at ameeting on the plansand activi lies of theNational Center for Ag­ricultural Law Re­search and Information.Professor Pedersen isalso on the planningcommittee for theAgricultural Law Insti­tute to be held inMemphis and co-spon­sored by AICLE and theMississippi Institute forCLE.

oJake Looney was adelegate to a joint U.S.­U.S.S.R. EmergingLeaders Conferencesponsored by theAmerican Center for In­ternational Leadership.Fifteen Soviet dele­gates and 15 U.S. dele­gates were selected toattend the week-longevent in SteamboatSprings, Colorado. He

also served as educe·tion leader for a legalstudy tour of the SovietUnion in which he con­ducted background lec­tures and coordinatedmeetings between U.S.lawyers and judgesand their Soviet coun­terparts in the Sovietcities of Moscow,Odessa, Pyatigorsk andLeningrad.

oJulia Wilder au­thored "The GreatLakes as a WaterResource: Questions ofOwnership and Con­trol." a chapter inPerspectives on Eco­system Managementfor the Great Lakespublished by StateUniversity of New YorkPress.

LL.M. Program

The 1988-89 LL.M.group consists of 13 stu­den ts represen lingArkansas, Minnesota,Nebraska, Louisiana,Kansas, Washington,D.C .. and California,pi us lawyers fromNigeria, Pakistan,Trinidad and Tobago.

Nine LL.M. candi­dates received theirdegrees during 1988.Of the recent gradu­ates, a number havehad their thesis or non­thesis papers pub­lished, including:

oDonald D. Mac­Intyre:

"The Adjudication ofMontana's Waters - ABlueprint for fmprovingthe Judicial Structure."

Montana Law Re­view;

o Walter Schmidt:Research paper on

state farm debt media­tion laws.

Accepted for publi­cation in the Journal ofAgricultural Taxation &Law;

o Gene Olson:Water law paper in a

somewhat revised form.Accepted for publi­

cation in the NorthDakota Law Review;

o Bob Davidson:"Antibiotics in An­

imal Feed - The Effectson Human Health."

In the hands of sev­eral book publishers forreview;

o Jerry L. Jensen:"Operational Finan­

cing: A Necessary Ele­men t for a SuccessfulChapter 12 Farm Re­organization...

Missouri Law Re­view.

AgriculturalLaw Center

Two additional staffmembers have beenhired by the NationalCenter for AgriculturalLaw Research andInformation.

oAlicia Tocco joinsthe staff after severalyears of practice inPhoenix where she spe­cialized in agriculturaland environmentalmatters. She is a lawreview graduate of the

January 19891Arkansas Lawyer/41

University of ArizonaCollege of Law andholds both B.A. and M.S.degrees from NorthernArizona University.

·Sally Kelley joins thestaff as agricultural lawlibrarian. She has anM.A. in library sciencefrom the University ofChicago and a B.A. andM.A.T. in Slavic lan­guages and literaturefrom Indiana University.Sally has considerableexperience as a publicand university librarianand has co-authoredpublications for theAmerican Library Asso­ciation.

Hotz Lecture Series

Featured speakers inthe fall Hartman HotzDistinguished Lecturesin Law and Liberal Artswill be political colum­nist Haynes Johnson andSenator Dale Bumpers.Johnson, who regularlyappears on the PBSnewsweekly program"Washington Week inReview, will discuss the1988 presidential elec­tion results and whatcan be expected fromthe new administration.Sen. Bumpers will dis­cuss what to expect inthe new congress. 0

UNNERSITYOFARKANSASAT UTIlEROCKSCHOOL OFLAW

By Paula Casey

The UALR Law SchoolAssociation held its

annual fall party at thehome of SheffieldNelson on October 29.Association PresidentPhil Farris and Pre­sident Elect BuddyRaines were co-hosts forthe event.

Two lectures havebeen scheduled for thespring semester underthe sponsorship of theBen J. Altheimer Foun­dation. The first lecturewill be delivered byJohn C. Coffee Jr., theAdolf A. Berle Professorof Law at ColumbiaUniversity School ofLaw, on March 16. Thesecond will be deliveredon April 14 by CharlesW. Wolfram, the CharlesFrank Reavis SeniorProfessor of Law andassociate dean at Cor­nell Law School.

FACULTY ACTIVITIES

• Professor Robert R.Wright recently signed acontract with WestPublishing Company fora fourth edition of hiscasebook on land use.Professor Wright be­came chairman of thePublications Board ofthe General PracticeSection of the AmericanBar Association inAugust. He is also amember of the Commit­tee on Centers for theGeneral Practice of Lawand a member of themedia board of the ABASection of Urban, Stateand Local GovernmentLaw.

.Professor Arthur G.Murphey Jr., attended aworkshop on conflict oflaws sponsored by theAssociation of AmericanLaw Schools in Wash­ington, D.C.

.Professor EugeneMullins made a presen­tation about bill draftingat the Arkansas Institute

for CLE on "LobbyingStrategies and Tech­niques" held in LittleRock. Dean Lawrence H.Averill Jr., also partici­pated in the program.

.Dean Averill. Asso­ciate Deans ScottStafford and PaulaCasey and ProfessorKenneth S. Gouldattended a conferenceon ways to assure diver­sity in the legal profes­sion sponsored by theAmerican Bar Associa­tion, the Association ofAmerican Law Schools,the Law School Admis­sion Council and theCouncil on Legal Ed­ucation Opportunity inWashington, D.C.

• Professor AndrewMcClurg's article,"Logical Fallacies andthe Supreme Court: ACritical Examination ofJustice Rehnquist's De­cisions in CriminalProcedure Cases," hasbeen published in Vol­ume 59 of the Universityof Colorado Law Review.

.The Syracuse LawReview has acceptedProfessor Frances Fend­ler's article, "Waive theFifth or Lose the Case -­Total Preclusion Ordersand the Civil Defen­dant's Dilemma," forpublication.

·Jean Probasco, direc­tor of Admissions, andAssociate Dean Caseyattended the annualmeeting of the South­west Association ofPrelaw Advisors at theUniversity of Texas inAustin and a law schoolforum in Chicago spon­sored by the Law SchoolAdmission Council andLaw School AdmissionServices.

·Professor EugeneMullins attended theAssociation of American

Law Schools workshopon "Legislation, Teach­ing and Scholarship inthe Age of Statutes" inWashington, D.C.

.Professors CathyDerden and RankoOliver attended a legalwriting institute confer­ence at the University ofPuget Sound Law Schoolin Tacoma, Washington.

•Library Director LynnFoster and ReferenceLibrarian Susan Gold­ner attended the annualmeeting of the Midwes­tern Association of LawLibrarians in Sioux City,Iowa.

STUDENT ACTIVITIES

The Rockefeller Scho­lars' Advisory Boardselected three "schol­ars" for 1988-89. Theyare Toni Bogan andCarolyn Reynolds ofLittle Rock and EdnaHargraves of Marianna.

The William R.Overton American Inn ofCourt selected 15 pupilmembers for 1988-89.They include Charles W.Burton; Elizabeth F.Elder; Jennifer Farmer;Tim Howell; ToddLewellen; Patty Lueken;Roger McConkie; DavidE. Miller; David More­head; Elaine Moss;Edward T. Oglesby;Mark Rogers; TriciaSievers; Don A. Taylor;Paul Taylor; and CarolWorley. The purpose ofthe organization is toimprove the competencyand ethical ideals ofAmerican trial andappellate lawyers,judges and law stu­den ts. Officers of theorganization are W.H."Sonny" Dillahunty,president, Judge HenryWoods, counselor andPaula Casey, secre­tary/treasurer.D

421Arkansas Lawyer/lanuary 1989

A.LC.L.I.NEWS

By Rae Jecm McCall

The time has come.By the time this issue ofThe Arkansas Lawyerreaches your desk, theArkansas Supreme Cou­rt will have announcedthe "Minimum Contin­uing Legal Education(MCLE) Program inArkansas.

What this means forthe Arkansas Institutefor Continuing LegalEducation is that theanticipation is over andthe real work begins. Tovarying degrees, law­yers in Arkansas havealways acknowledgedthe need to continuetheir education. Thesuccess of AICLE overthe past several years isa clear indication thatvoluntary CLE effortsare supported by manyattorneys.

However, the imple­mentation of the MCLEprogram will createmany new challengesfor AICLE. First, it is rec­ognized that there willno doubt be an influx ofcourse providers attem­pting to capture the CLEdollar. The approachused by many "for-prof­it" organizations is toconcentrate on only themost popular topics andattempt to integrateArkansas law into astandardized curriculumthrough the use of localfaculty members. Thereal difference betweenthese organizations andAICLE is that we have areal commitment to serv­ing Arkansas attorneys'CLE needs. We quitefrequen tl y offer pro­grams that have a limit­ed scope and audienceappeal even though we

know they won't be prof­itable because there is areal need to provide thisservice. An example isthe annual "Bridging­the-Gap"program fornew admit tees. Wehave a commitment toprovide this program atan extremely reason­able cost to registrants.That means we operatethis program at a lossbecause it is a valuableservice.

Video Replay Network

Another challengewhich we will continueto address is to provideseminars of a practicalnature on substantiveareas of the law in vari­ous locations throughoutthe state. The VideoReplay Network is onemethod to improve theaccessibility of our pro­gramming. We will con­tinue to explore addi­tional ways of servingthe attorneys who mayhave difficulty with thetime and expense oftraveling to seminars.

Since AICLE has astatewide mission. werely quite heavily uponthe volunteer contribu­tions of members of thebar, judiciary and lawschool faculty in thedevelopment and deliv­ery of CLE programs.The AICLE ProgramCommittee will considerany program proposalsubmitted. The proce­dures are quite simpleand can be exploredwith an AICLE staffmember.

We urge you to getinvolved with CLE activ­ities. Whether your in­volvement takes the formof serving as a programplanner, faculty memberor by offering your sug­gestions, we can assureyou that your efforts willbe appreciated.

Upcoming Programs

•Mark your calendarsnow for January 19-20.That's the date of the1989 Mid-Year Meetingof the Arkansas BarAssociation. Associa­tion President ElectDavid M. (Mac) Gloverhas planned a CLEevent you won't want tomiss. The program willfocus on "Lawyering -­Trends and Traditions"by providing inspiring,entertaining and infor­mative sessions. Lookfor additional informa­tion under separatecover.

oThe Lawyer's Guideto Negotiation andSettlement is the focusof a one-day seminarscheduled for February17 which will featureGerald R. Williams, pro­fessor of law at BrighamYoung Universi ty Schoolof Law. This programprovides a generalmodel for effective nego­tiating and will help youdevelop an individual­ized framework forenhancing your skills asa negotiator.

oOn March 3, a prac­tice-orien ted programentitled Family Law andPractice will be held inLittle Rock and in vari­0us locations throughthe Video Replay Net­work. This program hasbeen designed with thegeneral practitioner inmind. Don't miss thisopportunity to updateyour knowledge andskill in this area of thelaw.

For more informationconcerning programsand services, or if youhave a comment or sug­gestion, contact theArkansas Institute forCLE at 375-3957.0

ARKANSASBARASS:XAATIONHOUSE OFDELEGATESlv1EETINGOctober L 1988

The fall meeting ofthe Arkansas Bar Asso­ciation's House of Dele­gates was held onOctober I. 1988, at theFayetteville Hilton. Pre­sident Philip E. Dixonpresided.Business

oMartha M. Miller ofLittle Rock was certifiedto a one-year term in theHouse representingDistrict 29. Miller fillsthe unexpired term ofMark Lester of LittleRock. who resigned.

oThe minutes from theJune II, 1988, annualmeeting of the Housewere approved.

• President Dixon an­nounced that the Asso­ciation's membershiptotals 3,257, an increaseof 67 members over thistime last year.

oThe House approvedthe Association's finan­cial statement.

-The House increasedthe size of the State TrialPractice Committee toallow the appointmentof a vice chair andapproved the appoint­ment of a constructionlaw committee.

• Association Exe­cutive Director WilliamA. Martin reported thatthe Arkansas LawCenter is in need ofmaintenance and repairand discussed theAmerican Bar Associa­tion's House of Dele-

January 19891Arkansas Lawyer/43

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Sandra Wilson CherrySecretaryrrreasurer

House approved a pro­posal to reduce separa­tion as grounds fordivorce from three yearsto one year and anamendment to the noticeto creditors provision ofthe Arkansas ProbateCode to require actualnotice to creditorsknown or reasonablyascertainable. TheHouse placed on itsJanuary agenda propos­als providing for themerit selection of appel­late judges and a localoption with respect tomerit selection of trialjudges.

• President Dixonasked members of theHouse to poll their localbar associations andattorneys on the pro­posed professional ser­vices tax.o

moved that the presi­dent appoint a commit­tee to present recom­mendations in Januaryon how best to draft anew judicial article. Themotion was secondedand passed.Legislation

·Vincent W. Foster Jr..of Little Rock, chair ofthe Jurisprudence andLaw Reform Committee,presented three propos­als concerning theAssociation's 1989 leg­islative package. The

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MCLE and recommend­ed its approval. Themotion was secondedand passed.Bar Leaders Conference

President Dixon an­nounced that the BarLeaders Conference isscheduled for October28, 1988, in Little Rock.Long-Range Planning

E. Charles Eichen­baum of Little Rock andJudge Eugene Harris ofPine Bluff spoke on theneed for a new judicialarticle. Eichenbaum

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gates' meeting in Tor­onto.Mandatory CLE

W. Russell Meeks III,of Little Rock, chair ofthe Mandatory CLECommittee, reported thatChristopher Thomas, direc­tor of the Arkansas Su­preme Court's Office ofProfessional Programs,will be responsible forthe administration andenforcement of MCLE inArkansas. Meeks pre­sented Thomas' plan forthe implementation of

441Arkansas Lawyernanuary 1989

THE 1989 MID-YEAR MEETING OF THE ARKANSAS BAR ASSOCIATION

for the Fifth Circuit (a.k.a. the "Cajun judge")as he discusses "The Spice of Life -- Cajunand Judicial Humor."

In the afternoon. you can choose among anumber of unique, thought-provoking concur­rent sessions:

-The Lawyer's Quest for Quality of WorkLife

-Class Action Practice in Arkansas-How the 1989 Legislation Session Will

Affect Your Practice and What You Can do toGet Involved

-Tips on Writing Better Briefs-Family Law Problems and Proposed Leg-

islative Solutions-Public Schools in Arkansas -- Exploring

the Rights and Responsibilities-Psychological Strategies for Jury Persua-

sion-Employment at Will in Arkansas-An Update on Tax Issues

Attend the social functions, participate inthe meetings, learn the latesl. This programhas something for everyone.

To receive a complete schedule of func­tions and registration information, contactthe Arkansas Institute for CLE at 400 WestMarkham, Suite 700, Little Rock, AR 72201 orcall 375-3957.

EXCELSIOR HOTEL, WiLE ROCK

The 1989 Mid-YearMeeting has a newlook and a new focus.The theme -- Trendsand Traditions -- is atthe heart of everyactivity throughout thethree-day evenI. OnThursday, January 19,you may attend anArkansas Bar Associa­tion section or commit­tee meeting and anopen forum on a model

Judge Henry A. PolitzThe "Cajun Judge"

judicial article.On Friday, January 20, join the distin­

guished faculty of the CLE portion of the con­ference as they examine "trends and tradi­tions" in the legal profession.

You will begin the day by attending yourown trial, The People of the State of Arkansasvs. The Modern Lawyer! After the mock trial,the general sessions will continue with thetraditional update on Arkansas law by Asso­ciate Justice David Newbern entitled "Signifi­cant Arkansas Appellate Decisions" and anupdate on minimum continuing legal educa­tion.

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

JANUARY 19 - 21. 1989

Trends and Traditions

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• A handy guide to county, state andfederal offices including departments ofthe U.S. and Arkansas state government.

• A comptete digest of courts containingterms, rules and jurisdiction of federal,state and local courts with names,addresses and telephone numbers of courtpersonneL

• A complete roster of attorneys and lawfirms in Arkansas with addresses andtelephone numbers.

• Professional associa!ions includingofficers, committees and sections of theArkansas Bar Association.

• Professional and biographical data ofsome of the law firms and individualpractitioners in Arkansas.

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