\When you need a bank that offers professionalism to professionals, call ,
-
We've known for a long time that attorneys select ,a trust department for two very simple reasons. First, they want to be known and appreciated. And second, they want, in fact they expect, a maximum of service for a minimum of inconvenience. This is why we have always been concerned with offering our clients good service and good treatment. But we think being good is not enough. Therefore, we have made a commitment, not just to become better, but to be the best. And that's what we mean when we say we are The Trust Bank. It is our continuing effort to be simply, The Best.
&.
Commercial National Of Li ttle Rock
January 1979 Vol. 13, No.1
(§ie THE OFFICIAL PUBLICAliON OF THE ARKANSAS BAR ASSOCIAliON
Arkansas Lawyer SPECIAL FEATURES Cover Story The Old Federal Building The Tax Reform Act of 1976
OFFICERS
Wayne Boyce, President E. Harley Cox, Jr., President-Elect James A. Buttry. Secretary-Treasurer
EXECUTIVE COUNCIL
Don M. Schnipper Robert L. Jones. III David R. Malone LeRoy Froman Tom B. Sm~h Robert G. Serio Herman L. Hamilton John F. Stroud, Jr. Dennis L. Shackleford Chartes Carpenter W. Christopher Barrier Webster L. Hubbell
EX·OFFICIO
Wayne Boyce E. Hartey Cox. Jr. James A. Buttry Herschel H. Friday Roy T. (Rick) Beard Phillip Carroll
Settlement in a Personal Injury Case
Dean Robert K. Walsh 4 Ralph G. Brodie 9 E. Robert Wallach 26
Mitigating the Risk of Becoming A Defendant in a Malpractice Action by Your Former Client
Duke N. Stern and Joanne Martin 34
Natural Resources Law Institute
42
Award of Merit ...................•.•................. 45 Midyear Meeting
25
REGULAR FEATURES President's Report Wayne Boyce 2 Juris Dictum ...........•.•...•..............C. R. Huie 16 Legal Economics Fran Shellenberger 20 Law School News ..........•.•....................... 18 Oyez-Oyez ................•.............B. Tarkington 46 Executive Council Notes James A. Buttry 22 Service Directory ...........•.•.•.•................ I.B.C. Lawyer's Mart ....................•.•................. 33 Addenda C. E. Ransick 47 Ethics 44 Context W. Christopher Barrier 32 AICLE News Claibourne W. Patty, Jr. 40 The Arkansas Bar Foundation Marvin L. Kieffer 3 Tax Tips Paul D. Williams39
EDITOR
C. E. Ransick
EDITORIAL COMMITTEE
Robert T. Dawson E. Alvin Schay Cyril Hollingsworth
Published quarterly by the Arkansas Bar ASSOCiation. 400 West Markham. Ltltle Rock. Arkansas 72201 Second class postage paid at Llltle Rock Ar1<ansas SubSCription price to non-members 01 the Arkansas Bar ASSOCiation S6 00 per year and to members $300 per year Included In annual dues Any opinion expressed herein IS thaI of the author. and not necessarily that 01 the Arkansas Bar Asso· elation. The Arkansas Lawyer. or the EdttOrlal Commlltee ContnbullOns to The Arkansas Lawyer are welcome and Should be sent In two COPies to the Arl(ansas Bar Center. 400 West Markham. Little Rock. Arl(ansas 72201
All Inquirtes regarding advertising should be sent to The Arl(ansas Lawyer. above address.
January 1979/Arkansas Lawyer/1
PRESIDENT'S REPORT by Wayne Boyce
"From ghoulies, and ghosties, and long legged beasties and things that go bump in the night-Good Lord, deliver us." Old Scots litany. The organized Bar might appropriately pray with the ancient Scots for deliverance from that host of fearsome forces that seem bent on doing us mischief. The Chief Justice keeps insisting that a large proportion of trial lawyers are incompetent. I don't know where he gets his figures-{;ertainly the Supreme Court bench is a peculiar place to observe trial lawyers in action-but if there is one incompetent trial lawyer practicing in America, that is one too many. The president of the United States has been publicly critical of lawyers in general, impugning our intentions as well as our ability. The Anti-Trust Division of the Justice Department has indicated that it may not be through working on the Bar as a monopoly in restraint of trade and in violation of the Sherman Act, and the Federal Trade Commission has commenced an investigation to see if lawyers as a group haven't transgressed the federal statutes to the detriment of U. S. consumers. Who knows what else may be hiding in the dark at the top of the stairs? RED APPLE CONFERENCE To confront these and other problems, I called the Arkansas Bar's first Long Range Planning Conference to meet at the Red Apple Inn on Eden Isle in September. A few other states have tried the long planning approach to overcome the deficiencies of the year to year program resulting from the annual change of bar presidents. Frequently, the product has been rhetoric rather than results. We tried to take a "nuts and bolts" approach and work toward practical solutions. Benjamin Franklin said "Planning ahead is the hardest work there is" and the beautiful fall weather outside the Red Apple Conference Room didn't make it easier, but in two days we covered a host of topics and came up with some solid proposals for future action. An early and interesting ballot showed the foremost topic in the minds of the conferees was "Lawyer Competence". There are many approaches to remedy incompetence at the bar---€verything from improved law school curriculum, through internship and continuing legal education, to more adequate discipline and easier disbarment. While different people favored different solutions or combinations of solutions, there seemed to be general agreement that the organized bar has only a limited time to work out its own salvation before solutions, perhaps not all to our liking, are forced upon us. A FLORIDA FINANCING PLAN As always a big hurdle in accomplishing any program in Arkansas, is how do we finance it? Florida has recently come up with a novel fund raising approach. The Florida 2/Arkansas Lawyer/January 1979
Supreme Court, by rule, has authorized lawyers to place their trust funds held for clients in interest bearing accounts with the interest being used for public interest programs related to the legal profession. First blush reaction to the plan in Arkansas was "well, my trust account wouldn't yield any interest because the money is disbursed by check as fast as it is deposited." No doubt most client trust funds are "in and out" transactions, but amazingly there is sufficient lime between deposit and withdrawal to generate very substantial sums of money. At New York, Bernard Teague of Victoria, Australia, told the National Conference of Bar Presidents how his bar of approximately 3,000 lawyers had produced $6,000,000 a yearin interest from trust accounts. Interestingly, this is just about the size of the Arkansas Bar. Australia operates under a statute rather than a court rule, but the principle is the same. There may at present be impediments to such a plan in Arkansas, but any device which might produce anything like that amount of money for the improvement of the justice system is well worth closest scrutiny. On the way to Pinehurst, North Carolina and the Southern Conference of Bar Presidents, I had a long visit with ABA President Shep Tate who had just returned from London and the Opening of the Courts-an annual ceremony commencing the English legal year. As usual, when it comes to things ceremonial, the English did a superb job. After all, they have had a lot of practice. Later in the week as Presidents of Southern Bars were confronted by the myriad problems facing lawyers and the organized bar it occurred to me that we might do well to call on the experience of our English counterparts for ideas and solutions. John Bowron, an English Solicitor and Secretary General of the Law Society of England and Wales, spoke at an ABA luncheon in New York about the differences in the role of the lawyer in his country and America. The barrister, according to Bowron, is not only a trial lawyer, he is in fact the specialist in whatever field. The barrister is hired and paid by the solicitor. This arrangement would put the law in much the same relation that medical specialists have managed in this country, where the family practitioner refers his patient to a medical specialist whose scientific credentials have been scrutinized by one capable of making an intelligent judgment about them. The first Committee Round-up of Arkansas Bar Commit· tees held at the time of the Fall Legal Institute was a rousing success. More than twenty committees and well over a hundred lawyers caucused and considered problems and plans in their respective spheres. Obviously not all the problems were solved on that occasion, but both the spirit and the will to solve them were evident.
f.....
ARKANSAS BAR fOUNDA TION by Marvin L. Kieffer Chairman
ORAL HISTORY PROJECT One of the projects of the Foundation this year is an attempt to record and preserve an oral history, relating to the Arkansas Bar, the practice of law in Arkansas in earlier years, and the law schools. We are hopeful that we can interview senior members of the Arkansas Bar and make recordings on video tape to preserve the oral history for future use and reference. We have access to video equipment and have made some arrangements for storing a set of the tapes permanently for historical purposes. We have been doing some work on the project and are hopeful that we can gather and preserve historical information from our senior members of the Bar while we still have the opportunity. U. M. ROSE SCHOLARSHIP FUND All Arkansas Bar Association members should have received a letter from the Arkansas Bar Foundation, soliciting contributions to establish a U. M. Rose Scholarship Fund, with the Foundation. We owe a debt of gratitude in recognition of Uriah M. Rose, better known as U. M. Rose, as Father of the organized Bar in Arkansas. He worked to organize the Arkansas Bar Association in 1899, and served as its first President. I am sure many of you have see his picture, being the first in the group of Bar President's pictures, hanging on the wall at the Bar Center. U. M. Rose was one of few and the first of our Arkansas Bar Presidents to also become President of the American Bar Association, serving as President of the American Bar Association during 1901-1902.
U. M. Rose was born in Kentucky in 1834. He graduated from law school, married and moved to Batesville in 1843; however, he spent about two years in the further study of law after moving to Batesville, before beginning a regular practice of law. In 1860 Rose was appointed Chancellor of the only Chancery Court in Arkansas. After the Civil War, he resigned his position as Chancellor and entered the practice of law at Little Rock. He declined a federal judgeship and a seat in the U.S. Senate (then elected by State Legislatures), and continued his law practice at Little Rock until his death in 1913. This is an opportunity for the general Bar membership to make contributions to the Foundation. The Scholarship does not have to be limited to a $10,000 minimum amount set for it. We will accept any amount you contribute to the U. M. Rose Scholarship Fund. However, we hope you have a good year and will make a $50.00 suggested contribution, or more, at least by the time you would think about contributions, before the end of 1978. As of November 1, 1978, contributions to the U. M. Rose Scholarship Fund have been received from Ruth Lindsey, George Rose Smith, C. B. Nance, Sr., Ralph M. Cloar, Jr., A. F. House, Marvin L. Kieffer, the Crouch, Blair, Cypert and Waters law firm, and U. M. Rose of New Mexico. This is an excellent start. Hopefully, all Arkansas lawyers will wish to participate in this effort.
TO: Arkansas Bar Foundation, 400 West Markham, Little Rock, AR 72201 Enclosed is my contribution of $ this is a tax-deductible contribution.
to the U. M. Rose Scholarship Fund. I understand that
NAME: ADDRESS:
January 1979/Arkansas Lawyer/3
COVER STORY - - - - - -
THE RENOVATION AND DEDICATION OF THE OLD FEDERAL BUILDING BY DEAN ROBERT K. WALSH
At the 1977 annual meeting of the Arkansas Bar Association in Hot Springs, the then president Herschel H. Friday presented to the law school a check for $20,000 to be used for the renovation of the Old Federal Building in Little Rock. This contribution by the Arkansas Bar Association with a $10,000 pledge from the University of Arkansas Foundation set in motion the project that culminated in a dedication week end on July 14 and 15, 1978. This article is a report to the Bar of Arkansas on the project and dedication. The History of the Old Federal Building According to David Demuth of the Arkansas History Commission, the final impetus for the construction of the Old Federal Building in Little Rock was the eiectoral college dispute between Rutherford B. Hayes and Samuel J. Tilden in 1876. The building had initially been authorized by Congress in 1872, and the site was purchased in 1874 for $25,000. Officials of the United States Treasury Department, however, had indicated that the building in Little Rock, together with several other proposed southern federal buildings, would be too costly. In the 1876 presidential election, Hayes finished second to Tilden in the popular vote and in committed electoral votes with 162 votes for Hayes and 183 votes for Tilden. Twenty-two votes in four states were in dispute. The Electoral College gave all 22 disputed votes and the election to Hayes by one vote. Due to Democratic outrage in the Congress, a commission was appointed to study the question and decided just days before the inauguration that Hayes should get the dis4/Arkansas Lawyer/January 1979
puted votes. Mr. Demuth, contends that Hayes received support from southern Democrats in gaining the presidency only after concessions including removal of federal troops from the South and support for several southern building projects. The day after the congressional commission announced that Hayes would get the disputed votes, the federal government announced that limits placed on the cost of new post office buildings in Little Rock and Nashville, Tennessee had been lifted. The building had been planned by the classical architect Alfred Bult Mullet during the administration of President Ulysses S. Grant. On April 13, 1877, contracts were awarded to construct the building. Construction proceeded under the supervision of architect James G. Hill during the Hayes administration. The building followed the classic Italianate Renaissance style using Ohio sandstone on a pink Indiana granite base. The original section which housed the first of two courtrooms was completed in 1881 at a cost of approximately $225,000. In 1897, a four-story addition was built on the north side of the building to accommodate the increased mail load of the city. This addition included the caged elevator and the second marble courtroom on the north side of the third floor. In 1908. two one-story additions were constructed on the east and west sides of the building. After this project was completed in 1910, the building took on the configuration that it has today. There have been few exterior changes since then. Striped canvass window awnings were a feature of the building for its first 50 years and were installed again just prior to the dedication last summer.
From its opening in 1881 until 1932, the building housed two courtrooms for the Federal District Court, the post office, and other federal agencies. Many doorknobs in the building still bear the design of the great seal of the Treasury Department. In 1932, the Federal District Court and post office moved to their present location on Capitol Avenue. The building, however, continued to be used by the federal government; until the late summer of 1976, it served as an Armed Forces induction and examination center. At this time, it was given to the State of Arkansas and became part of the University of Arkansas at Little Rock School of Law. The Restoration Project The General Assembly of Arkansas enacted legislation effective JUly 1, 1975, by which the former Little Rock division of the FayetteVille law school became the School of Law of the University of Arkansas at Little Rock. The 1975 law also authorized the school to institute a full-time program of study. All parties interested in the development of the law school then focused on the immediate need for suitable additional quarters for the law school's expanding program. This need for additional space coincided with the need for a decision on the fate of the Old Federal BUilding. As Governor Pryor noted in his dedication remarks, the building almost became a parking lot: "It did not escape very easily that sad event, but the help, dedication, and feeling of commitment and purpose of a lot of people...all working together made an event like today's a possibility." Many people did cooperate in the project. The legislature first appropriated $250,000 in State funds for
the project under the sponsorship of many persons, including especially Senator Max Howell of Jacksonville in the Senate and Representative Bill Foster of England in the House. An important partner in the entire project was the Arkansas Department of Natural and Cultural Heritage under the leadership of Anne Bartley. Through the Historic Preservation Program of this agency, the federal government matched the legislature's $250,000. After study of the project, it was decided that an additional $100,000 was necessary to make the building usable, especially to complete the restoration of the two federal courtrooms on the third floor of the building. lt was at this point that the Arkansas Bar Association and the University of Arkansas Foundation pledged an additional $20,000 and $10,000 respectively toward the additional $100,000. Through the work of many people including lawyers such as Henry Woods of Little Rock and Jim Sharp of Brinkley, the remaining funds were pledged by the Arkansas Commemorative Commission and the Ben J. Altheimer Foundation. In August of 1976, the administrative offices of the law school were moved into the building. The plans for the renovation project were prepared by the architectural firm of Cromwell, Neyland, Truemper, Levy and Gatchell. In early 1977, the renovation contract was signed with Kinco, Inc. and construction begun. From the National Archives in Washington, D.C., Charles Witsell,
the project architect, obtained photos of the building under construction and the original drawings of the building together with a construction file of 4,000 letters dating from the beginning of construction. A detailed paint analysis of the rooms to determine the original colors was conducted by the Department of Natural and Cultural Heritage. First phase construction priorities were to upgrade the building so that it met safety and architectural barrier codes, to preserve the most significant features of the exterior and interior, to restore the courtrooms, and to make as much of the bUilding usable by the law school as possible. The restoration project is unique in that the old building was restored to use in functionally appropriate ways. The original post office mallroom on the first floor is now a study library. The oldest courtroom on the south side of the third floor has been restored as a trial courtroom. The upper level gallery has been separated by glass so that professors and students can discuss trials in progress without disturbing the proceedings below. The north courtroom with its marble columns and high wainscot is now used as a classroom and moot courtroom. The construction was completed and the remaining areas of the building occupied by the law school in the spring semester of 1978. The Dedication Week End The completion of the renovation project was realized with the combined and great efforts of many
people. It seemed appropriate to recognize these efforts at a dedication ceremony. A grant was received to fund the dedication, and a dedication committee was selected. The dedication committee was outstanding in its efforts throughout the dedication planning. The committee consisted of Anne Bartley, David Demuth, Donna DuVal, Beth Friday, Inez Howell, Clay Patty, Jim Sharp, Peg Smith, Charles Witsell, Henry Woods, and myself. The executive committee of our Student Bar Association and its president, Terry Derden, were also partners in planning and hosting the dedication. On July 14 and 15, 1978, the dedication ceremonies took place. The dedication began on Friday morning, July 14, with the first judicial proceeding in the south courtroom since 1932. A three-judge panel of the United States Eighth Circuit Court of Appeals heard oral arguments in four appeals. The panel consisted of Chief Judge Floyd R. Gibson, Judge J. Smith Henley, and Judge G.Thomas Eisele. Two of the appeals concerned a Federal Trade Commission investigation of the frozen meat industry, one was a labor law case, and the fourth was a criminal case involving the theft of a moving van and its contents. The audience for the oral arguments consisted of law students, faculty, lawyers,and members of the public. This was the first time that a panel of the Eighth Circuit had heard cases in Arkansas. At the beginning continued on page 6
Dean Robert Walsh, pictured here with Justice Byron White during the dedication week end, was born and raised in
Nebraska. He attended Providence Cottege in Rhode Island and Harvard Law School. While in law school, he served as an editor of the Harvard Journal on Legislation. After law school, he practiced with the law firm of McCutchen, Black, Verleger and Shea in Los Angeles, primarily as a litigator. He then was a law professor at Villanova Law School in Pennsylvania before coming to Littfe Rock as Dean of the UALR School of Law in June of 1976. In addition to his responsibilities as Dean, he is a professor of law, currently teaching a course in
Federal Courts. Dean Walsh is active in Bar Association work. He is currently
president of the Arkansas Institute of Continuing Legal Education and a member ofthe Bar Association's committees on constitutional reform and professiona/ utilization. January 1979/Arkansas Lawyer/5
THE RENOVATION continued from page 5 of this special session, Chief Judge Gibson traced the history of the Eighth Circuit for the audience, including brief sketches of Eighth Circuit judges who were appointed from Arkansas. There have been four such judges: Judge Henry Clay Caldwell, Judge Walter G. Riddick, JUdge J. Pat Mehaffy, and Judge J. Smith Henley. Throughout the week end, teams of law students and staff members of the Department of Natural and Cultural Heritage provided guided tours of the building to the public. On Fridayafternoon, the dedication speaker, Associate Justice Byron R. White of the United States Supreme Court, arrived. During that afternoon, Justice White graciously held an informal meeting with our law students in the south courtroom. Justice White spoke chiefly about the workload and organization of the Supreme Court. After his initial comments, he accepted questions from the floor. It was a unique opportunity for our law students. Later Friday afternoon, a reception was held for Justice White and the judges of the Eighth Circuit to meet the lawyers of Arkansas in the Arkansas Law Center. The reception was sponsored by the Pulaski County Bar Association. On Friday evening, a special dinner was held to honor the donors to the project and the dedication committee. The Arkansas Bar Association was represented at the donors dinner by its officers and the members of the Law School Committee of the Bar Association. United States Senator Dale Bumpers was the featured speaker. As usual, Senator Bumpers both entertained those attending with his humor and caused them to reflect with his thoughtful comments concerning the Carter administration policy toward the Soviet Union. The dedication ceremony itself took place Saturday morning in the south courtroom before an audience of approximately 300 persons, including the deans or representatives of the law schools of St. Louis University, Southern Illinois University, Villanova University, Temple University, Santa Clara University, the University of Alabama, Tulsa University, and the University of Missouri at Kansas City. Brief remarks were made during the dedication ceremony by President Charles E. Bishop, Chancellor G. Robert Ross, 6/Arkansas Lawyer/January 1979
Governor David Pryor, Attorney General Bill Clinton, Senator Max Howell, Director Anne Bartley, and the Honorable Wayne Boyce, current President of the Arkansas Bar Association. In his dedicatory address, Justice White stressed the relationship of law schools and the important public responsibility of the profession: "I have no doubt about the importance of the role that the law schools in Arkansas have played and will continue to play. The services of honest, skillful lawyers are essential to our wellbeing. Their proper training and preparation for their profession, a task for the most part performed by the law schools, is therefore of paramount importance." Justice White then traced the development of common law from the English to the American tradition and the role of practicing lawyers in this development. "Indeed, I doubt that anywhere in the world is the role of the lawyer of greater public importance than it is here in the United States. Among other reasons for this reality, and a very important one, has to do with the manner in which American law has developed and the place that the lawyer has occupied in the process. If this is true, and I shall attempt to show that it is, it also explains why good law schools are such critical national resources." After tracing the central role of the lawyer in the development and administration of law in America, Justice White concluded: "None of this, of course, makes the task of the law school easier, but it does underscore the need for their existence and for their proper functioning. I know the law schools across the country are aware of the various phases of the task. I am sure this law school is no exception and, haVing met those responsible for this school, that it is in good hands." Following Justice White's address, the formal dedication was made by Robert Shults of the University of Arkansas Board of Trustees, substituting for Board Chairman, Louis Ramsay, Jr. The ceremony was followed by a luncheon in the Old House Chamber of the First State Capitol. The use of the First State Capitol for the dedication luncheon had a certain historical symmetry. It was probably in this building that the earliest formal legal education in Arkansas took place with the tutoring of the Little Rock Law Class. The University of Arkansas
assumed sponsorship of this law class in 1893 establishing the University of Arkansas Law Department. At the dedication ceremony, I shared with those attending a wonderful column from the Arkansas Democrat in 1913 indicating that the legislature had moved the law school from the Supreme Court chambers of the First State Capitol to the Senate chamber, because the law school, having the largest enrollment in its history, needed more space. The medical school then received permission from the legislature to occupy the smaller space handed down from the law school. I could not help remarking with some tongue in cheek that it seemed to me we had lost our sense of priorities since 1913. The audience, made up almost entirely of members of the legal profession, seemed to enjoy this historical anecdote. The dedication week end closed with a symposium concerning the building. David Demuth presented the history of the building; Charles Witsell outlined its architectural significance; and Professor Ken Gould covered its current use by the law school. The Law School's Programs and the Building The law school now has a downtown law school campus consisting of two buildings a block apart. The law school has retained its use of the Arkansas Law Center Building which contains most of the faculty offices, three classrooms, and the main research library. The renovated Old Federal BUilding contains the administrative offices of the law school, the offices of the Arkansas Institute for Continuing Legal Education, student lounges, a library reading room for study, additional faculty offices, offices for student organizations, and the courtrooms. The courtrooms are the center of the Old Federal BUilding. The south courtroom contains extensive videotape equipment acquired through grant funds. As a facility, this courtroom is the equal of that of any law school in the country. In addition to use of the courtroom in the traditional appellate moot court program, the law school uses the courtroom in its required four credit Trial Advocacy course and in its elective courses in Practice Skills and Legal Clinic. The method of instruction in the Trial Advocacy course
is primarily student participation in simulated courtroom proceedings in which all student pertormances are videotaped for critique. In addition, the law school expects that the use of the courtroom by the Eighth Circuit panel will be just the beginning of a program of actual judicial proceedings in the courtroom. The courtrooms have already been used for continuing legal education and Bar Association meetings. On October 20 and 21, the Arkansas Trial Lawyers Association will hold a two day program in the south courtroom, and on November 17 the Arkansas Bar Association will sponsor its second seminar on law and journalism in the courtroom. Conclusion The Old Federal Building is in a sense symbolic of the development of our law school at UALR. The building is old, yet new. Legal education in Little Rock is old, yet our law school is new. The building is filled with tradition. The law school is the successor to one hundred years of continuous legal education in Little Rock. Yet, we also refer to the building as "our new building." The UALR School of Law as a separate school is three years old; the reestablishment of a legal education program by the University of Arkansas in Little Rock is thirteen years old. Like the building, our school has traditions, but is young with high aspirations. As another symbolic parallel, the project to restore the Old Federal of Building coincided with a'Reriod , great development at the' UALR School of Law. In 1975, we began our association with UALR. We added a day division; our faculty increased; ,he UAlR law Journal was established and pUblished; our library grew to its present collection of 103,000 volumes; our curriculum and clinical programs were expanded; we established and housed a joint continuing legal education institute; grants were received to establish the Edward L. Wright scholarship fund and the Ben J. Altheimer lecture series; and the work of both faculty and students received great recognition in Arkansas and throughout the country. The dedication to celebrate the restoration of the Old Federal Building celebrates in a larger sense the development of the entire law school. Like the project to restore the building, the
development of the school would not have taken place without the great support of the Bar of Arkansas. I know of no other state in which practicing attorneys are as supportive of legal
education. For the gift to restore the Old Federal Building and your constant support of legal education, I want to take this opportunity to thank you.
#.....
Justice White responds to questions at Infonnal meeting with UALR law students.
Justice White delivers his address In the south courtroom.
The Eighth Circuit panel before hearing oral arguments In the south courtroom. From left to right: Judge J. Smith Henley, Chief Judge Floyd R. Gibson, and Judge G. Thomas Eisele.
January 1979/Arkansas Lawyer/?
Let's face it, there's no avoiding the inevitable. But, you should have something to say about what happens next. We want you to live a long and happy life in the full knowledge that, when the time does come, your spouse and your family can carryon without having to face
the burden of.red tape and unnecessary taxes on your estate. Call it peace of mind. Call it what you will. The important thing to remember is that Mercantile Bank is here with a lifetime of trust services. So live.
â&#x20AC;˘
Mercantile Banll JONESBORO Good Bankers ... Good Neighbors
MEMBER FDIC
BIArkansas Lawyer/January 1979
TRUST DEPARTMENT
THE TAX REFORM ACT of 1976 PART II INDEXATION: A RESPONSIBLE TAX REVOLUTION By Ralph G. Brodie
In review, Part I of this article (July 1978) had three purposes. First, it presented the need for and rationale underlying three gift and estate tax changes made by the Tax Reform Act of 1976 (TRA 1976): the adoption of the uniform tax credit and the uniform tax rate schedule and the elimination of certain gift and estate tax avoidance techniques. Second, it commended Congress for making these three changes which restored basic concepts to the tax law and achieved a level of fairness, tax equity', and simplicity which is rare in the tax field. Third, it pointed out that Congress has failed, at every taxpayer's expense, to restore to the gift and estate tax law (the income tax law, too) an equally fundamental concept-tax stability.' Similarly, Part II also has three purposes. First, it will present the effects of the gift and estate tax reductions in TRA 1976. Second, it will outline the need for tax stability in the gift and estate tax law, discuss the Congressiona/ response to that need, and propose a solution. Third, it will examine the proposed solutionindexation' in detail. /t should be noted that the problems and concepts discussed are equally applicable to the income tax law. INTRODUCTION Unfortunately, taxpayers no longer trust government, and particularly Congress, either to slow the rate of inflation or to provide the tax stability necessary for taxpayers to avoid being victimized by inflation (and their own government). Whether or not California's Proposition 13, which on June 13, 1978, placed a limit on property taxes, is a responsible reaction to this lack of trust and to ever higher taxes may be debated. However, there is every indication to believe that a nationwide tax revolution has begun. The main focus of this articleindexation-offers a responsible approach and direction for all tax revolu-
tions concerning taxes with progressive rate schedules, and particularly for the gift and estate tax and the income tax. Once fUlly understood, indexation will be recognized as a bold and sensitive response to a very fundamental tax problem-the lack of tax stability. Not only will indexation provide all taxpayers with stable gift and estate taxes when compared to the same tax structure without any inflation correction, but it will also eliminate the hidden revenues (increased taxes) accruing to the government from the effect of inflation on a progressive tax system.' GIFT AND ESTATE TAX REDUCTIONS One of the major reasons for the gift and estate tax changes in TRA 1976 was to "provide substantial relief for modest sized estates.'" With this in mind, it is ironic but not so unusual that when Congress accomplished that purpose they also gave "very substantial relief" to those less modest estates valued at over 100 million dollars.' Table I, which compares the estate tax using 1942 and 1976 rates with the estate tax using 1981 rates, does not correct for the effects of inflation. Table I appears to indicate that (1) modest estates valued at under 500 thousand dollars will get substantial relief; (2) estates valued between 500 thousand and 1 million dollars will receive some relief; (3) estates valued between 1 million and 9 million dollars will receive a tax increase instead of tax relief (and in some cases a very large tax increase); and (4) estates valued at over 100 million will receive extraordinary tax relief. However, the figures indicating tax relief are misleading; when inflation, is considered, there is actually a tax increase, compared to the level of taxes in 1942, rather than a tax decrease. For example, in Table I an estate valued at $250,000 in 1942 paid an estate tax of $47,700. If the
Editor's Note: This article is the second in a two-part sequel by Ralph G. Brodie on Gift and Estate Taxes and Indexation. Mr. Brodie received his B.S.f.E. and J.D., University of Arkansas, 1963 and 1966, and his LL.M. (In Taxation), New York University, 1973. He is with the Brodie and Peterson, Ltd., law firm in Uttle Rock; past Executive Director of the Arkansas Tax Revision Commission; past President of the Pulaski Tax Counsel; and past Chairman of the Taxation, Trusts and Estate Planning Seclion of fhe Arkansas Bar Association.
rate of inflation caused the same estate to be valued in 1976 at $750,000 (three times greater), then the estate tax should be increased in the same proportion to $143,100. However, using the old rates the estate tax in 1976 is $212,200. This is a tax increase of $69,100 which is not reflected in Table I. Even if we apply the 1981 estate tax rates (when TRA 1976 is fUlly phased in) to the estate valued at $750,000 in 1976, the tax is $201,300. This is a tax increase of $58,200. This is the result even though the table indicates a tax decrease of$10,900 from 1976to 1981 for estates valued at $750,000. It is also interesting to note that the first year after TRA 1976 and Congressional claims of tax reduction, the 1977 Annual Report of the Commissioner of Internal Revenue stated that the amount of tax revenue the federal government gained from gift and estate taxes paid during 1977 actually increased 37.3% over 1976. continued on page 10 January 1979/Arkansas Lawyer/9
TAX REFORM continued from page g Certainly, taxpayer confidence and support cannot be expected to increase with Congressional actions that claim significant tax reduction, provide nO tax relief for most taxpayers (considering inflation since 1942), and allow an increase of 37.3% in estate tax revenues in one year. NEED FOR TAX STABILITY The 37.3% increase in estate tax revenues in the first year after TRA 1976 is one fact which vividly points out that Congress, once again, failed to protect taxpayers from the greatest tax inequity of all-the disproportionate gift and estate tax increases which result from the interaction of inflation with progressive gift and estate tax rates.' Real protection for taxpayers Can only be achieved by restoring tax stability, i.e., positively countering the effects of past inflation and making the gift and estate taxes immune to the effects of future inflation. First, COngress should fUlly account for past inflation by setting the new uniform tax credit and the new tax rate schedule at levels equivalent to the 1942 values of the original 1942 tax exemption and the original tax rate schedule. Second, Congress should protect taxpayers from the effects of future inflation On gifts and estates by indexing the unified tax credit and the unified tax rate schedule. The magnitude of the taxpayer's problem caused by inflation can be seen from the fact that the buying power of the 1976 dollar had less than one-third the buying power of the 1942 dollar.' Therefore, a taxpayer was required to have three 1976 dollars' to retain the buying power equivalent to one 1942 dollar." Future inflation Can only make the problem worse. For example, assuming a 6% rate of inflation from 1976 to 1981, the 1981 dollar will have less than one-fourth" the buying power of the 1942 dollar and will require four 1981 dollars" to retain the buying power equivalent to one 1942 dollar. Inflation by itself would not Cause this inequity if the estate tax rate had a flat tax rate like the sales tax." For example, with a flat 3% estate tax rate, when the value of an estate increases from $150,000 to $300,000 solely due to the effects of inflation, the tax collected doubles from $4,500 la/Arkansas Lawyer/January 1979
to $9,000, but the buying power of the estate and the tax collected remains the Same. The problem occurs when inflation is coupled with a progressive tax rate, because this same estate is placed in a higher tax bracket with higher tax rates and pays a disproportionately greater estate tax." For example, in 1978 the tax collected On a single person's estate valued at $150,000 is $4,800." If this same person dies in 1981 or later, when, solely due to the effects of inflation, the value of that estate has increased to $300,000, the tax collected will increase 8.5 times from $4,800 to $40,800." Before taxes the value or buying power of the estate remains the same; the problem is that nothing else does. Taxes more than double; in fact the estate will pay 4.25" times more in estate tax. This is $31,200 more than the $9,600 in taxes expected from inflation alone. After taxes the estate (and the heirs) will have lost $15,600" in 1978 buying power. Briefly, the combined effect of inflation and progressive tax rate schedules is to automatically increase the percentage of estate tax collected On an estate significantly greater than (disproportionate to) the percentage of the increase in the size of the estate due to inflation. The theory behind progressive tax rates is that those who have more are able to and should pay more to support the government. But a progressive tax system based On the "ability to pay" concept should be allowed to respond only to "real"" increases in value or buying power and should be prevented from responding to inflation-induced increases. The problem then is that estates are being pushed (by inflation) into progressively higher tax rate braCkets" where they have a real tax increase without any corresponding increase in real value or buying power of the estate. Under a progressive tax' system taxpayers seldom have legitimate complaints about higher taxes caused by real growth in the size of their estates. However, there are fundamental differences between real growth-induced and inflation-induced tax increases. With real increases in estates, taxpayers have greater after-tax buying power; they are wealthier and have a greater ability to pay higher taxes which, as a
result, don't hurt quite as much. With inflation-induced increases in estates taxpayers have less after-tax buying power; they are poorer and have less ability to pay higher taxes which, as a result, may hurt bitterly. Further, inflation-induced tax increases promote unlegislated shifts in the tax burden among the taxpayers and tend to promote increased inequities as well. In the final analysis, only governments who use progressive rate schedules stand to gain from the tax increases that result from inflation." Further, this annual source of increased tax revenue causes a definite bias in favor of increased government spending, simply because real Increases in revenue will always be available. The overall One year increase of 37.3% in estate tax collections in 1977 over 1976 bears proof that taxpayers are being victimized by government tax policies that allow these hidden increases to continue. The main problem, however, is neither the increase in tax revenues (and resulting increase in government spending) nor the increased tax inequities that inevitably follow; it is the fact that they are allowed to happen (1) without full public disclosure, i.e., annually publicizing the increase in effective tax rates and the amount of the resulting tax increase, and (2) without strict politicai accountability, i.e., specifically legislating or voting the real tax increase that occurs.
CONGRESSIONAL RESPONSE In response to these problems in the income tax area, Congress, in recent years, has had to periodically pass major income tax "cuts"" to reduce the hidden tax increases caused by the failure to have a tax policy that prevents them. However, since 1942, the only tax cut in the gift and estate tax area has been TRA 1976. Unfortunately, to call these tax "cuts" tax reductions is misleading because the effect, considering inflation, has been proven to be largely illusory." These illusory tax reductions occur when any of the following situations happen: (1) when a tax reduction is promised but the real effect is only to repeal all (or part) of the hidden tax increase that occurred since the last tax cut and then effective only for the current and future taxable years; (2) when there is nO refund of the hidden tax increase that incurred in previous
taxable years; and (3) when hidden tax increases are allowed to occur in future years to be corrected, hopefully, by future illusory tax cuts. An honest tax policy that corrects the effects of inflation would prevent both hidden tax increases and illusory tax cuts. Other than the changes previously discussed in TRA 1976 and a study" of the problem, the only other major Congressional response has been to design special estate tax relief provisions, like IRC ยง6166A, in response to pressure from special interest groups. Invariably, however, special provisions create additional inequities and IRC ยง6166A is no exception. That section gives estates with farms or closely held businesses up to 14 years and 3 months longer to pay estate taxes than the estates of other taxpayers who must pay within 9 months. Further, qualifying estates can elect to pay no tax at all for the first five years (although they are required to pay interest each year). And if that is not enough, there is a special low interest rate of 4% on the estate tax attributable to the first $1 million of farm or closely-held business property. The five-year deferred payment and the low interest rate, coupled with the effects of inflation, have the ultimate effect over 15 years of allowing the estate to literally pay no estate tax at all. This happens because the real growth in the value of the property held intact by the estate, the value of the use of the unpaid tax money over time, and the declining value of dollar used to pay the estate tax, should more than offset the amount of the estate tax which is fixed in an earlier time period. Clearly, Section 6166A is a gross inequity that should be removed from the tax laws at the earliest possible time. A tax policy that accounts for inflation can eliminate the demand for special interest estate tax relief. PROPOSED SOLUTION: INDEXATION Congress can eliminate most, if not all, of the problems discussed above and provide tax stability in the gift and estate tax area at the same time by adopting indexation" as a tax policy for the gift and estate tax. Indexation is already being used in the United States in two areas of the tax law'" and has been adopted in several forms in other cQuntries."
Indexation is a tax policy that maintains a tax equivalence" on estates that have equal (identical) buying power, even though taxed in different taxable years, when the size of the estates (because of inflation) are different. Indexation will positively and automatically counteract the combined effects of inflation and progressive tax rates on the gift and estate tax. Even though indexation sounds complicated, in reality it is simple. It means that annually the government corrects the estate tax system by automatic increases in the unified tax credit and changes in the unified tax rate schedule to reflect the annual increase in the cost-of-Iiving index caused by inflation. Indexation will prevent inflation from reducing the value of the tax credit and from changing the tax rate schedule and causing unlegislated shifts in the tax burden. Indexation will also maintain a tax equivalence from year to year because it insures that the buying power of the estate taxes collected will only be greater when an estate has a real (noninflationary) increase in total value or buying power or when Congress votes a specific tax increase. Indexation will automatically prevent the discretionary tax reductions that are needed periodically because of inflation. More important, it will allow Congress to use the time saved to understand and solve equally important but less pressing changes in our tax system which are always overshadowed by the need for tax reductions, i.e., simplification, tax equity, fairness, the fair distribution of the tax burden, real increases or decreases in government tax revenues and programs. Indexation will not prevent the government from maintaining existing programs at the same levels. It will not because the revenue collected from the tax rates Congress sets will maintain a stable buying power. Indexation, will place Congress on a spending allowance (budget) it cannot change (absent deficit spending) without taking the political responsibility for raising or lowering taxes. For example, if an existing program needs to be expanded or requires an increase in real buying power, indexation will require Congress to either reduce other existing programs or to increase taxes to provide that real increase. It will also re-
quire Congress to more closely examine proposed new programs if they will require a real tax increase. Indexation will, for the first time, provide a comparison that reflects the effect of inflation. This will assist Congress and taxpayers in making valid cost studies of and comparisons between existing and proposed programs. Indexation will provide a tax stability that will assist Congress and taxpayers in rationally setting national goals and priorities. SUMMARY In review, there are five major reasons for the urgent need to restore tax stability: (1) Since 1942 inflation has decreased the value of the dollar to the point that it took three 1976 dollars, and will take at least four 1981 dollars, to equal the value of the 1942 dollar. (2) The combined effect of inflation and progressive tax rate schedules automatically makes tax collections increase faster than the rate of inflation. (3) Progressive rate schedules, which cause the major part of inflation-induced tax increases, should not be allowed to respond to inflation-induced increases in gift or estate values. (4) Governments who use progressive rate schedules have a builtin bias in favor of an annual increase in government spending because of the annual real increase in taxes. (5) Taxpayers are being victimized by government tax policies that allow real tax increases that are neither disclosed or legislated. In response to these problems Congress has provided the following: (1) Discretionary periodic tax cuts that are misleading and, considering inflation, illusory. (2) Estate tax relief provisions for special interest groups with builtin tax inequities. (3) A study of indexation. Indexation can meet these problems because: (1) Indexatiion will prevent annual hidden tax increases by maintaining a tax equivalence from year to year. (2) Indexation is simple and will correct the problem automatically without Congressional action. continued on page 12
January 1979/Arkansas Lawyer/11
TAX REFORM continued from page 11 (3) Indexation will eliminate the need for periodic "lilusory" tax reductions. and the time saved can be used to solve equaily important tax problems that are now overshadowed. (4) Indexation wiil place Congress on a real budget (absent deficit spending) for the first time in history. (5) Indexation will provide a stable benchmark to make valid cost studies of and comparisons between existing and new proposed programs. (6) Indexation wiil ailow existing government programs to be maintained at the same level of real funding. (7) Indexation wiil allow increased funding of existing government programs (absent deficit spending) and the creation of new government programs only if Congress votes to reduce other programs or to increase taxes. (8) Indexation will minimize or eliminate the need for special interest legisltion. The detailed examination of indexation. and Tables iI and III that follow. show the depth and pervasiveness of the problem caused by the failure of Congress to provide tax stability for the American taxpayer. DETAILED EXAMINATION OF INDEXATION The problems caused by the interaction of inflation with progressive rate schedules and the solutions offered by indexation can best be understood by considering five examples: The effect of inflation on the old exemption and the exemption equivalence of the new unified tax credit in Example 1. the effect of inflation on the estate tax rate schedule in Examples 2 and 3. and the effect of inflation after indexation in Examples 4 and 5. In 1976 Congress replaced the old estate tax exemption with a tax credit. In order to make valid comparisons, the term "exemption equivalence" " of the credit will be used in Example 1. In order to make valid comparisons. the term "tax equivalence" " of the 1942 estate tax rate schedule will be used in Examples 2. 3. 4 and 5. All examples in Tables iI and III assume that it required three 1976 dollars and will require four
12/Arkansas Lawyer/January 1979
1981 dollars to equal the value or buying power of one 1942 dollar. Example 1: In 1977 the new $30.000 tax credit had an "exemption equivalence" of $120.000 (see Table iI). This was twice as much as the old $60.000 exemption in effect in 1976. However. when the old exemption was enacted in 1942 it had more than three times the buying power (tax saving power) it had in 1976. For this reason. Congress should have made the exemption equivalence of the 1977 tax credit more than $180.000 (three times greater). In 1977. a properly indexed tax credit should have been set at a value of $45.000 (See Table iI. line 5). The failure of Congress to account for all past inflation caused the estates of all taxpayers Who died in 1977 to have available $15.000 (33 1/3%) less tax relief from the new tax credit than the estates would have received if the new tax credit had been indexed to the 1942 value of the original tax exemption (See Table II. line 6). In essence. Congress allowed a tax increase of up to $15.000 to occur in 1977 while taking credit for a tax reduction. In 1976. when the tax credit for 1981 was set at $47.000. that amount had an exemption equivalence of $175.000. This was almost three times as much as the $60.000 exemption. However. the original 1942 exemption had more than four times the buying power it will have in 1981. " For this reason. Congress should have made the exemption equivalence of the 1981 tax credit at least $240.000 (four times greater). For 1981. a properly indexed tax credit should have been set at $64.500 (See Table iI. line 5). The failure of Congress to account for all past inflation and to protect estates against future inflation will cause the estates of all taxpayers Who die in 1981 to have available $17.500 (27.1 %) less tax relief from the new tax credit than the estates would receive if the new tax credit were indexed to 1942 values. Once again. Congress has allowed a tax increase of up to $17.500 to occur in the guise of a tax reduction. To prevent future tax increases caused by inflation. Congress should at least index the tax credit so that it will at all times reflect the true value or buying power of the 1976 dollar. i.e .â&#x20AC;˘ the year the tax credit was enacted. However, in all fairness to the tax-
payers. Congress should also account for all past inflation and index the new tax credit to the value of the 1942 doilar when the original tax exemption was enacted. Example 2: In 1942. under the old estate tax rate schedule. a taxable estate valued at $250.000 paid an estate tax of $47.700 (see Table III). In 1976. after adjusting the values for inflation. the present worth of the 1942 estate was $750.000 and the tax equivalence of the estate tax was $143.100 (both 3 times greater). ThiS should also have been the result if the 1942 estate rate schedule and exemption had been indexed. HoWever. in comparison. using the old rate schedule. in 1976 the tax on the $750.000 estate would have been $212.200. This would have been $69.100 more tax or 48.3% greater than the tax equivalence required when the estate tax is properly adjusted for inflation or indexed (See Table ill. Example 2. line 3). Example 3: In 1981. after apjUSting the value for inflation. the present worth of that 1942 estate wiil be $1.000,000 and the tax equivalence of the estate tax wiil be $190.800 (both 4 times greater). This should also be the result if the 1942 estate rate schedule and exemption had been indexed. Using the new estate tax rate schedule and new tax credit. the tax on a $1.000.000 estate will be $298.800. This would be $108.000 more tax or 56.6% greater than the tax equivalence reqUired when the estate tax is properly adjusted for inflation or indexed. (See Table ill. Example 3. line 3). Example 4: By indexing only the old tax rate schedule. the effect on Example 2 is a 12.9% reduction in tax. In 1976. indexing the old estate tax rate schedule and using the 1942 exemption. the tax on the $750.000 estate would have been $185.100. This would have been $27.100 (12.8%) less than when the old unindexed tax rate schedule and tax exemption were in effect. (See Table ill. Example 4. line 4). By indexing only the estate tax exemption (at $180.000 as shown in Example 1). the effect on Example 2 is a 19.8% reduction in tax and is even greater than indexing the rate schedule alone. In 1976. using -the old estate tax rate schedule and an indexed 1942 exemption ($18:ÂŁ).000); the tax on the $750.000 estate would
have been $170,200. This would have been $42,000 (19.8%) less than when the old unindexed estate tax rate schedule and old estate tax exemption of $60,000 were in effect. (See Table III, Example 4, line 5). If the old rate schedule and the old exemption had both been indexed to the 1942 dollar, the combined effect in 1976 is a tax of only $143,100 as shown in Table III, (See Example 2, line 2, and Example 4, line 6) which is a $69,100 (32.6%) tax reduction. The result caused by indexing only the tax rate schedule is $42,000 (29.4%) more tax, and the result caused by indexing only the 1942 exemption is $27,100 (18.9%) more tax, than if both the old rate schedule and the tax exemption had been indexed. Example 5: As the size of the estate increases from $750,000 in 1976 to $1,000,000 in 1981, the effects of indexation become substantially greater. The results indicate that the larger the estate the more important indexing the tax rate schedule becomes. By indexing only the new tax rate schedule to 1942 values, the effect on Example 3 is a 30.3% reduction in tax. In 1981, after indexing the old estate tax rate schedule and using the 1942 exemption, the tax on the
$1,000,000 estate would be $208,300. This will be $90,500 (30.3%) less than when the new unindexed tax rate schedule and new tax credit are in effect (See Table III, Example 5, line 4). By indexing only the new tax credit to 1942 values ($64,500, an exemption equivalent to $240,000 as shown in Example 1), the effect on Example 3 is a 5.9% reduction in tax. This reduction is less than indexing the new rate schedule alone. In 1981, using the new unindexed tax rate schedule and a fully indexed tax credit, the tax on the $1,000,000 estate will be $281,300. This will be$17,500 (5.9%) less than when the new tax rate schedule and new tax credit (both un indexed) are in effect (See Table III, Example 5, line 5). If the new rate schedule and the new tax credit had both been indexed to the old rate schedule and exemption and the value of the 1942 dollar, the combined effect is a tax of only $190,800 as shown in Table III (Example 3, line 2, and Example 5, line 6) which is a $108,000 (36.1 %) tax reduction. The result caused by indexing only the new tax rate schedule to 1942 values is $17,500 (9.2%) more tax, and the result caused by indexing the
tax credit to 1942 values is $90,500 (47.4%) more tax, than when both the new tax rate schedule and the new tax credit are indexed to 1942 values. The results from comparing Examples 4 and 5 indicate that indexing the tax credit is more beneficial to smaller estates and that indexing the tax rate schedule is more beneficial to larger estates. Equity and tax stability requires that both be indexed. There can be no compromise. CONCLUSION In spite of Congressional claims to the contrary, TRA 1976 did not provide the gift and estate tax relief promised. TRA 1976 failed primarily because id did not provide the tax stability necessary to counteract the effect of inflation on the progressive tax rate schedule. When fully understood, indexation will be recognized as a responsible solution to the major problem facing taxpayers-the lack of tax stability. Indexation will provide the tax stability that is lacking by maintaining a tax equivalence for taxpayers thereby eliminating increased taxes otherwise accruing to the government. Further, indexation is a tax policy that can apply to the income tax as well as the gift and estate tax. Indexation is a tax revolution waiting to happen. l!l
TABLE I COMPARISON OF NEW AND OLD TRANSFER GIFT AND ESTATE TAX RATES
" ....
Assumptions:
1. 2. 3. 4.
Single taxpayer (no marital deduction). Maximum 1981 credit $47,000 used in 1981. Oid $60,000 exemption used in 1942 and 1976. No gifts. The buying power of one dollar in 1976 is $.33 compared to one 1942 dollar. With 6% inflation, the buying power of one dollar in 1981 is $.25 compared to one 1942 dollar. 5. Tax rates unadjusted for inflation. Change Tax + or ~ Tax In 1942 Value 01 in 1981 In 1981 and 1976 Estate New Elf. Rate Elf. Rate Old 60T o o o o 80T 2.00% -1,600 o o 1,600 100T 4.80% -4,800 o o 4,800 150T 11.93% -17,900 17,900 o o 250T 23,800 9.52% 47,700 19.08% -23,900 SOOT 25.30% -17,700 108,800 21.76% 126,500 750T 201,300 28.29% -10,900 26.84% 212,200 1M 298,800 30.32% -4,700 29.88% 303,500 2M 733,800 36.69% 36.31% +7,600 726,200 3M 1,243,800 41.46% 1,231,400 41.05% + 12,400 4M 1,833,800 45.85% 1,802,800 45.07% +31,000 5M 2,503,800 50.08% 2,430,400 48.60% + 73,400 6M 3,203,800 53.40% 3,098,000 51.63% +105,800 7M 3,903,800 55.77% 54.23% +107,600 3,796,200 8M 4,603,800 57.54% 4,524,400 56.55% +79,400 9M 5,303,800 58.98% 5,282,600 58.70% +38,800 10M 6,003,800 6,042,600 60.42% -38,800 60.04% 69,003,800 100M 69.00% 75.34% -6,338,200 75,342,000 16 69.90% 699,003,800 768,342,000 76.83% -69,338,200 January 1979{Arkansas Lawyer{13
I TABLE II EFFECTS OF INFLATION ON ESJATE TAX EXEMPTION (CREDIT) EXAMPLE 1 1976 $ 60,000 30,OOOa 120,OOOa 180,000 (3 times greater) 30,OOOa 45,000b 15,000
1942 $ 60,000
1. Estate tax exemption (deduction) Estate tax credit 2. Exemption equivalent of credit 3. 1942 exemption indexed
60,000
4. Estate tax credit 5. Estate tax credit indexed 6. Tax penalty
1981 $ 47,000 175,000 240,000 (4 times greater) 47,000 64,500b 17,500
a Credit not enacted until 1977 bUI applied to 1976 for illustrative purposes. b Tax credit'properly indexed:
'1976
x ,
,
1981
x
180,000 120,000
30,000
. X
~
...
240,000 1('5,000
47,000
.
~ $45,000
x
~
" rounded to $64,500 $64,457
TABLE III EFFECTS OF INFLATION ON ESTATE VALUE AND TAX RATE SCHEDULE EXAMPLE 2 1. Estate value (after inflation) 2. Tax due (after inflation) 3. Tax due (Example 2 using old rate schedule and exemption; Example 3 using new rate schedule and tax credit -<'
1942c $250,000 47,700c 47,700c
6. Tax due (after inflation) indexing both rate schedule and exemption.(credit)
1942c 47,700c , 47,700c
47,700c
1981 $1,000,000 (4 times greater) 190,800d (4 times greater) 298,800 ($108,000 than line 2)
1976, 185,100d ($27,100 less than line 3) 170,200 ($42,00 less than line 3)
EXAMPLE 5 1981 208,300 ($90,500 less than line 3) 281,300 ($17,500 less than line 3)
143,lpO ($69,100 less than line 3)
190,800 ($108,000 less than line 3)
EXAMPLE 4
r -.
4. Tax due (after inflation) : indexing rate schedule only 5. Tax due (after inflation) ,indexing exemption (credit)only
1976 $750,000 (3 times greater) 143,100d (3 times greater) 212,200 ($69,100 more than line 2)
EXAMPLE 3
cf1942 is the reference year and $47,700 is the reference lax. d A properly indexed tax should be identical to the value after inflation shown in Examples 2 and 3. line 2. Assuming this 10 be true, then lines 2 and 6 should be identical. II is very easy to prove the results'bllines 3 and 5 in Examples 2 and 4. Line 3 is determined by taking the $750,000 estate, sybstracting the old exemption of $60,000, and then applying the old rate schedule. Line 5 is determined by-taking the same estate, subtracting the .: 'indexed exemption equivalent of the 1977 tax credit determined in Table I. line 3 ($180,000), and then applying the old rate schedule. A straightforward calculation of the effect of indexation on the old estate tax schedule (line 4) is complicated by the fact that the tax rate brackets are normultiples of a constant amount or percentage. Line 4 was obtained by determining the incremental difference from' lines 2 and 5 to determine the effect of indexing the tax credit alone and subtracting that difference from line 3 to determine the effect of indexing the rate schedule alone. Proof of .' lines 3, 4 and 5 in Examples 3 and 5 is comparable.
14/Arkansas Lawyer/January 1979
,
FOOTNOTES 1. Tax equity-achieving the same tax treatment for taxpayers in similar economic circumstances.
2. Tax stability-achieving the same tax treatment (tax equivalence. see footnote 28) from year to year for taxpayers with estates (incomes) of equal value or buying power regardless of the combined effects
of inflation and progressive tax rate schedules. For example, an estate (income) in 1978 should not be taxed greater than one with an identical buying power in
1942 solely because inflation has increased the doUars required to retain that
buying power, thus placing the estate (in· come) in a higher tax bracket where it is taxed at a greater percentage than it was
1980 - .2602 1981 - .2445 12. Supra, footnote 9. 13. In Arkansas the sales tax rate is 3% of sales. 14. Four recent studies have estimated that a one percent inflationary increase in the adjusted gross income of taxpayers will increase federal income tax revenue between 1.25 percent and 1.4 percent. The author is aware of no comparable studies on the estate tax, but the effect should be similar. Note: INFLATION AND THE FEDERAL INCOME TAX, 82 Yale L.J. 716,760 (1973) and STAFF OF THE JOINT COMMITIEE ON TAXATION, TAX POLICY AND CAPITAL FORMATION, at 26 (1977).
when fewer dollars were required for the same buying power.
3. Indexation achieves tax stability (see footnote 2) by maintaining a tax equivalence (see footnote 28) from year to year on estates (incomes) with equal buying power. Indexation counteracts the disproportionate estate tax increases caused by the interaction of inflation and progressive tax rates by annually adjusting the unified tax credit and unified tax rate schedule to reflect changes in the cost-of-living index.
,
4. Comments by John N. Turner, Minister of Finance, Canada in a 1966 Budget Speach to Canadian House of Commons. INFLATION AND FEDERAL AND STATE INCOME TAXES, Advisory Commission on Intergovernmental Relations, at 71-72 (November 1976). 5. H.R. REP. 94-1380, 94th CONG., 2nd SESS., ESTATE AND GIFT TAX REFORM ACT OF 1976, at 5 (AU9. 1976). 6. Just in time for the estates of Howard Hughes, H. L. Hunt, etc.
(
7. In contrast, four major Federal income tax cuts from 1960 to 1975-justified largely on economic reasons-resulted in lower income taxes in 1975 than would have existed had indexation been adopted in 1960 with no SUbsequent tax changes. However, these Federal income tax cuts did not fUlly eliminate the effects of inflation on the aggregate income tax from 1965 to 1975. Supra footnote 4, at 7 and see footnote 23. 8. Supra, footnote 5, at 15. 9. This is an approximation rounded for convenience and illustrative purposes only. 10. STAFF OF THE JOINT COMMITIEE ON TAXATION, 94th CONG., 2nd SESS., GENERAL EXPLANATION OF THE TAX REFORM ACTOF 1976, (HR 10612, Put>lie Law 94-455), at 530 (Dec. 1976). 11. Decrease in value of the 1942 dollar with a 6% inflation rate: 1976 - .3333 (assumed value in 1976) 1977 - .3133 1978 - .2945 1979 - .2768
15. In 1978, tentative tax ($38,800) less tax credit ($34,000) equals estate tax due ($4,800). 16. In 1981 or later, tentative tax ($87,800) less tax credit ($47,000) equals estate tax due ($40,800). 17. One-half of 8.5. 18. One-halt of $31,200. 19. "Real" is used to indicate increases in value or buying power caused by an accumulation of more wealth or by an increase in inherent value, in contrast to inflation-induced increases in the number of dollars required to maintain a constant value or buying power.
ments of 1972, Pub. L. No. 92-336 §202, 88 Stat. 406 provides for automatic cost of living adjustments in the maximum taxable wage base for FICA taxes beginning in 1975; and (2) IRC §415, as added by the Employee Retirement Income Security Act of 1974, Pub. L. No. 93-406, 88 Stat. 879 provides for cost of living adjustments in the maximum benefits allowable for qualified pension and profit sharing plans. 27. Brazil, Canada, Chile, Colombia, Finland, France, Israel, Sweden, and The United Kingdom. William A. Kelley, Jr., et al., "Indexing for Inflation," Tax Lawyer 31 (Fall 1977), 17-35. Argentina, Denmark, Iceland, Luxembourg, Netherlands, and Uruguay, Henry J. Aaron, Editor, Inflation and the Income Tax, The Brookings Institution, at 215·231, (1976). 28. Tax equivalence-the dollar amount required to maintain the same value or buying power of the original tax collected from one year to the next, i.e., the dollar amount required to prevent a loss in buying power of the tax collected. 29. Exemption equivalence-the dollar amount required to maintain the same value or buying power (tax-saving power) of the original tax exemption or tax credit from one year to the next, i.e.. the dollar amount required to prevent a loss in taxsaving power of the lax exemption or tax credit. 30. Supra, footnote 28. 31. Supra, footnote 11.
20. If inflation doesn't place an estate in a higher tax bracket. it at least makes a larger proportion of the estate subject to the highest marginal rates applicable.
CATALOG
21. Supra, footnote 14. 22. For example, the Tax Reduction Act of 1975 and the Tax Reduction and Simplification Act of 1977. 23. Since 1942, except for the addition of the marital deduction, the only tax reduction in the gift and estate tax area has been TRA 1976, which restored only two-thirds of the real value of the 1942 tax exemption to the 1977 tax credit and made some adjustments in tax rates as shown in Table I. In contrast see supra, fOOlnote 7. 24. Section 507 of TRA 1976 called for the Joint Committee on Taxation to "make a full and complete study and investigation with respect to simplifying and indexing the tax laws of Ihe United States" and to complete its work and recommendations by July 1977. Only the first part of this study on simplification has been completed. STAFF OF JOINT COMMITTEE ON TAXATION __ CONGo _ SESS., ISSUES IN SIMPLIFICATION OF THE INCOME TAX LAWS, Sept. 19, 1977. 25. Supra, footnote 3.
The much awaited Blumberg's Law Products Catalog is now available. Featuring over 2,000 products including corporate supplies, law blanks, legal covers, will supplies and much more. Receive your free copy of America's most comprehensive law products reference catalog. (attorneys only) Write to: Dept. LP-500 Excelsior-Legal Stationery Co., Inc.
62 White Street New York, NY 10013 Send in your professional card or letterhead marked "New Blum,berg Catalog."
26. (1) 42USC §415 (1)(1 )(Supp. V 1975), as amended by the Social Security AmendJanuary 1979/Arkansas Lawyer/15
...........
JURIS DICTUM
~---
1III
by C. R. Huie Executive Secretary, Judicial Department
NEW YEAR'S DAY - A NEW ERA FOR COURTS When the bells ring, skyrockets flash, and the whistles blow at midnight December 31,1978, a new day will dawn January 1, 1979 for the people of Arkansas and a new era will begin for Arkansas Courts of General Jurisdiction. On that day, Act 432 of 1977 will take effect and 22 new Circuit-Chancery Circuits will replace the 19 Judicial Circuits and 18 Chancery Circuits, each with different geo-
graphical boundaries which will have been in effect up until that time. In addition, four new Circuit JUdgeships will be added, three of which will have combined Circuit and Chancery jurisdiction and three additional Chancellorships have been created to assist in handling the ever increasing flood of litigation engulfing our trial courts.
THESE ARE THE CIRCUITS THAT WERE The Judicial Circuits appearing on the map below which depict the present jurisdictional, geographical areas of our Circuit Judges.
The following map presents the geographical jurisdiction of our Chancery Judges.
THE NEW ERA Encouragement from various Judicial and Chancery Circuits for the Legislature to take some action with reference to reapportionment had been in existence for some time because of the discrepancy in the workload of the various judgeships over the state and disproportionate caseloads. This encouragement and some criticism finally resulted in the passage of Acts 325 and 974 of 1975 which 16/Arkansas Lawyer/January 1979
created a temporary State Board of Judicial Apportionment. This Board consisted of the Governor, the Attorney General, the Secretary of State, the Chief Justice of the Arkansas Supreme Court, the Chairman of the Judiciary Committee of the House of Representatives, the Chairman of the Judiciary Committee of the Senate, and one additional member, a qualified elector to be named by the
Governor. The Board was authorized and directed to reapportion the existing Circuit Court Districts and Chancery Court Districts of the state on or before January 1, 1977 from which Circuit and Chancery Judges should be elected in November 1978 general election to take office on January 1, 1979. The act further provided that the Board cease to exist after completion of its duties and certifying its reapportionment to the Secretary of State on or before January 1, 1977. The Board was further authorized to employ such personnel, researchers and consultants as necessary for the performance of its duties. The Board following the instructions contained in the Legislative directive employed the National Center for State Courts to survey the Arkansas Court System and to make recommendations for an equitable reapportionment. In response, the Nationai Center came forward with three alternative reapportionment proposals, which gave the Board sufficient information upon which to base its report of reapportionment to the Secretary of State prior to the
January 1, 1977 deadline. Following the report of the Reapportionment Board, the 1977 Legislature adopted the major suggestions contained in the report of the Board of Reapportionment with some changes and placed its adoption in effect by the passage of Act 432 of 1977. The new Circuits created by Act 432 together with the number of Circuit Judges and Chancellors or Circuit Judges with Chancery jurisdiction is shown in the map below. Although designated officially Circuit-Chancery Court Circuits by Act 432, for the sake of brevity and easy usage, the Judicial Department will refer to the CirCUit-Chancery Circuits as "Judicial Circuits" since both Circuit Judges and Chancellors are Judges, the Circuit JUdges and Chancellors have identical geographical jurisdiction, and it is believed that administration and the compilation of quarterly and annual reports will be simplified and the cost of reproduction reduced. ' "
ARKANSAS COURT CIRCUITS-EFFECTIVE JANUARY 1, 1979
I
January 1979/Arkansas Lawyer/17
LAW SCHOOL NEWS Assistant Dean James K. Miller Assistant Dean Susan Webber
â&#x20AC;˘
â&#x20AC;˘
SCHOOL OF LAW, UNIVERSITY OF ARKANSAS, FAYETTEVILLE Dr. Robert A. Leflar was honored by the Arkansas Humanities Program and Southern Arkansas University when he was presented the "Outstanding Humanist Award." Dr. Leflarwas the fourth of six lecturers in a lecture series, sponsored by SAU and the Humanities Program, en-
September 18 meeting of the Sebastian County Bar Association. He spoke to the Phi Alpha Delta student forum on September 19. Professor Joan Chapman is conducting an empirical study of the attitUdes, aspira-
titled "Arkansas Humanities in Perspec-
She began her study of the processes of legal education during the spring semester, 1978, and will complete the study during the spring semester, 1980. Data for this study will be obtained by several re-
tive." He spoke on "Law in Today's American Society." Professor Tom Robinson recently
spoke on "Law and Technology" at the Alcor Life Extension Conference held in Los Angeles, California. The main focus of the conference was biomedical gerontology. Dr. Robert A. Letlar has been appointed chairman of three committees of the Na-
tional Conference of Commissioners on Uniform State Laws. He will serve as
tions. and adaptations of law students,
search techniques, including person to person structured interviews and semistructured in-depth interviews. These interviews are being conducted by law
students at the School of Law, Fayetteville, and the School of Law, Yale University. Dr. Robert A. Lellar addressed the Texas Judicial Conference at its annual meeting in Arlington, Texas, on Sep-
tember 28. His SUbject was "Some Opinions on Opinions," Students William Ware, Louis Pappas,
and Michael Pullara have been selected to represent the law school in the National Moot Court Competition. Professor Steve Pepper is faculty advisor. Dean Mitt Copeland was among the speakers participating in the 1978 Fall
Legal Institute. His subject was "The Uniform LandlordfTenant Act-A Change in the Traditional Relationship." New faculty members include Assistant Professor and Director of Clinical Programs Carlton Bailey, and Legal Writing Lecturers Shelia Bair, Glenn Bergenfield, and Sammie Brookins. Mr. Bailey received his B.A. degree from Talladega College, Talladega, Alabama, and received his J.D. degree from the University of Chicago in 1972. He was admitted to the Minnesota Bar in 1973. Prior to joining the faculty, Mr. Bailey was the Managing Attorney for the Southside Legal Aid Office, Minneapolis, Minnesota. Ms. Bair received her BA and J. D. degrees from the University of Kansas. In
law school, she participated in Moot Court, was a Justice and Chief Prosecutor of the Kansas University Traffic Court, and served as research assistant to
Professors Phillips Kissam and Ira Robbins.
Mr. Bergenfield received his B.A. degree from Sarah Lawrence College, and his J.D. degree from the University of Oregon. He was Articles Editor of the Oregon Law Review and was a contribu-
tor of legal articles to the Oregon Daily Emerald. Mr. Brookins received his B.S. degree from Lane College, Jackson, Tennessee, and received his J.D. degree from Howard University. At Howard, he was Re-Write Editor of the Law Journal and was Managing Editor of the Barrister Newspaper. Prior to joining the faculty, Mr. Brookins
Dr. Robert A. Leftar
was engaged in private practice in Memphis, Tennessee.
chairman of the drafting committee to revise the Uniform Statute of Limitations on
Funds have been approved for the purchase of a complete new package of video equipment which will be installed in
Foreign Claims Act, as chairman of the
stand-by committee on the Uniform Survival and Death Act, and as chairman of the
the law school courtroom. This equipment will be available for use in clinical programs, lawyering skills programs, and for the showing of various video cassette presentations.
review committee for the Uniform Metric
System Act. In addition, Dr. Lefiar serves as a consultant to several other committees of the National Conference. Professor Mort Gitelman addressed the 18/Arkansas Lawyer/January 1979
Dean Milt Copeland
\
SCHOOL OF LAW, UNIVERSITY OF ARKANSAS AT LITTLE ROCK LEON JAWORSKI TALKS WITH STUDENTS
Former Watergate prosecutor Leon Jaworski participated in an informal ques路 tion and answer session with law students and faculty on September 14. His comments, given to a full house in the School of Law's newly renovated courtroom, co路 vered his experiences as special prosecutor for the Korean influence peddling scandal and for Watergate.
Later that evening, Mr. Jaworski gave the Donaghey lecture in the Theatre Auditorium on the main campus of UALR. His topic was morality in government. The full text will be pUblished in an upcoming issue of the UALR LAW JOURNAL. Professor Robert R. Wright, Donaghey Distinguished Professor at the School of Law, introduced Mr. Jaworski, Professor Wright and Mr. Jaworski have worked together in the American Bar Association, and Professor Wright was instrumental in bringing Mr. Jaworski to the School of Law. SECOND ISSUE OF LAW JOURNAL PUBLISHED A special section on Law and Medicine and a Book Review of the Annotated Sherlock Holmes are highlights of the second issue of the UALR LAW JOURNAL, published recently. In addition, the LAW JOURNAL contains articles on Impeachment of One's Own Witness, by Samuel Perroni, and Maritime Collision Law, by Irene Johnson Barnes, and a comment on the Proposed Arkansas Uniform Child Custody Jurisdiction Act by Edward O. Moody. THOMAS E. DOWNIE AWARD ESTABLISHED Thanks to a generous gift from the Winrock Corporation, the law school has established an award to honor the late Thomas E. Downie. Mr. Downie, who was a member of Winrock's Board of Directors, has a distinguished career in the legal profession. He was a former prosecuting allorney for the Sixth Judicial District and a former President of the Pulaski County Bar Association. In order to honor Mr. Downie's devotion to the highest standards of the profession, the income from the fund will be used to provide awards to the students receiving the highest grade in the Legal Profession course at the School of Law. Additionally, a plaque will be hung in the School of Law
and the names of winners inscribed upon it. Dean Walsh, upon accepting the award, stated, "The School of Law is pleased to establish this award. It will
serve not only to memorialize a distinguished lawyer but also to encourage students in the stUdy of legal profession. It will demonstrate to them the importance which the Bar and the community place upon adherence to the standards of professional conduct." LAW SCHOOL RECEIVES GRANT FUNDS The law school has been notified that tt has received a grant from the Department of Health, Education and Welfare under Title II of the Higher Education Act. The grant wili be used to enrich the School of Law's clinical program by hiring adjunct supervisors for the students in the program and to develop a first year practice laboratory. The Donaghey Foundation has awarded two grants to the School of Law. One grant will support travel and research by the holder of the Donaghey Distinguished Professorship. Professor Robert R. Wright is the current holder of this chair. The second grant will allow the Law School to purchase a computer terminal and pay line charges for use of innovative computer programs in legal education developed at the University of Minnesota. FACULTV NOTES Professor L. Lynn Hogue attended the Eighteenth Annual Archives Conference on the Law in American Society: New Historical Perspectives and Resources. The Conference was held in Washington, D.C., on Thursday, September 21, and Friday, September 22. Professor Hogue has been named a member of the American Public Heath Association's Commit路 tee on Health Law. He was also one of eleven Arkansans attending a White House briefing on President Carter's proposal to contain health care costs on Tuesday, September 26. Dr. Robert R. Wright, Donaghey Distinguished Professor of Law, has been elected to the House of Delegates of the Arkansas Bar Association. Professor Wright spoke to the Arkansas Land Surveyors Meeting on September 14, on Property Rights and Air Space. He also spoke on New Developments in Property Law at the Fall Legal Institute of Friday, September 15. Professor Wright addressed Welcome Wagon on Tuesday, September 19. The group, which met at
Maumelle Country Club, heard a lecture on Probate Law. Professor Susan Webber also addressed the Fall Legal Institute. In addition, she has been named vice路chairman of the Committee on Legal Education of the General Practice Section of the American Bar Association. Professor O. Fred Harris, Jr. was graduated from the Second Military Justice II Course of the JUdge Advocate General's School in Charlesville, Virginia. Professor Harris received his graduation certificate with honors. The course ran from August 7-18,1978. Assistant Dean Ellen Brantley addressed the Little Rock B & P W Club on Thursday, September 28,1978. The subject of her talk was Inheritance and Probate. On July 31, 1978, she appeared on KARN's Dialog Program discussing Wills and Estate Planning. Assistant Dean Brantley addressed students at Catholic High School on the Legal Implications of the Equal Rights Amendment on Friday, September 15. Assistant Dean Brantley, who was appointed by the Chief Federal Judges of the United States District Courts for the Eastern and Western Districts of Arkansas to a committee to draft new rules of court, participated in a presentation of the proposed rules to the assembled judges of the courts on August 31,1978. The judges have taken the proposed rules under advisement. Assistant Dean Brantley also served as moderator at a luncheon seminar of the Women's Education and Development Institute Incorporated held on September 12. The seminar, which was part of a series sponsored by a grant from the Arkansas Humanities Program was on The Working Woman: Her Dual Family and Career Roles. Dean Robert K. Walsh, who was named by Chief judge G. Thomas Eisele as chairman of the committee to review applications for appointment of a United States Magistrate, presided over a meeting of the committee held September 1, 1978. The committee has made its recommendations to the jUdges of the Eastern District of Arkansas, who will select the Magistrate. Dean Walsh has also been appointed by the Supreme Court of Arkansas to its Judicial Planning Committee. He will serve on the subcommittee on the Judicial Article, which will draft a proposed article for submission to the Constitutional Convention. Dean Walsh has written an article for this issue of the Lawyer on the dedication of the Old Federal BUilding, held in JUly. continued on page 21 January 1979/Arkansas Lawyer/19
LEGAL ECONOMICS by Fran Shellenberger
"TIME AND CHARGES BILLING ON YOUR WORD PROCESSOR" Lawyers and secretaries whereever I go tell me that the one area of their workload with which they need help is billing. I know of one firm of four lawyers where each lawyer is involved five days per month preparing the bills for that month. Worse yet, at billing time the rest of the client workload in that office comes to a halt.
If you are using comparable equipment you can adapt this method for use on your system provided it has the following word processing capabilities:
Current time and charges billing systems utilize time slips or cards which are filed daily and pulled when the lawyer is ready to send a bill. The secretary types the information on the slips in chronological order and occasionally separates them by attorney if more than one attorney has worked on the file. A disadvantage to this method is the handling of the time slips, sorting and filing them by file and by date. Upon retrieval at billing time, the slips have to be handled again to be sure they're in chronological order and sorted once more by attorney.
2) Variable codes-a method of merging variable information;
If you have or are considering word processing equipment for your office, you may already have all the tools necessary to automate time and charges billing at a considerable savings in time to both lawyer and secretary.
Here's how: The system described here assumes you wish to bill monthly and that you use time slips. However, the slips will be "filed" electronically on your word processing system. The equipment discussed here is the CPT 8000, a stand-alone text editor utilizing a floppy disk with two disk drives, a CRT screen and a separate printer. 20/Arkansas Lawyer/January 1979
1) Glossary-a method of storing and inserting a phrase or paragraph by typing only an identifying number;
3) Random entry and storage;
responsible attorney's initials, the initials of any others who will be charging time to the file and an abbreviation of the type of file (Probate, Will, Divorce, etc.) This means that time entries can be retrieved not only by file number but also by any or all of the criteria included in the billilJg code. A typical billing code for a client of Anthony Advocate would be: "1234,AA,Will"
4) Selected retrieval of "files" by identifying number.
"1234" identifies the file number for Carl Client;
(A time-and-charges system similar to this can be developed for your word processing system even if it does not have a glossary and the ability to create and retrieve files; however, without those capabilities more media and mediahandling is involved.)
"AA" identifies the billing attorney;
In order to enter new data at random and insure that the system files it correctly, it is necessary to establish a "file name" for each client. The simplest identifying number for that "1i1e name" is the client's file number. Along with the file name, we need to establish the retrieval criteria for file entries. I call this the client's "billing code" The code can be nothing more than the file number if desired. If the file number is used as both the file name in the glossary and as the billing code as entries are typed, the system can be instructed to print all the entries for that file at billing time. However, in addition to the file number, it may be desirable to add certain other criteria to the billing code, such as the
"Will" identifies the file as containing a Will. This code and all other billing codes are stored on the system in its "glossary," which means that the entire code can be retrieved by typing only the file number. TypeS of Entries This system uses three types of entries, all of which are filed using the client file number in the glossary. They are: Type of Entry
Description of Entry
A
An address entry, one per file or client; H The heading which appears at the top of an itemized bill, for example: "Date Description of Services Time
Amount"
There may be a few" H" entries or only one, depending on the types of bills you send; B
Billing entries, representing the information appearing on the time slips.
Media The system utilizes one billing disk for each month, allowing convenient retrieval of entries as necessary at minimum media costs. We call this the "Billing" disk. The system also utilizes one disk which stores the glossary of file names (including the billing code), a billing address for each client, and the heading(s) you wish to appear on the firm's statements. We call this the "Glossary" disk. Typing Billing Entries Onto the System
'.
As the secretary "files" time slips, she first types the file number onto the CRT screen. As she does so, the billing code for that client file appears from the glossary disk. Next she types the actual time and charges entry from the time slip. When all time entries have been made on the screen for that day, the secretary stores them on the billing disk. The CPT 8000 permits the operator to choose a storage spot on the disk by number. This billing system takes advantage of that feature by storing time entries at a number which equals the actual date on the time slip. For instance, entries for the 30th are stored at No. 30 on the billing disk. This feature simplifies the system in two ways:
system which includes the file number, the beginning and ending dates of the period of time for which you are billing the client, and the criteria from the billing code for that client you wish to have printed on the bill. For exampie, if several attorneys have charged time to the file and you wish the billing entries to be sorted by attorney, you may instruct the system to group those entries charged by Lawyer #1, #2, etc. If you include the date as part of your criteria, you may instruct the system to print only those entries within specified dates regardless of how many time entries appear on the disk for that client. The printed copy of the bill returned to the lawyer for review will contain the name and address of the client, a heading, and a list of the time and charges entries by date and by any other criteria you specify. This copy can be considered a draft copy and used as a tool in arriving at a fee if desired. However, since it is printed in high-quality character print style (the same style you use for correspondence, etc.) it can be mailed to the client as is. The format of the printed statement can be varied should the lawyer prefer that the actual time and charges not appear on the client's copy of the statement. This can be accomplished automatically by the CPT 8000 or manually on other systems having the operator type this information at the far right of the screen. By using paper for the client's copy which is slightly narrower than your file copy, the actual time and charges will print to the far right, appearing on your file copy but missing the original copy altogether.
1) The secretary knows at all times where all entries are stored without the necessity of maintaining a disk index;
BENEFITS OF SYSTEM
2) Each entry is easily retrieved for correcting typographical errors if necessary, or making insertions or deletions as requested by the billing attorney.
This system eliminates the handling of time slips, uses equipment which is already available in the office and makes that equipment even more productive. Best of all, it saves time and improves the billing process in your office.
Printing a Client's Bill When it's time to prepare a bill, the secretary inserts both the glossary and billing disks into the CPT 8900. She types a short instruction to the
LAW SCHOOL NEWS continued from page 19 Professor and librarian Ruth Brunson
spoke on Legal Bibliography at the Arkansas Library Association Annual Con-
ference in Hot Springs on Sunday, September 17, 1978. At the conference, Janet S. Goldman, acquisitions librarian, was elected as secretary of the Special Libraries Section of the Association. Professor Fred Peel served as a mem-
ber of the facuity of the ALI-ABA course on Domestic Taxation of Hard Minerals at
Houston, Texas on September 27-29. The supplement to Professor Peel's book, Consolidated Tax Returns was published by Callaghan & Co. in September. Assistant Dean Clay Patty's work in the Arkansas Institute for ContinUing Legal Education is discussed in his separate article in this issue.
CONSTITUTIONAL CONVENTION CONFERENCE The School 01 Law, in conjunction with
the UALR Department of Political Science and Criminal Justice and the Institute of Politics and Government, sponsored a conference on the Constitutional Convention on October 6 and 7. The conference, which was designed to develop an awareness of the issues facing the delegates and citizens in the upcoming convention, featured an address by former Michigan Governor George Romney, who served as chairman of the Michigan Con-
stitutional Convention in 1962 and as Governor from 1963 to 1969, when the new Michigan Constitution was implemented.
A debate by Senator Robert Harvey and Ted Boswell on the merits of ratification at a special or general election and panels on specific articles were also presented.
Dean Robert Walsh moderated the panel on the judicial article. The panelists were Charles D. (80) Cole, Regional Director of the National Center for State Courts and Dean Patrick D. Kelley of the University of Missouri at Kansas City
School of Law. Professor L. Lynn Hogue was a member of the panel on the local government article. This panel was mod-
ACKNOWLEDGEMENT: The author is indebted to T. J. Boyd of CPT Corporation for contributions in the concept of this time and charges billing system. ' "
erated by Glen Sparrow of the UALR Department of Political Science and also in-
cluded Professor Lauren McKinsey of the Department of Political Science, Montana
State University. ""
l'-,
January 1979/Arkansas Lawyer/21
EXECUTIVE COUNCIL NOTES by James A. Buttry Secretary-Treasurer
The Executive Council was occupied during the months of August and September with the consideration of a large body of proposed legislation. Each item of proposed legislation had been considered by the Jurisprudence and Law Reform Committee and was presented to the Council with the recommendation of that Committee. See September, 1978, News Bulletin. Council members spent considerable time, in session and in private study, in the evaluation of forty-four items of proposed legislation. In some cases debate was
Association had been honored by the American Bar Association was received enthusiastically. Nineteen applications for membership were accepted and the Council determined to renew the lease with the Foundation for the south wing of the Arkansas Law Center. President Boyce reported that a report was expected shortly from the Board appointed for Prepaid Legal Services and that he had appointed representatives to serve on the Bbard of Arkansas Legal Services, Inc. Pursuant to the request ofthe Sup-
lively and votes were divided. Set forth in the News Bulletin is a summary report of the report of the Committee, the action of the Council and the decision of the House of Delegates. In addition to the review and consideration of 44 items of proposed legislation, a task requiring extensive study and sometimes lively debate, the Executive Council, at its August 12 meeting, attended to several items of significance-at least one of which appears to have unusual potentialities. An announcement that the
Ar1lansas Eminent Domain Digest
Probate laws of Arkansas
Arkansas Supreme Court cases on eminent domain compiled in digest form. Table of Cases; word Index. 266 PAGES, HARDBOUND,
1964
$12.SO*
Probate Code of Arkansas and other laws of the Arkansas Statutes
pertaining to probate practice
In
one convenient volume. "86 PAGES,
HARDBOUND.
1961
....ith Supplement 1978-1979 Supplement only
Wor1lbook for Ar1lansas Estate Planners
Ar1lansas Banking laws
by Mitchell D. Moore and William H. Bowen Everything for the estate planner. Checklists, forms. ideas, techniques in convenient looseleaf binder. 11 CHAPTERS,
1967
US.OO路
Ar1lansas Statutes Annotated 25 volumes (1947) $225.00_ in the Stilte of Arbnns
1977 Supplement
A comprehensive one-volume survey including provisions of the Arkansas Statutes relating to banking. 446 PAGES, HARDBOUND,
1966
$25.00-
Contact your Arkansas representative MR. JOSHUA E. McHUGHES
Tel. (501) 376路9131
MICHIE'=1P'? BOBBS'MERRILL
$95.00.
*Plus Shipping, handling and sales ta~ where applicable.
22/Arkansas Lawyer/January 1979
$15.00.
Law Publishing
reme Court, the Council voted to file with the Court the recommendations of the Association Committee regarding the unauthorized practice of law. Upon the report of Winslow Drummond to the effect that the Arkansas Statute Revision had approved recodification in principal, the Council voted to pursue with the Attorney General the matter of recodification of the Arkansas Statutes. Bobby McDaniel reported that federal no-fault legislation appeared to be defeated, at least for the present Congress, due in significant part to the efforts of the Association. President Boyce reported that the Association had just received the American Bar Association Award of Merit for the Systems service. The
U ••. _tlTA ......
(R. ."".,. I. TI ..... 0..- .. v
,.. "VIUCATIOfI, NO
~"P
0
nuarterlv
400 West Markham, Little Rock
v:_.,..,
,
Pulaski
Little Rock
Arkansas 72201
........ E...... OCOM"LEf( "00''I(SSE5 01' "UILISHEIOI. tOlTOIOl. ANO MA"AOI",a 10lTOIII
400 West Markham
400 West M"'rkh.lllm ...
........... Cl .... &OITO. IN.",• • "01 Add .....)
C. E. Ransick
40" w
'
'
"'
"' ,-
-'-
,
Mike Kelly Dale Shoup
.. ,,"'&
•
"DO"....
,
•.
Pl:30/J< ~o.atu».
Q9f~4a4-
Pl:30/J< ~WJul.atio-1t
• • • •
,J
h_.. . .
0 .....' 1".. "0' C ....... " .. o OU"'''" ...... c .. O, .. O .2 ... 0 ........
0""'1"" C"""""O OU.'"'' ..... C .. O, .... 12 .. 0 ........
lXTINT AND NAtUIOIE 01' el"'CUI,.AtlON
·.t _ .. R ..,,)
TOT ... L"O co............ T .. O I...
· ·
Q9f.duvJt:Ja&
"DO.....
"",io". _ ..........
f.....
I • I
"",
, 'Olll CO.... I,.ETION 8'1" "0"'''"0"T OlllGANIZ"TlONS AUTMORIZED TO "'''IL ... T S"EC''''L IllATES IS.~'." U2 IU.1'SMJ Tto..... '00.. I.. 011, ....... 01 \I'Ih 0._" ..1O" _ ,... 10' I'ood.... 1",,_ '.A ........... (C/O.d- 0_1
·
~m tlw dJia#
.
N NE
I.
•
Ar 7'2"
"",
ItNOWN 1Il0NOHOLOERS. MOlllTG"GEE'. ANa OTMI"~ SICUIllITV HOLOEIll. OWNINO OR HOLOING 1 "ERCENT OR MORE OF TOT ... I,. AM()U",T OF 10.. DS. "'OlllTGAGlS Olll OTMEIll 'ECUIll'T1E5 (If f~.........0 ....... "fU.)
Clark County Bar Assn. Pres , W. H. Dub Arnold Secretary ., .. , , .Sherry J. Mathis
•Ir----------, • Q7to/V~ Q7~1t(;1CV;;4 I
-"
"
... ,twe.J
Marion County Bar Assn.
•L •
Little Rock
7. OWNER (If o ... "eeI 1>7 • eo,...... ''''''. (,......... ......, -'01",........, IN .r.r....."" .100 I............''''.. ,M .......... tM ...._ ...... -'01..._ . of "odo" -'01",_. of 1M 1""."",..., /WIld... _ ../n, o. /WIId/", , , , . _.., O' ,..."" of 10'.1."",..", of I t _ If "or 0"'_ h . eo ....... , .... 1M _ _, _ 0"'.........., H ,,",, " 0_ _ ..,. • ,...,_~ 0' OIM' .." _........., .... ",.... I,........."'" -'01, ....... _II ... tINt o f ' - ''''''''''''''' ......,
Norman Wilburn
Lonoke County Bar Assn. Pres. . Navada Roberts Vice-Pres. . Charles A. Walls Sec.{Treas, ' .. ,Joe O'Bryan
•
$6.00 non-memb rs
Arkansas 72201
"""'II:
I • I
UltK"'~IO"
Ad.",00,1
Arkansas Bar Association
Benton County Bar Assn. Pres. . Howar.q ,Slinkard Vice-Pres Terry Lee Sec.{Treas W. Asa Hutchinson
Pres Secretary
~c·nn
Z'PCod<lj (/VOl p'ffOl".. j
0" 0 .... &" ... 1,. .u • .,..... o ....'C&. 0" TH& "U.L"H&", ('lot prlfohr ..j
400 West Markham
•
0" •••
o....,c:. 0 .. ""'.L'CATION rs,...,. CII". CO""'7,."'. _
5. LOC"T,ON 0" n ..: HII:"OQU".TII:'"
,,'0''' 0" .. , .. ,NO
j- ........v...........u ................. 1........ u ..... 4 ..c..
1 ....... Qu .... Cy 0 .. , •• ut<
.,1.0C"''O''0 .. 0 .. KNOWN
t. ..
I. I ,1.1.1. i.1 n,,,,,.
"~PP
lono,," IN• ...".,.., Add.._)
Baxter County Bar Assn. Pres Edward Cunningham Vice-Pres James W. Atkins Secretary Rick Spencer
,
v'c.
J' u.s.c .J68JI
....e .. T'o..
C. E . Ransick
Treasurer
f....
STATEMENT OF OWNERSHIP, MANAGEMENT AND CIRCULATION
..U.L.... &"
Oyez (from page 46)
potentialities were recognized and discussed, as the possible revenues would appear to be substantial and to offer an approach to a number of existing and expected public needs, such as legal education, client security fund solvency and delivery of legal services to the poor. It was gen: erally agreed that the possible development of this revenue producing vehicle should be pursued for Arkansas.
Award is signified by plaque which President Boyce displayed. President Boyce reported on a recent decision by the Supreme Court of Florida which portends the development of unusual opportunities for state bar associations. The decision upheld the deposit or investment of client trust accounts and the use ofthe earnings derived therefrom for the support of programs in the public interest. The
'1"....
ItlllI
.'1" ""'I,..
........ O'.T"'."'''O'' c .......... " 0" 0 ....... 11 ... &...... ..........1,.1. CO.... L.......... " .. v ...... 0 OT ............. co..... TO ...... L o,.t",.U"'O .. ts.... ofC _
DJ
CO",''''. NOT O"T"'."'T"O l. O" .. 'C"" ....... 1,. .....,. " ............. ' .. T' .. G
0'1" ..... U""C<;O"'''T''O, ."0'1,."0
•
TO'''L (Su, .fB," _
...
2 800
-0-
-02,758
~""o""'..,..,
I ~Iiry thaI !he .."lernenlS made by rorrect and compkll:.
2,653
2,7
-0-
-0-
2.653
2,758
122
42
-0-
... G""T' ...,,..... "'" ""_"
.AI
.~"t art
ACTUAl,. NO. COfI'IE. 01' SINGLE InVE "UILtSHIO NEIloI'lEST TO FII.ING OAtE
2,653
TO'''L ..... '0 C'''C'''L''''''O'' ($ ......, HIlI _
2........u ......... 0 ... ,,0:00"
,.W.,,,...I"._"'J
2.775
""'0 C'''C'''LA'''O'' t ..... 1,.11:. T" .. OUGH 00: ... 1,.&" ...... 0 <: ..... 11'11: .....TII", .. t 00 ........ O'<:O ..... T. . . ."1,."". J• ...... ,1,. ."' ••<:"'''T'O''.
• •
'If clN.... <I. ,...../0.......... It ....... 1' ••,. ....." .., .. of ~IN.., •
"VEIOI"OE NO ~O"II[' lAC" ISSUE OUIll''''O "IOIECEOING Il MONTt+$
InC'
-0-
2,775
2.800
I
~~:i:LO:O'" .. Ol ... O .....UOL.......... u., .. O: •• ....." ".0" c.. .JIIII'" E. Banslclt:
c.
.. --ltOutlve D1reOtor
u. 1'0101 COM"I.II!TlON I.,. "VILII"EIOIS MA'I,.'NO lOoT THE IOIIOUI.AIll "'ATIS (Su,lo.. IJ2.ltl. ~o.IMS."',"" .tr... ...tj
,
3t USe. 36,. ","ovleo.. I" "...,Inen, ...., ~N. pe.................. Ieo " .... _ "".ltlel! to .... 11 ........... r>d ... I. .",•• _.10" '3se 01 .,,1•• 1... ,'ull m.lI _ ... ",." ••• , ,Il. ' ...... ,OvlGOCl ..""., ."1......_.1_ " ..I." .... III....." ...Uy ..h" .11. "on•• "",le. . . . . 1..... ' ....... 10......ml.oIo.. •0 ..... lIm....... _ ...... " '" _ " '....... I", ............._ 01 "'I.......... I ........y '_on _mi...." to "'•• , ... _ .. II<:.tI." , , _ I.. It........... ' ........_ ........._1._ I>y 31 V • C. 36,..
110"21>:;:'
~'TOII."U~"S ................. 0" 0 .......
::":";':;, 3526
(P~t / J
1'''_ 00"_
C. E. Banslck J:uout1ve D1reotor
(See inSltuClionson ,evenc)
January 1979/Arkansas Lawyer/23
Have you missed it?
Order Now! Business Manager UALR School of Law 400 West Markham Street Little Rock, Arkansas 72201
Annual Subscriptions ... $g.OO, Annual Survey Issue only ... $6.00
CAN YOU AFFORD TO MISS IT? 24/Arkansas Lawyer/January 1979
MIDYEAR MEETING JANUARY 18-19, 1979 CAMELOT INN LITTLE ROCK
CIVIL LITIGATION
"CLE" SUBJECTS
NEW RULES OF CIVIL PROCEDURE AS ADOPTED BY THE SUPREME COURT OF ARKANSAS
MIDYEAR MEETING HOUSE OF DELEGATES SATURDAY MORNING JANUARY 20,1979
January 1979/Arkansas Lawyer/25
SETTLEMENT IN A PERSONAL INJURY CASE: THE IMPERFECT ART By E. Robert (Bob) Wallach There is not one of us that does not relish the secret, and often not so hidden, delight of the role of the courtroom advocate. Not only are we entitled to the admiring glance and response of those who react with unabashed awe at the knowledge that we struggle daily with the intricacies of mind and artifice in the courtroom, but we may also contentedly associate ourselves with the lofty tradition of noble advocates of the past, beginning with Socrates, flowing effortlessly through the likes of Sir Thomas More and Samuel Leibowitz, and basking in the present in the luminescence of a Sam Ervin or Joe Ball. It is indeed a comfortable visage with which to entertain our private selves. But in the harsh reality of day to day practice, there is not one of us that does not fully acknowledge the illusion, or at best, the momentary reality, of the role of the noble gladiator in a just cause. The actual fact is that there is. no one currently engaged in the area of personal injury litigation, paintiff or defendant, who does not settle ninety to ninely路five percent 01 the litigation handled. Settlement is our most often-used technique, not the brilliance of incisive cross-examination or the eloquence of emotional final argument. Yet the art of negotiation-that quality which not only helps to preserve the rights of our clients, but continues to pay the overhead and send our children to school-is the least taught, most ignored, and often, most abused skill of the trial lawyer. In the past, it was commonplace for the practicing lawyer to bemoan with regUlarity the paucity of advocacy training in our law schools. We could, unafraid of rebuttal, view with disdain the lack of practical training in the art of being a trial lawyer. Our law schools were repositories of academic intelligentsia, preparing no one for the practice of law and even viewing with disdain various practical talents necessary to become an accomplished advocate. That attitude of the practicing lawyer is another rapidly dissolving anachronism. The law schools today, almost all, have embarked upon vigorous programs of education in all areas of clinical undertaking, but most particularly in the art of advocacy. Courses in eVidence, trial skills, litigation, or whatever name is affixed are standard elements of the curriculum and are often taught by practicing trial lawyers who become members of an 26/Arkansas Lawyer/January 1979
adjunct faCUlty and bring to the law school a welcome touch of reality. Even in so enlightened a Climate, one looks with dismay at the course content 01 programs in advocacy to lind either nothing or very little taught about the art 01 negotiation and settlement. At best, it usually constitutes a small tail-end portion of the course. This is not surprising; the glamor of crossexamination, the dogmatic admonitions relative to complete preparation for trial, and the splendor and ego satisfaction of final argument, all lend themselves to a more persistent lever of attention than does the rather mundane art of trying to determine "what a case is worth." Despite the advances made in academia, there is still a pronounced disdain for actually talking about the process of converting human pain and suffering or the consequences of death into the callous equivalent of dollars and cents. How difficult it is for the law school professor to acknowledge that all of the vaunted preparation for the profession that fills the curricula of our law schools leads ultimately to the resoiution of pecuniary rights in an arena populated by claims adjusters, claims committees, investigators and lawyers who have traditionally occupied the bottom rung of prestige in the hierarchy of our admittedly elitist profession. However, we recognize fhat our profession serves at its broadest base the communities in which we live in the most elementary spheres of our professionthe criminal law, domestic relations, landlord-tenant, small business representation, and most profusely of ali, personal injury litigation. Armed with the knowledge and the rationale that settlement is the art which we must most completely perfect if we are to completely fulfill the role of complete advocate and knOWing that by doing so we will more competently fulfill our obligation to represent our client, plaintiff or defendant, with skills as carefUlly honed as any employed in the courtroom, let us see if we can engage in the great American pastime of trying to formulate "black letter rules" for the amorphous art of settlement. I. PREPARE,PREPARE,PREPARE We again begin our discussion with the ancient adage that has afflicted us since the first day we entered law school and Dean William Lloyd Prosser told me to "look to the left and look to the right and
remember that next year, one of you won't be here." There is no avoiding the adage, for it has become trite by being an everpresent and everlasting truism. Settlement discussions should not begin without the same approach towards preparation as any competent trial lawyer would bring to the preparation for trial. A. THE SETTLEMENT LETTER In any confrontation of opposing viewpoints, it is essential to move dramatically and in impressive fashion at the outset. This is generally plaintiff's potential advantage and is too often overlooked. An increasing number of counsel for the defense are beginning to realize that it is not necessary to await the overture of settlement from plaintiff's counsel. Often, it is in the interests of the defense, and certainly in the economic interest of the insurance industry, to initiate settlement discussions. The quality of the settlement presentation by either side will be fully determined by their intimate understanding of the case, the witnesses, the parties, and the human intangibles which all too often tip the scales and produce the verdict. The opening salvo in settlement negotiations is best contained in the preparation of a settlement brochure, or an extensive settlement letter. The elements of either are essentially the same. 1. A STATEMENT OF THE FACTS First of all a statement of the facts is necessary. This should be carefully phrased, detailed not only with the evidentiary facts of the occurrence but also with those human factors which are often the essential determinant of the outcome in a personal injury case. It should be objective and not subject to criticism by having omitted salient factual support upon which the opponent will be able to rely. At the same time, it should be phrased in a way which carefully carries the flair of per-
suasion for your client, much as would a
well-constructed opening statement. The opening statement and the settlement overture must both be persuasive but not
an intensive care unit. While he expressed a good faith concern for the provision
cross-examination is far more theoretical than real.
of adequate medical care to the pathetic,
6. A MINI-BRIEF At this stage of the presentation, the
vulnerable to attack for half-statement or
comatose young mother, a check with the administrator of the convalescent hospital
misleading innuendo.
revealed that the figures being provided
2. A PROFILE OF THE CLIENT This portion is then followed by a profile of the client (plaintiff or defendant). This too often overlooked element of
by defense counsel were approximately
human persuasion should be advanced as early in the settlement negotiations as
one-third of the actual expense projected for care considered essential and lifepreserving.
4. ECONOMIC ESTIMATES Counsel may wish to include the
is possible. It requires that the lawyer fully
economic estimates of an economist
understand his or her client, and recog-
or an actuary, the projected cost of an
nize the ways in which the injury or death has intimately affected the lifestyle and the future of the person whom you are charged with representing competently. It
annuity. a proposed evaluation of comparable potential earning figures from other occupations, or a wide variety of
requires more than a recitation of injuries
or acknowledgement of the death. It requires knowing enough about the way in which this individual person lived and the context of the family, occupation and interests of that individual or surviving
family to fUlly personalize the true consequences of the accident and its aftermath. Often it is wise to include photographs that depict the plaintiff as he or she was before the injury, as the family was before the death-engaged in activities which
formed an integral part of the joy of living. Perhaps most important is to extract from depositions, medical records and
statements of witnesses that have already been compiled during the discovery process those observations which will be made from the witness stand and which will corroborate the enormity of the consequence of this tragedy upon your client.
data which appropriately fit into this section of "special damages" and provide the hard foundation for evaluation before proceeding to the more difficult and more
nebulous elements of general damages. 5. MEDICAL EVIDENCE In an injury case, it is important to substantiate the injuries, and their ramifications, with as much reliance upon medi-
cal evidence that will be admitted at trial as possible. The inclusion of appropriate medical reports, excerpts from hospital records (including nurses' notes), consultative reports, and even extracts from medical ar-
ticles which discuss the injury and its probable long-range effects all accomplish the dual purpose of dramatically piCturing the injury and corroborating the prognosis. The inclusion of appropriate photographs which depict the various stages of development of the injury, particularly in
3. THE "SPECIALS"
burn cases, is essential to demonstrate
While all of this humanistic orientation is important in the evaluation of an individual
the various degrees of severity suffered by the plaintiff.
personal injury matter, the core ingredient upon which most claims committees
center is the hard "speclals"-the tangible economic loss as expressed in medi-
cal bills and wage loss, past and future. This is the most mechanical of the presentations, but as with the simplest activity, the more skill you bring to it, the less likely it is to cause you harm and the more per-
suasive it will become. All medical bills should be carefully compiled, itemized, and their credibility checked. "Credibility" refers to the unalterable fact that those bills must be unquestionably related to the event which is the subject of the action. While we are accustomed to thinking of this as primarily ground for an error by
plaintiff's lawyer, this maxim, along with all others in this article, are equally applicable to the defense. In a recent matter involving a young
woman who had sustained a cardiac ar-
Defense counsel are no less able to
create a formidable defense to the injury by the presentation of medical supporting data which either contradicts, minimizes or perhaps most important, recommends
alternative methods of lifestyle or medical treatment which can alleviate the severity
of the injury. There is, in the judgment of almost all conscientious counsel for the defense, a recognition of the obligation to provide expert medical consultation in the treatment of a severe or catastrophic in-
jury. It is appropriate, not only to lessen the economic import of the injury, but to fulfill a humanitarian objective in assisting the plaintiff to return to as normal a lifes-
tyle as possible. There are some adherents of the "old school" who would resist these suggestions on the theory that their medical evidence should be withheld until it is pre-
rest and was in a coma following minor
sented at time of trial. There is an element of risk involved for the trial advocate in
surgery, defense counsel undertook to determine exactly what it would cost on a
exposing the totality of medical evidence
monthly basis to maintain her in an ade-
quate convalescent facility. He wanted to avoid continuing extraordinary expense of
at an early stage for evaluation and preparation for cross-examination. However,
if the testimony is valid and wellsubstantiated, the threat of imperious
careful presentation of a mini-brief on
the various legal issues presented by the case continues to demonstrate the extent of your preparation. It may well disabuse opposing counsel, client or claims com-
mittee of any false reliance they may have had either upon your lack of expertise or legal arguments which they thought were available to them. The extent and complexity of the brief will vary with the issues and the magnitude of the case involved. Here, the role of the advocate wrestles with a question of strategy, and for many, conscience. Should the mini-brief be so objective as to
fUlly expand upon potential arguments of the opponent? Is it necessary to not only expand fully upon those theories favorable but also to seek to meet, by first expressing, those upon which our opponent will rely? When I was in law school, the answer was simple. We were taught
that it was not necessary to do our opponent's research. Many have questioned
that philosophy, particularly in terms of the presentation of a memorandum to the
court which must ultimately decide upon the issue. Whatever the merits of that argument, the posture of settlement presents an equally perplexing decision. If the entire tenor of the settlement presentation is candor, it is possible for counsel
to veer from that standard when the law is discussed?
Everyone must be guided by their own philosophy of how to practice and best represent their client. For me, I choose for
the full exposition. The candid evaluation of a case for settlement is a thread
which runs throughout the selliement presentation. If there are weaknesses in
our legal position, we gain little by avoiding them; in my experience, counsel for
the defense is as able, if not more so, than I. Better to deal with those arguments and to attempt to find responses which will sufficiently impress an opponent so that
while he or she may not agree, they at least understand and can communicate to
their client the fact that the issue is not settled. It is no different than dealing with contested factual issues, which a jury may decide either way, and which counsel
understand to be possessed of both strengths and weaknesses. Inherent in
the ability to bring about a settlement is the complete understanding of both the vigor and the frailty of our position. Assume that you represent a severely brain-damaged young man who was struck while attending his disabled vehicle late at night on a well-lit freeway. The driver of the car which struck him had left a bar 15 or 20 minutes before, and after the accident is found to have a blood alcohol of .015. Settlement with the driver and her continued on page 28 January 1979/Arkansas Lawyer/27
SETTLEMENT
continued from page 27 carrier is quick, and you are left to seek the true measure of damages in a "Dramshop" cause of action against the bar. As is immediately apparent to us all, the factual basis of this case is not nearly as strong as plaintiffs counsel would want in a traditional dramshop cause of action. But what of the law? Is it essential, in order to prove a case against the bar, that the bartenders be shown to have known, or in the exercise of reasonable conduct ought to have known, that the customer was "obviously intoxicated"? Is that the test? Is the sale standard to be applied a statutory basis, resting in the criminal sanction upon a bartender who serves an "obviously intoxicated person"? Certainly, that will be the position of defense counsel, and there is ample supporting law. In such a situation, everything militates, in my jUdgment, for the preparation of an extensive memorandum which fully discloses the theory of plaintiff's case, resting in the theory of the substantive law that a bartender is held to the same standard of reasonable conduct as any other individual; that the test for a bartender, or the owner of a bar, is not "obvious intoxication," but the foreseeability of harm arising from the serving of alcoholic beverages in sufficient quantity to produce an .015 blood alcohol in an individual who must drive a vehicle upon leaving the bar. The obligation in such a case of difficult liability and serious injury is to advance the cause of settlement as much as possible. Opposing counsel will evaluate a case differenlly if a jury will render a determination rather than a judge in re· sponse to a motion for summary judg· ment. Even with the portents of appeal, a carefully presented legal brief in the settlement presentation may well diminish the enthusiasm of counsel and/or client for appeal, if they must seriously view the prospect of making "bad law" in the process, plus the accumulation of interest in the interim appellate period. Once again, it should be apparent that counsel for plaintiff and defense have the same opportunities and rationale for the full presentation of the substantive law in a light which will effectively educate opposing counsel and the client to the legal difficulties which attend the case. There is an eminently pragmatic just· ificatlon for full disclosure in all aspects of the settlement overture" whether made by plaintiff or defendant. Each should remember that in a strange irony (but nonetheless absolute reality), one's opposing advocate becomes an essential ally in the cause of settlement. Only the complete, candid and reasonable settlement proposal will persuade your opponent that it is a sound basis for either consummation of settlement or be· ginning along that path. Unless he or she is persuaded of its merits, they will not 28/Arkansas Lawyer/January 1979
undertake the absolutely essential task of communicating the strengths of the settlement overture to their respective client in an effort to persuade either the payment of substantial funds or the acceptance of an offer. We are necessarily kept one step removed from the opposing client. That "barrier", created by the sanctity of the attorney-client privilege and the obligation to communicate with a client only through their representative, must be transformed into a bridge of communication by which our efforts toward settlement are effective· iy articulated and persuasively recommended by the client's own lawyer. To accomplish the metamorphosis of the opposing advocate into an ally in the interests of settlement requires not only the manner and style of presentation which we have discussed, but also an attitude of respect for our adversary. More about this important quality in a moment. II. DON'T BLOW IT IN THE EVALUATION The last portion of the presentation is the evaluation and demand for settle· ment, or the offer to be made. Most lawyers or claims representatives, upon receiving a settlement proposal, turn to this section before they begin to read any other. A good suspenseful novel may inhibit our desire to read the end in order that we might fUlly enjoy the developing intricacies of the plot; not so with the settlement offer or demand. This is a pragmatic business in which we find ourselves. The ultimate test of the possibility of settlement rests in the reaction of trained counselor claims personnel to the reasonableness of the figures suggested. Here again, able lawyers, eminently successful, will differ markedly as the best approach. Many successful plaintiff's counsel believe firmly in the proposition that"you can always go down but you can never go back up," and fix their demands accordingly. Equally able counsel for the defense or their principles adhere to the proposition that they should make every effort to "buy the case as cheaply as possible" and come up only in increments necessary as the negotiations develop. Other lawyers have acquired for themselves an envied reputation of either plac· ing a value upon a case which commands immediate respect and acceptance, or in evaluating and offering an amount which plaintiffs counsel cannot refuse. We fully understand that all aspects of personal injury litigation are human events in process. Our approach to settlement can be no different. The attitude and posture we take in evaluating a case for ourselves may have to be very different from that which we can communicate to our opponent. However, there are those circumstances in which we can feel confident that the individual or company has a history of candid, fair and direct evaluations. An increasing minority subscribe to the philosophy that most settle-
ment negotiations are a charade of meandering offers and counter-offers requiring patience and persistance as the "game" is played. The alternative is to abandon the time-honored waltz of settlement in favor of an efficient and firm evaluation based upon realistic considerations. We cannot automatically assume that our offer or evaluation will be accepted without an established history of prior relationships upon which to build our reputation. This does not mean that an evaluation should simply be an "opening shot" from which point "something will happen." There are at least two fundamental rules for the initial evaluation which should be followed. From the plainliffs standpoint, the demand must be in a figure which is not so high as to remove from the defendant any potential threat that it will either be achieved by jury result or exceeded. A demand figure which is beyond the range of the opponent's expectation as to an ultimate jury verdict presents no reason for settlement. Why pay a figure which is, at best, the maximum jUry verdict? Why not gamble upon a jury which will return, if not a verdict for defendant, a figure which will at least have saved the difference between the demand and the verdict. The principle can be phrased another way: A demand must be a figure in the range which will present to the opponent a serious threat that it will be exceeded, and so require that some explanation be offered after the result as to why the demand was not accept· ed. No one likes to lose, but more important, no one likes to have to explain a loss which could have been avoided, even if a retrospective point of view is employed. For defense counsel, the rule is the same in the reverse: an offer has to be made which is close to the jury verdict range. It must be a figure which will require counsel for the plaintiff to explain to his or her client that while the figure may not be all that is desired, it is certainly within the realm of possibility that a jury will return less, no more, or not sufficiently more to warrant the risks and expenditures involved in trial. Either counsel makes the opponent's job easy when the evaluation is so far out of the "range of reason" as to remove the element of decision and choice. Especially for defense counsel, who represent a client on a continuing basis, undertaking a trial with the knowledge that the demand prevented any real possibility of settlement relieves a major stress. Beyond this, each case must be evaluated on its own merits. Formulae are sometimes helpful (e.g., five times the specials). IncreasingIy, they seem less relevant than an individualized presentation of the case and its effect upon the individual. There ;s no way to bring a computer-like science to the evaluation of a personal injury settlement. There is, however, the
underlying principal that the establishment of a representation for candor and fair dealing makes a figure submitted by either side initially more receptive. Recognizing the truth of the statement that each case is different from another it is often possible to gain a range of values for a particular injury. With almost uncanny precision, juries will establish (in a given geographic area) a "value" for a broken leg or a cervical strain or the death of a housewife. Some years ago. two trials took place simultaneously in contiguous counties in northern California. Both involved the death of young women in childbirth following lengthy periods of labor. The theories of the cases were remarkably similar and the circumstances suHiciently identical so as to cause both the plaintiffs counsel some degree 01 I
amazement. Each case took approximately three weeks to try and in each instance the jury returned a verdict for the plaintiH. The margin of diHerence in the verdicts was $5,000, despite the obvious fact that neither jury knew of the existance of the other case. While this particular example may seem unique, experienced trial lawyers throughout the country will regulary attest to the proposition that there is, in fact, a range of values for injuries which, while not certain, allows us to establish a "range of reason" within which our evaluation should fall. It is this "range of reason" to which I subscribe. While the figures may be higher than opposing counselor their principal may accept, the figure is always given in the hope and belief that it will fall within the experienced understanding of the "range of reason" applicable to this type of case. In that way, we know we have begun what should prove to be a successful march towards settlement. III. HONOR THY ADVERSARY Recall the lawyer who estimated far too low the cost of convalescent care and so threatened his credibility in the settlement negotiations. Such conduct often breeds a response destructive to the negotiating process. In that case, one of the counsel for plaintiff, who was intimately involved with the family tragedy and the eHorts to try to sustain a home life for young children in the wake of the enormity of the loss of their mother's presence understandably responded to opposing counsel with a vigorous denunciation of counsel's motives and good faith. The letter was sent not only to the lawyer, but to co-plaintiH's counsel and to others legitimately interested in the settlement process. The response of defense counsel was immediate and expected; settlement negotiations ended in his umbrage at this assault upon his professional integrity. There are a number of lessons in this episode, but one is by far the most important. The success of settlement negotiations of any type is Intrinsically inter-
woven In the regard the adversaries have for the Integrity of the other. This is not limited to personal injury litigation alone. Norman Cousins, editor of The Saturday Review, revealed recently an episode that took place during the darkest days of the Vietnam War. Hubert Humphrey, then vice-president. was visiting in Japan and had grown deeply disillusioned with America路s role in the carnage of Vietnam. Present CiI.mong the group of Americans with him was a person who knew of a prominent Japanese educator who had been a longtime personal friend of Ho Chi Minh, premier of North Vietnam. VicePresident Humphrey met with the educator and implored him to go to Hanoi in an eHort to persuade the North Vietnamese to meet with the Americans in secret in either Geneva or Poland in order that sett1ement-Le., peace-might be achieved. It was the time of the American suspension of its bombing of North Vietnam and President Johnson's expression of hope for peace. The educator went willingly and secured from Ho Chi Minh a willingness to meet. The representation was simple; "The Americans had demonstrated their credibility in truly seeking peace by their cessation of bombing. It is now time for Hanoi to respond in an equal overture of good faith by coming to the bargaining table." Humphrey returned, elated, to WaShington and communicated this important development to the security council and the President. One week later, the President of the United States, in a nationwide television address resumed the bombing of North Vietnam and advised the American people that Hanoi had shown no willingness to negotiate settlement of the conflict. The bombing resumed; North Vietnam launched their successful TET OHensive. The Johnson administration repeatedly sent new overtures of negotiation, through intermediaries, during its final months of life. All were rejected with the cryptic response that there was no way in which America could be trusted again. Sometimes, in the hectic and often mundane travail of our daily practice, we lose sight of the principles which should, and usually do, guide us in the representation of our clients. We may never understand the intricacies of the Vietnamese negotiations, but the fundamental lesson路 involved in the maintenance of credibility and in the mutual high regard of one adversary for another as the sine qua non of eHective negotiation would not have been missed by a good trial lawyer, young or old. In our rapture to be advocates, we often treat our opposition as though they were somehow bereft of merit or honor. Clearly, the contrary is the fact, almost without exception. The trial bar is filled with honor and dignity. Throughout this country, lawyers of great skill, dedication to their clients and high principle practice
in all areas of litigation. It is no less so in the field of personal injury. No settlement negotiation can be successful which does not respect this truth, unless a lawyer or a principal has given unequivocal reason to believe otherwise, the tenor, approach and conduct of settlement negotiations must reflect high regard for our opponent. In addition, everybody has problems in approaching settlement negotiation. Either plaintiff's or defendant's counsel may have a diHicult client. Problems of excess insurance. pressures of trial schedules, and substantial outstanding debts of the plaintiff occasioned by virtue of the injury or death are but a few which are common to us all. We could each add to the list from our own personal experience. While it may be diHicult to quantify such elements in trying to advise a premise for settlement negotiation, we know that these factors can and do influence the course of those efforts and it is imperative that we once again repeat to ourselves that this is a "human event" and requires not only a careful calculation of the special damages but a careful consideration of the intangibles. Seldom is a case so perfect, a client so understanding, a schedule so free, or a decision so uncomplicated that we can view with impunity the concerns of our adversary. I am reminded of the words of Longfellow, spoken in a diHerent context, but clearly relevant to us all: "If we could rem/ the secret hi...tory of our ellemies. we if/wille/find i" CllCh life. sorrow atH/ sllffe,路jrlg enough to di..w rm (Ill hostilities'" IV. A QUANTUM OF COURAGE Lest someone summarize a discussion of settlement negotiation with the words "preparation" and "understanding" alone, let us add what well may be the most essential ingredient of all - courage. Outside the context of violent combat or riskfilled adventure, we seldom think of the role of courage as an inherent quality in the art of adVocacy. Yet, to be a faithful and competent representative of a client requires the ability to stand firm despite the pressures of professional comrader!e, office overhead, ego satisfaction or fear. All of these may play some role in our representation of a client. Not one of us is free of the economic pressures of practice which may militate towards the settlement of a "good" case because the offer is "reasonable," although we may well understand that it is not all the client deserves. The pressures of ego afflict us all. PlaintiH's counsel may want to "win the big one" despite the fairness of the oHer. Defense counsel may see an opportunity to prevail over a vaunted opponent of high reputation, even though the demand is fair and acceptible. Our continuing relationship with those whom we admire may cause us to strive continued on page 30 January 1979/Arkansas Lawyer/2g
SETILEMENT continued from page 29 for an amicable settlement which, while
acceptible to the client, is as much influenced by our knowledge that there will be future negotiations on other cases as by
our sense of responsibility to the client. We must also acknowledge that with many trial lawyers, there abides within us a basic fear of the uncertainty of the courtroom. There is something not quite
natural about the way trial lawyers submit themselves to the regular tournament
challenge of the competitive and unpredictable battle of skilled adversaries, with its inevitable prospect of victory or defeat. We are among the few whose occupation requires that we regu-
larly enter the joust with skilled adversaries who are capable of exposing our
vulnerability in a way in which neither we nor others can avoid understanding. Small wonder that for more lawyers than we care to acknowledge, the apparation of trial works its silent pressures upon the decision to settle. Each or any of these pressures may
cause us to continuously erode our original dispassionate evaluation of the "range of reason" into which we believe our client's cause should fall. For reasons which are obvious in their importance in terms of our reputation with our colleagues, to say nothing of our own sense
of self-respect, it is important that a line be drawn which will be the final demarcation-that point at which we know we will commence trial rather than com路 promise the client's interests any further. It must be understood that so long as we are satisfied that the case is being settled within the "range of reason" we
have determined, the fact that the figure may also be acceptible to our opponent, be cognizant of the problems faced by them, or even in our own economic interests, is not in conflict with our decision.
All of the above factors may be appropriate, so long as we know, as only we can
know, that the figure agreed upon is primarily motivated by our concern for our client's interest.
faith" case. In those instances in which a client is represented whose injuries or losses are so extreme, the available insurance coverage so limited, and the lia-
cross-examinations or the most skillful of
bility facts so postured that there is no alternative to a demand for the full policy
level as the historic reverence we have paid to the drama of cross-examination,
limits, we can permit no other factors to enter our consideration as to value.
we will have more completeiy understood
For defense counsel, the task is no less difficult. The decision to reject a demand for bad faith when one fUlly understands that the consequence to the principal may be dire could easily be influenced by any number of rationalizations that would permit taking "the easy road," For both lawyers, the path of honor is to evaluate as quickly as possible their clients' interests. If they must
bility to our client's cause. While others may phrase the need for
adhere to an inflexible position as a matter of conscience, to respect that decision
the meaning of a conscientious responsi-
settlement in terms of court congestion or the inadequate competence of counsel in
trial the true rationale-and the only one
whi~h should motivate us in the representation of an individual client's causeis the knowledge that "There is nothing better for the client than a good settlement." The concept of the Advocate requires
and proceed immediately to trial, recognizing that the usual efforts at settlement negotiations are not available.
V. SETTLEMENT AS VICTORY For decades, our law schools and the great deans of the trial bar have taught us that the role of the adversary is to prevail. What sweeter moment than the return of the jury and the announcement of victory over your opponent-the confirmation of
the totality of your legal skills accepted by either jUdge or jury in full vindication of
redefinition. We all recognize the vener-
able image of the Advocate, that brilliant expounder of the art of cross-examination; that eloquent individual who commands the emotions and inner reactions of juries; that decisive, quick-witted court-
room artist; that individual with gifts of florid phraseology and fine words. Let us also elevate to prominent status
as Advocate that individual who possesses compassionate concern for the client
and who can with gentleness and grace deflect peopie from confrontations that
your client's rights? For all of us, it is a
thrilling moment which makes those interludes of defeat acceptable, But that is a limited definition of the concept of "victory." In these past two de-
may produce more emotional distress and
disturbing introspection than any lawsuit can justify.
cades particularly, experienced trial
lawyers first learned to accept and then to encourage the concept that an honorable settlement in the client's interest was as much a skillful representation as the glamorous escapade of the courtroom. We have learned to understand that over-
tures of settlement, made by either side, are not indications of weakness, but a mature understanding of the need to find an alternative to the uncertainties of trial
Let us elevate to prominent status as
Advocate that individual who can enter litigation and conclude it successfully in the representation of the client's interests
without feeling a need to accomplish the ultimate subjugation of his or her rival,
allowing all parties some dignity, some measure of fairness, allowing as many
participants in the litigation as possible to go on to future events without the pall of bitter and utter defeat resting with them forever.
whenever it is possible, It is important for lawyers to understand that a weli-prepared, well-conceived, carefully evalua-
For plaintiffs and defendant's counsel,
ted settlement proposal is as much an
the element of courage is in no way more
indication of skill that will produce the admiration of an opponent as the finest of
apparent than in dealing with the "bad
final arguments. When the trial bar has elevated the art of negotiation and settlement to the same
EDITOR'S NOTE: We featured Bob Wallach's article on the Initial Interview in the April 1978 issue of The Arkansas Lawyer. We also promised a series of related articles by him. This article on Settlement is the second. Again, Bob Wallach is a nationally renown
practicing lawyer, a professor of law and consultant to the Dean at Hastings College of Law. He was a featured speaker-panelist on the Arkansas Bar Association's successful Civil Trial Practice Institute a few years ago. While Settlement was in fact an address,
we have not edited the article for publication, "I think that Bob's article on settlement would make an excellent series for The Arkansas Lawyer. He writes well and dis~uss~s practical problems faced by the trial lawyer. He is both a scholar and a man.ot v.:1de tn~~ experience. I hope he can continue to be a regular contributor to our pUblJcatlOns . .. - - - - - Henry Woods.
30/Arkansas LawyerlJanuary 1979
What I am trying to say, and I think it is part and parcel of what we should be doing as Advocates, is to remember that victory need not be total to be complete, and that there is more to victory than conquest. "
....
NEWS RELEASE From: Chief Judge G. Thomas Eisele Eastern District of Arkansas (For The Court)
The civil cases pending in the Eastern District of Arkansas have been reassigned effective September 1, 1978, as follows: (1) All regular civil cases pending in the Pine Bluff and Helena (Eastern) Divisions as of September 1 are assigned to Judge Oren Harris. Cases filed aher September 1 will be divided on a five-way basis (Judge Harris not participating) as discussed below. (2) All civil cases pending in the Batesville (Northern) Division as of September 1 have been divided equally among Judge Roy, Judge Eisele and JUdge Arnold. All cases filed in the Batesville Division aher September 1, will be divided on a fiveway basis as explained below. (3) A five-way division of all pend-
WI'lIOMT, LINDSLT •
ing cases in the Jonesboro and Little Rock (Western) Divisions has been made, with the objective being that each of the five dockets would contain an equal number of civil cases. Aher determining what the one-fihh equal number would be, the clerk established two separate dockets designated as ·'Unassigned Docket X" and "Unassigned Docket y", and assigned to those dockets the most recently filed civil cases in those divisions. That is, he took the cases filed in those divisions on September 1 and alternated backward through time until the appropriate number was reached. All of this means that the dockets for "Unassigned X" and "Y" will contain the most recently filed little Rock and Jonesboro cases. The
........ ,' .....
,JII:NNINGS
...... ",_,......... ,........ ..-........., .,- . ......_ "0""" ,
LITTLE ..
oe.., .........."' .....
Y'uo.
w
" ' __··0'
" .... w
oetobe.r 9. 1978
Re:
Job. for new 1.
era in Januar
" . , , _• •
_..
0_., .•
_
.
.. _ ...............-
_- _
..,
............. .."".......' . ....., ,~
. ' . _ . _ _" h
• •••. <.
"
_.
..•. _., ._... .•·0 ••.•_._.
.........
.....
- _ •. " . "0"--
and June of 1979
Gentlemen: Your response and continued help in the plaee-ent of young lawyer. ha. been .1,I(;c::e•• ful in .I.clJt every in.t..nce. We again t.hank you for your palJt. and future effortlJ. have found t.hat there is bet.t.er ut.ilizat.ion of our young lawyer. and your own needlJ if you can interview this year for commence.ent of work next AugulJt.
We
have al.o been asked to help young lawyers, oUt of school three to five year•• Who are trying to get into the actuol practice of law.
We
Please call or write the under.igned or M•. Ellen B. Brantley in Llttle Rock at 371-1012 of Hr. Jim Hiller in Payet.t.eville at 515-)102. Sineerely.
~~::il~n
Profe•• ional UtiliEat.ion Coa:Ut.t.ee
JDS :ms cc,
Mr. Wayne Boyce Col. C. E. Ransick H•. Ellen S. Brantley Mr. Jame. K. Miller
,.
".~
_
.
remaining Jonesboro and Little Rock cases have been divided equally between Judge Roy, Judge Eisele, and Judge Arnold. (4) Starting on September 1, newly filed cases in all divisions of the Eastern District will be divided equally, using our random selection procedures, among Judge Roy, Judge Eisele, Judge Arnold, "Unassigned X" and "Unassigned Y". As a result of the above allocation, the most recently filed cases in the Jonesboro and Little Rock Divisions, being those cases on the dockets captioned "Unassigned X" and "Unassigned y", will simply lay dormant, except for emergency matters, until the passage of the Omnibus Judgeship Bill and the selection and qualification of the two judges provided for therein for the Eastern District of Arkansas. If an emergency matter does arise in one of those cases, the Clerk should be contacted and he will advise which sitting jUdge will be responsible for disposing thereof. Attorneys having cases on the "Unassigned X" and "Y" dockets (being for the most part cases filed in 1977 and 1978) are urged to use restraint in seeking "emergency" action in their cases. Their restraint and patience will enable the Court to proceed to deal with the older civil cases. The general moratorium on civil cases will be Iihed upon the qualification of Judge Arnold, but each of the sitting judges will have to make his, or her, own decision as to how much time can be released from criminal cases, habeas corpus proceedings, section 1983 cases, and other priority matters pending the passage of the Omnibus Judgeship Bill and the qualification of the two new judges. Once those two new judges are "on board", the available resources of the Court will be devoted to bringing all civil dockets current.
"
January 1979/Arkansas Lawyer/31
CONTEXT By W. Christopher Barrier Chairman, Public Education Committee Arkansas Bar Foundation
"WOULD YOU LIKE TO SPEAK TO HIS SECRETARY? .." In dealing with the relations of lawyers to their various "publics", I have touched on press relations, use of the telephone, bar committee work and a number of other people contact situations. However, I have made very little mention of a significant segment of people in the law business - nonlawyers. Ask Me No Questions... To remedy this situation somewhat, I have invited the secretaries and other non-lawyer personnel in our office to list (anonymously) their chief complaints and plaudits with reference to their work. The results were as follows (not necessarily in order of importance): 1. "CALL MY SECRETARY..." - If you tell someone to call your secretary for an item of information, warn her ahead of time. Conversely, when you call another lawyer and talk to his secretary instead, don't presuppose she is completely familiar with every file he is working on (or is at liberty to discuss it even if she is). 2. HERE TODAY, GONE TOMORROW - When you leave the office, tell your secretary where you can be reached and when you expect to be back, especially when long periods are involved. (Frequently, your work will be held up because you cannot be reached for a vital question.) 3. WORK路 FLOW -Relativetothe last item, do what you can to evenly distribute work, especially dictation. For example, with a little planning you can finish a block of dictation before you leave for a three hour meeting, whereupon it can be ready to sign or proofread when you get back. (Interestingly, most capable secretaries 32/Arkansas Lawyer/January 1979
dislike having too little to do almost as much as being overworked.) 4. DEADLINES & PRIORITIES Of course, when you give your secretary that big block of dictation, let her know what really needs to be done that day, and what can wait. It keeps her from feeling overwhelmed. Also, you may feel uneasy about "rushing" her on certain work. But, it is better to do it ahead of time than it is to give no instructions, and simply hope for the best- and then rush in at 4:15 to see if it's been done (after she is already well into another task). And if she works for more than one lawyer, don't make her decide which competing brief, pleading, etc. gets her attention first - work it out with your partner. 5. CAPABILITIES - Remember that an experienced secretary not only can but wants to do work beyond just typing - gathering information, initial drafting, even simple research. But, make sure your instructions are clear and explicit at the beginning, or you've wasted her time and yours. And if she needs the file to do the job correctly, make sure she gets it. (She usually will need it - for addresses, etc. - when doing dictation.) 6. CAPACITIES - Try to familiarize yourself with your office's wordprocessing and bookkeeping equipment and related hardware - what it can do and (perhaps more important) what it cannot do. Asking the bookkeeper for more information than you really need can turn a two-minute computer retrieval into an hour of hand calculations. Also, many lawyers think that word-processing equipment can do almost anything and, hence, feel free
to completely re-write and re-arrange every rough draft. Before you start moving whole paragraphs, be sure it doesn't mean completely retyping that paragraph. (It usually does.) And, just because it can be re-done more quickly, don't figure you don't have to proofread as carefully as you would otherwise. 7. THEY'RE ONLY HUMAN Many secretaries have husbands who work and children in school. Others are single parents. This means they must deal constantly with daycare, after-school services, sick kids, doctor's appointments, etc. Remember that a 40-hour work week does not have to fall between 8:00 and 5:00, Monday through Friday, if someone needs to leave early for a kid's dental appointment and make it up some other time. Remember... Remember that your secretary needs praise for a job well done as much as you do. Remember that she wants to be treated as a member of the legal services team and not as the hired help (by you or by other lawyers). Remember, when you make a decision which affects her (office hours, taking on a big project, parking, equipment purchases) to at least consult with her. Remember that her lunch hour is her time - not a time to run errands, business or personal, for you. And, finally, remember that the same things which enhance your relations with other lawyers, clients and witl,~sses courtesy, communication and common sense - are equally useful in keeping your secretary happy and productive.
f......
Lawyers' Mart
20c per word
BOOKS FOR SALE Collier Bankruptcy Manual with latest revision service (6 volumes) complete. Excellent condition $130.00. B. Goldstein, 330 W. Broadway, West Memphis. 735-3863.
••••••••••• AMERICAN JURISPRUDENCE, first and second$900.00. Kenneth H. Castleberry, P.O. Drawer 470, Eureka Springs, Arkansas 72632. 253-8732.
••••••••••• SW & SW2nd (Arkansas Cases) Call Ralph G. Brodie - 376-2327.
• •••••••••• Complete set of Proof of Facts, with current supplements, in new condition. Complete set of Trials put out by Am Jur, with current supplements, in new condition. Hobbs, Longinotti & Bosson, 500 Ouachita Avenue, Hot Springs, AR. 623-6666.
$5 minimum
WANTED TO BUY Ten sections of Globe-Warnecke, Macy or Luscumb, glass-front bookcases with two bottoms and two tops, Must be in good condition. Hobbs, Longinotti & Bosson, 500 Ouachita Avenue, Hot Springs, AR. 623-6666. ASSOCIATE WANTED Small Firm-N. W. Arkansas Prefer Lawyer with two years experience (minimum). Emphasis on trial work. Send Resume to: Arkansas Bar Association . SITUATION WANTED Master Chief Legalman, U.S. Navy, with 20 years experience in office management, personnel management and court reporting, desires similar position in Arkansas. For copy of resume, contact: David A. Wallace, 205-241 St., SW Bothell, WA 98011. Phone: 206-527-3271.
,tillnuilHlil!llulllIlIIlllIl
~-::::::=:=-
~ fll
-S -S
.,.
ji"
"Miss Dripsniggle, while you're out for lunch, please take my suit to the cleaners, file the Davenport Brief, pick me up a cheeseburger (hold the mustard) and then, if you have time, on your way back ..." January 1979/Arkansas Lawyer/33
MITIGATING THE RISK OF BECOMING A DEFENDANT IN A MALPRACTICE ACTION BY YOUR FORMER CLIENT By Duke Nordlinger Stern and Joanne Martin
Legal malpractice has reached crisis proportions and experts predict this frightening situation will continue to deteriorate. Attorney liability claims which were 3 or 4 per 100 policies a few years ago now average 6 or 7; the size of settlements, awards and defense costs have risen dramatically; annual increases in malpractice premiums of more lhan 100 percent are the rule rather than exception; and insurance protection is decreasing in both availability and breadth of coverage. The literature contains an increasing number of articles describing the legal malpractice trend and exploring its causes, but little is offered to the practitioner in the form of useful advice for avoiding liability ciaims. Malpractice will always be a risk faced by the attorney and there are only a minimum of safeguards that are useful against pure inadvertance. However, there are significant steps that can be taken by the lawyer to mitigate professional liability exposure that results from methods of practice. By modifying or reorganizing the management and techniques of practice an attomey might be able to better serve clients and protect his assets. This note will offer legal malpractice loss control suggestions incor路 porating claim statistics, the Code of Professional Responsibility, litigation experience and conditions in the liability contract. USING MALPRACTICE CLAIMS STATISTICS TO YOUR ADVANTAGE Although lawyer professional liability insurers have generally been remiss in gathering useful statistics as to the causes of claims. the limited information available from these sources and other studies point to a few specific causes of malpractice. Attorneys who analyze and adjust their own practices to avoid these problem areas would be implementing the beginning of useful loss prevention. Statute of Limitations Lawyer malpractice is the most common cause of professional liability claims. As a result, the policy applications of all 34/Arkansas Lawyer/January 1979
carriers require detailed explanations about the attorney's docket control system. Underwriters reportedly pay close attention to the responses to these questions. Unfortunately, there are many areas of practice and numerous points in each at which a critical date can be missed. Insurance statistics have not been collected or refined to isolate the high exposure missed statute situations. Therefore, the attorney must develop broad preventive techniques. There are a number of docket control systems available for adoption. The key to an effective system is not so much路the one selected, but rather the diligence with which the selected procedure is adhered to. Therefore, an attorney must be certain that (1) each member of the firm understands and uses the docket control system, (2) one member of the firm or qualified employee is charged with supervising the system, (3) immediately upon acceptance of a matter it is incorporated into the docket system, (4) each attorney with primary responsibility for a matter should frequently recheck to be certain all critical dates are correctly noted and followed, and (5) the person supervising the system should spot check each matter on a frequent basis. Too often in the day-to-day practice of law an attorney forgets to follow the primary requirement of an effective docket control system. As a result, preventable malpractice claims occur. Real Estate Practice The second most frequent area in which lawyer malpractice claims arise is real estate practice. Again, the statistics do not describe what situations are most vulnerable in this area. For example, do claims arise most often in the preparation of documents, search of title, giVing of tax advice, closings, litigation of real property suits or other areas? Often in real estate practice because of the volume of matters handled certain procedures tend to become routine and advice generalized. Attorneys who specialize in this area and even those who handle only a few real estate problems are advised to keep alert.
Abuse of Process; Wrongful Garnishment or Attachment There has been a disturbing increase in the number of legal malpractice claims based on abuse of process, and wrongful garnishment or attachment. The circum路 stances underlying these claims are not clear from the insurers' experience data. However, it would appear they result from lawyer carelessness since the rules in these areas do not usually require unique expertise. With clients and third parties demonstrating an increasing awareness of compensable injuries in these areas, attorneys are cautioned to be certain their office practice encompasses the requisite procedures. Often a legal assistant or secretary is delegated the task of preparing the forms, and the practitioner should be certain to verify their correctness and service. Improper Handling of Tax or Estate Mailers Because of the expertise required for a successful practice in taxation, and estate planning it is not surprising that professional liability insurers are reporting an increase in the number of claims in these areas. The general practitioner with the aim of malpractice loss prevention should consider associating specialists when his client's matter goes beyond the elementary stages. LET THE CODE OF PROFESSIONAL RESPONSIBILITY BE YOUR GUIDE The question is often raised as to whether every act or omission which gives rise to a supportable malpractice claim also can be the basis for a disciplinary proceeding based on breach of ethics, or conversely if a lawyer faces a disciplinary action whether it is reasonable to expect a malpractice claim to follow. The answers to these questions have both affirmative and negative possibilities. Presently the majority of state bars are unified and have as one of their charges the enforcement of ethical conduct by attorneys. Even those jurisdictions with voluntary statewide bars have separate disciplinary agencies established by the supreme courts. The enabling rules of court which create the mandatory bars or other agencies most often enumerate specific grounds for disciplinary action and usually "malpractice" is specifically one such basis. Even where the standards are silent as to malpractice, the Code of Professional Responsibility is incorporated specifically or by reference, and DR6-101 and other Disciplinary Rules imply that. malpractice is a ground for discipline.
In practice, however, the various su路 preme courts that have considered malpractice in a disciplinary proceeding have concluded that unintentional inadvertence is not an actionable legal ethics violation. Nonetheless, the Code of Professional Responsibility can be critically instructive to the lawyer who wants to practice malpractice claim prevention since the legal professional liability case law is replete with situations that bear close similarity to violations of the Disci路 plinary Rules. Conflicts of Interest Two years ago attorney professional liability insurers reported that conflicts of interest was the cause of less than five percent of malpractice ciaims. Today this area represents 22 percent of the legal malpractice claims brought against one of the two remaining national insurers. DR5-101 (A) prOVides: Except with the consent of the client after full disclosure, a lawyer shall not accept employment if the exercise of his professional judgement will be or reasonably may be affected by his own financial, business, property, or personal interests. DR5-105 (c) states: a lawyer may represent multiple clients if it is obvious that he can adequately represent the interest of each and if each consents to the representation after full disciosure of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each. With the foregoing Disciplinary Rules in mind the lawyer is advised to beware of the following situations: 1. Falling into the conflict trap through dual representations, e.g. representing lender borrower, mortgagor and mortgagee, vendor and vendee, insured and insurer or husband and wife. Respecting representation of an insured and insurer, for example, in defense of an action under a policy, there are numerous situations where the interests of the defendant and his carrier will become adverse and the attorney will be caught in the middle. Even the most amiably intended divorce actions can give rise to conflicts and exposure to malpractice claims if the attorney continues to represent both parties. The best advice is to avoid a possible conflict of interest from the beginning and represent only one party. Avoid temptation and avoid claims. 2. An attorney who represents both the administrator and the estate could be faced with a conflict. 3. The situation of representing a guardian ad litem. The duties owed to both the court and to the minor or incompetent can give rise to problems.
4. Representation of multiple plaintiffs or multiple defendants in a tort action. For example, how can you urge a particular course of action such as an aggregate settlement when your client's interests are not identical? 5. Testifying to a matter in dispute between parties who are in litigation when you are still serving as an attorney of record. Avoid the inconsistency and a possible malpractice claim. The duty to withdraw is stated by DR5-102 (A), while DR5-101 (6) applies if a member of your firm is to be a witness. 6. What if your fee is being paid by a party other than your client, such as in the representation of a minor. Plan your practice with a clear understanding of your duties of loyalty. 7. Derivative suits can lead to a conflict between the needs of the corporation as a legal entity and the interests of oHicers and stockholders. Your functions as an advocate could give rise to a conflict. Not all of the foregoing would be per se violations of the Code of Professional Responsibility or guarantee a malpractice claim. However, they are areas of concern both prior to retainer and as the representation progresses. continued on page 36 THE AUTHORS - - Duke Nordlinger Stern is Executive Director and General Counsel of the West Virginia State Bar. He serves as Chairman of the Lawyers Professional Ljability Committee of the National Association of Bar Executives, and Vice Chairman of the Committee on Professional Uabifity of the Section of General Practice, American Bar Association. Mr. Stem holds a B. S. in Economics from the Wharton School, University of Pennsylvania; attended the School of Law, University of Virginia; and received his J.D. from Temple University and his M. B.A. and Ph. D. degrees from the University of Missouri. He is the author of AN ATTORNEY'S GUIDE TO MALPRACTICE LIABILITY published by the Michie Company, the co-author of the ATTORNEYS' MALPRACTICE PREVENTION MANUAL, and has written more than 35 articles on lawyers' professional liability. Joanne Martin is Staff Assistant, Division of Professional Service Activities and formerly Assistant Managing Editor, Periodical Services, American Bar Association. She is a graduate of Ohio University.
January 1979/Arkansas Lawyer/35
MITIGATING THE RISK. .. continued from page 35 Generating False Client Hopes A high percentage of complaints brought to the attention of lawyer disciplinary agencies are based on alleged assurances of specific results or absolute probabilities of success. Rarely does a formal disciplinary proceeding result in these areas, and complementary malpractice claims are generally fruitless when based on these grounds.'However, the claim itself can lead to an additional expense for the attorney and a worsening of the particular lawyer-insurer relationship. The practitioner is well advised to avoid this risk of malpractice claim by not generating faise client hope~. For the most part clients are unsophisticated as to the legal process and should be given realistic appraisals of their problems. Commingling of Funds Commingling of clients' funps is often a double edged sword in the contexts of malpractice and ethical violations. DR9102 (A) provides: All funds of clients paid to a lawyer or law firm, other than advances for costs and expenses, shall be deposited in one or more identifiable bank accounts maintained in the state in which the law office is situated and no funds belonging to the lawyer or law firm shall be deposited therein. Furthermore, DR9-102 (B) sets forth the attorney's duties respecting (1) notification of receipt of his client's property, (2) identifying and labeling his client's property, (3) maintenance of complete records and rendering accountings to his client, and (4) prompt payment or delivery of property that his client's entitled to receive. A few states have formalized procedures for establishing, verifying and reporting on clients' funds accounts. However, the practitioner is well advised not to wait for state bar action, but to institute workable office management procedures that assure proper protection and prompt disbursement of a client's funds or property. Like with other high risk areas at practice it is imperative that a member of the firm be responsible for accountability.
Unreasonable Delay "I hired my lawyer seven months ago and since then nothing has been done." A substantial percentage of the complaints received by lawyer disciplinary agencies are based on a feeling that there has been no action on their legal problem, and reinforced by their attorney not being available for telephone calls or responding to letters. While the client's case may be only one of hundreds being handled by the attorney, to the client it is undoubtedly of critical concern. An attorney should be retained as an objective advocate, but many 36/Arkansas Lawyer/January 1979
clients feel unrepresented without some continual showing of interest. Delay alone in acting on a client's matter is neither malpractice or a breach of the Code of Professional Responsibility. However, DR6-101 (A) states that "A lawyer shall not: ... (3) Neglect a legal matter entrusted to him." Delay can rapidly reach the point where an ethical violation occurs, and if the attorney's procrastination causes injury to the client's position a malpractice claim is likely to be made. It would be impossible for a practitioner to contact every client every day, and could be wasted lime since developments to report rarely occur with such frequency. However, client calls should not be ignored and copies of correspondance should be sent to the client whenever possible. A method of practice that recognizes the personal concerns of the client is one where unreasonable delay is unlikely to occur and a climate that promotes malpractice suits will not develop. Fee Disputes Many complaints against attorneys are based on fee disputes although most do not actually amount to ethical violations. However, the disgruntled client may be inclined to lodge a mal practice claim, or counterclaim for malpractice if the attorney sues for his fee. Ethical Consideration 2-19 suggests procedures for formalizing the attorneyclient relationship and urges that the agreement be reduced to writing. However, in practice most retainers are oral, and often fees and client expectations are not defined in express forms. Interviews with lawyers indicate that the written contract is avoided because of the perceived time and expense required for preparation, and the feeling that cllents see the document as a sign of distrust. In reality the toregoing objectives could be disposed of by more effective attorney-client communications. The written agreement equally benefits the client by setting forth what he can expect of his representative and defining his cost. Certain relationships suggest alternative actions by the attorney or a scale of fees, but even these ranges can be included in the retainer document. The most important factors are that the written contract be prepared and that it include clear statements as to the duties of all the parties. Furthermore, the attorney should keep detailed time records and not change his stated procedures without notifying the client. It would be diffIcult for a client 10 object to the quality of the attorney's performance or the fee statement received when they are in accord with the specifications of the written retainer. Business Dealings With Clients It is not uncommon for attorneys to engage in business transactions with clients and other non-lawyers. Despite intentions
to the contary, members of the bar quite often use their legal knowledge or give advice on behalf of such joint efforts. In these situations courts are prooe to find the existence of an attorney-client relationship upon the complaint of the lay party. The existence of retainer or fee charge is usually immaterial. DR5-104 (A) prohibits such attorneyclient business dealings if the parties have differing interests therein and if the client expects the lawyer to exercise his professional judgement therein for the protection of the client, unless the client has consented after full disclosure.
In practice, it is easier to support a malpractice claim in situations of financial involvement with clients than to prove an ethical violation. Under such circumstances if the client suffers injury the case law heaVily underscores the likelihood of his recovery. An attorney who is confronted with the possibility of a joint business venture with a client is cautioned to consider the increased malpractice and ethical risks along with the financial considerations. In all such situations there should be a complete disclosure, and the client should be strongly urged to seek independent legal and other professional advice.
Additional Caveats for Avoiding Claims 1. Avoid acquiring any proprietary in..: terests in your client's legal matters unless the narrow mandates of DR5-1 03 are strictly adhered to. 2. Do not refuse to provide legal services until your fee has been paid. (DR7101) However, withdrawal from representation may be permitted under DR2-11 0, DR5-102, or DR5-105.
3. Do not refuse to be discharged by your client. (DR2-110 (B).) 4. RestUdy the Code of Professional Responsibility and use it as a guide in your practice in avoiding malpractice claims and ethics complaints.
THE LITIGATION COUNSEL'S AREAS OF VULNERABILITY Bear in mind that the key to the aggrieved client's proving a professionalliability claim is to prove that the attorney's act or omission was the proximate cause of the loss. In addition, the client must establish a duty owed to him by the attorney. In developing a program of malpractice risk mitigation the litigation attorney should be aware of previously proven areas of loss:
1. Failure to inform the client of available causes of action or defenses.
2. Presenting groundless actions or offering patently ineffective defenses. 3. Failure to include proper parties.
4. Incorrectly naming parties or describing the capacity of parties.
5. Negligence in handling evidence or witnesses. (Note: Hindsight generally will not work to the client's betterment in a malpractice claim.) 6. Wrongful withdrawal from a client's case.
7. Failure to preserve error for appeal. 8. Failure to observe process requirements. 9. Recommending an unreasonable settlement.
10. Failure to communicate a settlement offer to the client. 11. Failure to convey a client's authorized settlement offer to the opposing party. 12. Selling aside a default judgement against the opposing party without the client's consent. 13. Failure to prepare a decree or preparing a defective decree. Respecting plaintiff counsel's potential professional liability consider: 1. Failure to file a claim within the statute of limitations. 2. Unreasonable delay including failure to go to trial wUhin the statutory time, appear for trial or observe discovery rules. 3. Inability of a client to collect on a jUdgement because during his attorney's unreasonable delay the opposing party became bankrupt---<Jo not sit on a judgement. Respecting defendant counsel's potential professional liability consider: 1. Failure to assert meritorious defenses. 2. Appearing and offering a defense without the client's consent. 3. Failure to file a responsive pleading, or to appear and defend on behalf of a client. Respecting appellate counsel's potential professional liability consider: 1. Failure to file timely notice of appeal. 2. Failure to comply with requirements respecting filing records, transcripts and other documents to perfect an appeal.
UNDERSTANDING YOUR INSURANCE POLICY CAN HELP MITIGATE MALPRACTICE LOSSES Surveys reveal that very few attorneys understand the proteclion afforded by their professional liability insurance policies. This is unfortunate since the limitations of coverage can be instructive in designing methods of practice to mitigate losses, and determining the amount of coverage to purchase for protection in the event of a claim. While there is no standard lawyer malpractice insurance form certain provisions are worthy of analysis. Basic Policy Form Historically lawyers professional liability insurance was written on an occurrence form. Assuming that no prior acts coverage was included, protection was applicable provided that the negligent error or omission was committed while the policy was in force. However, today almost all lawyer policies are issued on a claims made basis.' As a reSUlt, in addition to the requirement that the act or omission occur during the policy period, the claim must also be made while the policy is in force in order for the loss to be covered. The effect of this change in basic policy form is that the attorney must be alert to the risk tail exposure-the possibility of uncovered loss after the policy has been terminated. The practitioner should seek coverage that gives the right to purchase longest risk tail protection after the underlying policy is either cancelled by the insurer or lawyer. Most important, however, the attorney must be ever alert to errors or omissions that could give rise to a daim, and to report them immediately to the insurance carrier. Attempts to unilaterally repair the situation could readily result in an aggravated and uninsured loss.
Settlement The traditional difference between the general and professional liability policies is that in the former the insurer has the right to settle while in the latter settlement requires the approval of the insured since the professional's reputation can be adversely affected. While this distlnclion is still maintained, in the majority of current policies there has been an erosion of the protection. If the insurer receives a settlement offer the attorney still has the right to refuse to settle. However, if a SUbsequent settlement or jUdgement is 10r an amount greater than the original settlement offer the attorney is personally liable for the difference. This places a significant burden on the attorney to accept the settlement and attorneys should carefully evaluate all such offers.
Defense Costs Until recently the malpractice insurance policy afforded allorneys protection for defense costs in addition to actual damages. However, in most of today's policies defense costs are part of policy limits and insureds must consider rising defense costs in determining the limits of coverage to purchase. Also, defense costs can be a costly factor if they are includable in the deductible. Assume 5100,000 limits of coverage and a claim for 595,000 for which selllement is made. If defense costs were 58,000, the insured would be liable for 53,000. Aggregate Limits Today allorney professional liability insurance policies are written with an aggregate limit as versus single limit policies of a few years ago. If, for example, the allorney has a 5100,000/5300,000 policy, while 5100,000 of protection is available 10r all claims arising out of a given negligent act or omission, there would be a limit of 5300,000 on all claims during the policy year. Exclusions Insurers are attempting to exclude from protection claims which arise in high risk areas of practice notably securities law. While a high percentage of allorneys do not handle legal mailers Involving federal securities laws, depending how the exclusion is worded it may be sufficiently broad to also exclude coverage for blue sky transactions. Then, too, recent decisions in certain circuits point to the possibility that deeds of trust may be securities and, therefore, claims based on this area of real estate practice might be excluded. CONCLUSION Lawyers face an increasing exposure to malpractice claims. In order to preserve their professional liability insurance and protect their assets, attorneys must incorporate loss prevention techniques into their practices. The foregoing will assist in avoiding the malpractice risk, but it is up to the attorney to institute and adhere to a loss control program. The demands of a practice is invalid reason for delay. FOOTNOTE: 1. The Arkansas Bar Association is fortunate to be able to offer its members through CNA the occurrence-type coverage. Rather, Beyer and Harper is the Association's Administrator. The Association also receives from CNA the excellent "AEGIS" feature which appears In each issue of The Arkansas Lawyer. See page 38 of this issue for additional information in this connection. ~ January 1979/Arkansas Lawyer/37
There may be an angry client on your trail!
--You never know when a client will threaten you with a lawsuit ... and be hot on your trail to collect. In view of the growing number of claims and the dollar amounts paid in settlement, the time may come when the only practicing attorney will be a well-protected attorney. No lawyer, working alone or as part of a team, is immune from a lawsuit. CNA and the Arkansas Bar Association have worked together to come up with a comprehensive program of professional liability insurance for its members that helps protect both your financial and professional future. First, it helps to minimize the causes ofliability suits through loss prevention programs. Then, it provides financial protection to help guard you against professional and business liability with a maximum of $100,000 per claim ($300,000 annuallyl after a deductible. Think you need more? Supplemental protection of$l,OOO,OOO for business and professional coverage and $1,000,000 for personal liability is also available. Your professional survival may depend on adequate insurance protection. Find out more about your Arkansas Bar
38/Arkansas Lawyer/January 1979
::a- .....- :-.--- ~
Association sponsored Comprehensive Lawyers Professional and Business Liability Plan, including the exclusions, any reductions or limitations and the terms under which the policy may be continued in force. Just send the coupon below to the administrator: Rather, Beyer & Harper.
1---------------------, Please send me information for the Arkansas Bar Association sponsored Lawyers Professional and Business LiabiJity Insurance. Send to:
Arkansas Bar Association Administrator Rather. Beyer & Harper
Suite 362, Prospect Building, 1501 North University, Little Rock, Arkansas 72207. Or call (501) 664路8791. Name Fil路Ill
_ ~
~
Add,'css,
Cily Slate
L
_ --2 7 Ip
_
Sponsored hv
I I I I
I I I I I I
I I _ I I ~~s~s I ... ~,.,~ I < '--)j'" ,',.._~,.,,0'.. I _
~"
_. .J
TAX TIPS by Paul D. Wllllama Director, LI"1e Rock Dletrlet
NEW
Internal Revenue
SCHOLARSHIP FUND
The R. A. Eilbott, Jr. Scholarship Fund has been set up in the amount of $5,000 with the Arkansas Bar Foundation. The $5,000 came from a scholarship fund which had been established in his memory at the Simmons First National Bank at Pine Bluff from contributions by numerous friends and devotees. It was the Eilbott family's desire that the scholarship fund be turned over to the Arkansas Bar Foundation for administration. Contributions may be made to the Arkansas Bar Foundation to be added to this scholarship fund. The R. A.. Eilbott, Jr. scholarships will be listed in the catalogs of both the School of Law, University of Arkansas at Fayetteville and the School of Law, University of Arkansas at Little Rock. The scholarships will come from the income from the R. A. Eilbott, Jr. Scholarship Fund, and be available on the following basis:
A. First to be considered is financial need. B. If a recipient cannot be selected on the basis of financial need, theD preference shall be given to the applicant or applicants wtlO have shown an interest in criminal law. C. If a recipient cannot be selected based on the first two criteria, then preference will be given to the applicant or applicants from Southeast Arkansas. The Arkansas Bar lost an outstanding lawyer when R. A. Eibott, Jr. passed away on July 8, 1977. It is fitting that his influence will continue in the form of these annual law scholarships.... lI' ...
service
I am happy to report to you that effective January 1, 1979, an Automated Power of Attorney (POA) file is scheduled to be implemented in the Southwest Service Center. This program should enhance our ability to be more responsive to the taxpayer who has designated an agent. According to the plan the file can be accessed from any IDRS computer terminal in the district. Powers of attorney presently on file will be posted to the new file. From your standpoint, the new file will help to eliminate the need to provide additional copies of POAs when dealing with more than one employee or division of IRS. All POAs submitted to IRS must be properly executed. We cannot accept those that are incomplete or incorrect. Among the more common errors are .( 1) omitting the taxpayer identification number, (2) not specifying the type of tax and/or years or periods, and (3) no signature by the practitioner. Unless the POA is granted to an attorney, CPA, or enrolled agent, it must be either acknowledged before a Notary Public or witnessed by two disinterested individuals. The move into an automated system makes it doubly important for the i POAs to be completed accurately. ;. Centralized Forms Distribution Again this year the tax forms distribution program will be centralized. Instead of individual IRS offices filling large orders, all orders received from Arkansas will be processed by the Internal Revenue Service Center, Austin, Texas. Remember that Package X will not be automatically mailed this year. Rather, Package X will be listed among the publications on Form 2333E. You will use the Form 2333E to request your copy of Package X. The Form 2333E will be included in Publication 1045, "Information to Preparers of Federal Tax Returns," which will be distributed to all addresses on the Director's Practitioner mailing list the first of October. All orders for forms should be submitted to: Forms P.O. Box 2923 Austin, Texas 78761 One-Level Appeals Procedure Effective October 2, 1978, there will be a one-level appeals procedure to resolve tax disputes between the Internal Revenue Service and taxpayers. Under the new system, a Regional Director of Appeals will be in charge of all appeals within each of the seven IRS regions. In addition to current regional appeals, this new office will also handle disputes now appealed to the Examination and Collection Divisions at district conferences and to the regional Employee Plans/Exempt Organization Staff. We will continue to maintain appeals offices at all locations where fulltime district conferences and regional appellate staff currently are located. Appeals conferences will also be held at temporary locations, as they have been in the past.
f..,
January 1979/Arkansas Lawyer/39
AlelE NEWS by Claibourne W. Patty, Jr. Executive Director Arkansas Institute of Continuing Legal Education
220 REGISTRANTS ATIENDED THE FALL LEGAL INSTITUTE The Fall Legal Institute held at the Camelot Inn, Little Rock, September 14-15,1978, attracted 220 paid registrants with its program of Real Estate Transactions. Seasoned practitioners and law faculty members presented such topics as the Purchase and Sale of Real Estate with particular emphasis on the Contract of Sale, Financing the Sale, Tax Matters, Title Examination, Closing, Development of Real Estate, The Construction and Sale of Condominiums, Leasing of Improved Real Estate, The Uniform Landlord and Tenant Act and Recent Developments. Approximately 10% of those registered returned evaluation forms which indicated a most favorable response to the speakers and their topics. As a matter of fact there was a preference for more programs of this type in the future. RECORD NUMBER OF REGISTRANTS ATIEND PRACTICE SKILLS COURSE Paid registration at the Nineteenth Annual Practice Skills Course, jointly sponsored by the Young Lawyers Section of the Arkansas Bar Association and AICLE was 85, a third more than those attending the Practice Skills Course last year. The topics presented last year were repeated this year in approximately the same format, with the exception that some speakers were changed. The evaluation forms returned indicated that the registrants wished to go into some subjects more in depth, however since a Practice Skills Course is
40/Arkansas Lawyer/January 1979
mainly concerned with getting the new lawyer safely in and out of the courthouse it is suggested that they consider attending future CLE events on particular subjects which do explore in greater depth. It has been the consensus of previous program chairmen for the Practice Skills Courses to limit this session to approximately two-and-a-half days, which in turn, limits the selection and length of the particular topics to be presented within this particular program format. Up to now the Practice Skills Course has been held at the UALR School of Law in Little Rock; but due to the increase in enrollment it appears that if more people pass the Bar exam in 1979 than in 1978 it will be necessary to move to larger quarters in the convention center or the Camelot. This can be accomplished without raising the registration fee since the cost of the handout materials is more or less fixed and we do not usually offer meals. MID-YEAR MEETING The Mid-Year Meeting to be held at the Camelot Inn, Little Rock, Arkansas, January 18-19, 1979, will concern itself almost exclusively with the new Rules of Civil Procedure which will have been adopted by the Arkansas Supreme Court by that date. The House of Delegates will have its Mid- Year Meeting at the Camelot Inn on Thursday morning, January 18, which will be followed by a luncheon with either a Bar Association or CLE related program. Winslow Drummond of Little Rock has consented to serve as program chairman, and we are in the process
of selecting specific topics and speakers in connection with the civil litigation-civil procedure theme of the program. There will be more details available in subsequent "fliers" which will be mailed to you through the Bar Association as well as the mailing of the brochure itself which should arrive in the early part of December. In the meantime please mark your calendars for this important Bar路 Association-CLE event. PROGRAMS IN PROGRESS AICLE is presently working with the LABOR LAW COMMITIEE of the Arkansas Bar Association to present the Second Labor Law Institute to be held at DeGray Lodge on March 23 and 24; and with the TAXATION SECTION of the Arkansas Bar Association to hold a tax seminar for the general practitioner in Little Rock on April 27 and 28 in 1979. More details will be available in the next issue of the Arkansas Lawyer. " ....
See Page 25........
.... ~,,,
WEST ANNOUNCES NEW EDITION OF POPULAR BANKRUPTCY TREATISE
Gives you
One of the most popular and trusted works on bankruptcy law, Bankruptcy Law and Practice, has been published in an expanded Second Edition by West Publishing Company. This three-volume set, by Daniel R. Cowans, reflects the many changes that have taken place in bankruptcy law in recent years, including the adoption of the Bankruptcy Rules promulgated by the Supreme Court since 1973. The set features expanded coverage of the sequence of events in straight bankruptcy, arrangement proceedings under Chapter XI, preferences and fraudulent conveyances, and creditor recovery rights. For the first time, a chapter on the handling of setoffs is included, as well as a chapter on the handling of real property arrangements under Chapter XII of the Bankruptcy Act. New forms, which supplement the Official Bankruptcy Forms, are also included. Of special significance are the many new forms for wage earner plans under Chapter XIII. A special supplementary pamphlet is included with Bankruptcy Law and Practice, 2d Edition. It contains the text of the Bankruptcy Act, Bankruptcy Rules and Official Bankruptcy Forms, the Federal Rules of Civil Procedure and the Federal Rules of Evidence, together with indexes.
CONF
With West's Arkansas Cases in your library, you know that you always have immediate access to all modern reported Arkansas case law. You are always up-to-date, too, with advance sheets every seven days sent to you at no extra charge. You practice with confidence. You find research ease with Arkansas Cases. Such helpful West features as the Key
Number System lead you quickly to all cases in point. All material is organized to save you time, the most vital ingredient in y,?ur practice. Arkansas Case~ is an indispensable tool for lawyers throughout the entire state. Let your West representative show you exactly how it can help you. He will also prove to you how easy it is to own.
WEST PUBUSltING COMPANY Elmer P. Roberts P.O. Box 7659 Linle Rock, AA 72217 Phone: 501/224-5471
~ Midyear Meeting Camelot Inn, Little Rock January 18-19, 1979
Second Annual Labor Law Institute DeGray Lodge, Arkadelphia March 23-24, 1979
Natural Resources Law Institute Arlington Hotel, Hot Springs February 22-24, 1979
Tax Seminar for General Practioner Camelot Inn, Little Rock April 27-29, 1979
Workers Compensation Law Institute Camelot Inn, Little Rock March 23, 1979
Annual Meeting Arlington Hotel, Hot Springs June 6-8, 1979
January 1979/Arkansas Lawyer/41
18TH
ANNUAL ARKANSAS o Q
~
o Q
NATURAL RESOURCES LAW INSTITUTE
Ld I
(FORMERLY OIL & GAS INSTITUTE)
FEBRUARY 22-24 1979
ARLINGTON HOTEL
HOT SPRINGS ARKANSAS "The Arkansas Oil and Gas Institute has greatly enhanced the professional competence of those involved in oil and gas matters, and has provided outstanding contributions to the continuing education oflandmen and lawyers." The Landman 42{Arkansas LawyerlJanuary 1979
Have ~ou accounted 'or all the heirs'! Mlssl,., and unknown heirs loea'ed. NO CHARGE TO THE ESTATE WORLDWIDE SERVICE FOR:
o COURTS o LAWYERS o TRUST OFFICERS o ADMINISTRATORS o EXECUTORS
research services int
wortd路. . . probe" r....as SUITE 1410 BROADWAY TOWER BUilDING. ENID. CALL TOLL FlIEE 1 ~ OKLA. (CALL COLLECT) 233-1320
January 1979/Arkansas Lawyer/43
CODE Of PROfESSIONAL RESPONSIBILITY FEE DISPUTES (Editor's Note: In 1975, the American ear Association's Standing Committee on Professional Discipline and Center
for Professional Discipline published the booklet "Avoiding Unintentional Grievances". The Arkansas Bar Association purchased and furnished copies to each of its members.
Under this Regular Feature -{;ode of Professionaf Responsibilify-in The Arkansas Lawyer, we have published various parts of the Code and many related quizzes. It is our intention now to publish parts of "Avoiding Unintentional
Grievances" for rereading and review by the membership. To this end, we have secured permission from the American Bar Association to so pUblish.)
One of the most common complaints against lawyers concerns the amount of the fee. Many complaints couched in other terms turn out to be fee disputes. The likelihood of such a complaint can be substantially reduced if the fee arrangement is made clear at the oulset and reduced to writing. Ethical Consideration 2-19 of the Code of Professional Responsibility provides:
"As soon as feasible after a lawyer has been employed, it is desirable that he reach a clear agreement with his client as to the basis of the fee charges to be made. Such a course will not only prevent later misunder-
standing but will also work for good relations between the lawyer and the client. It is usually beneficial to reduce to writing the understanding of the parties regarding the fee, particularly when it is contingent. A lawyer should be mindful that many persons who desire to employ him may have had little or no experience with fee charges of lawyers, and for this reason he should explain fully to such persons the reasons for the particular fee arrangement he proposes." The likelihood of a complaint concerning fees can be further reduced if the lawyer, in explaining and reducing to writing the fee arrangement with his client. incorporates what is and what is not included. Most fee complaints are made by clients with little knowledge of the legal system, its processes and the factors determining the amount of the fee to be charged. They have a tendency to accept a "ball park" fee estimate as a binding figure. Clients tend to equate the employment of a lawyer with an obligation on the part of the lawyer to deliver the most favorable result contemplated by the client rather than as an obligation of the lawyer to render appropriate legal services which 44/Arkansas Lawyer/January 1979
-Beaten, Sir . .. beaten on all counts . .. yet this morning you told me I had an excellent case. -Yes, damnlt ... and I am ready to handle your appeal . .. but I must warn you, I never take a case to the Royal Court (Appeal Court) for less than three hundred francs.
mayor may not, depending upon the law and facts, accomplish exactly that result. A clear explanation of the fee arrangement and a written agreement at the outset will not only reduce the likelihood that a fee dispute will develop, but if there is a dispute, the lawyer will be in a proper position to substantiate the fee because a contract between lawyer and client made after the relationship has been established is generally construed most strongly against the lawyer.
I.....
ARKANSAS BAR ASSOCIATION THE LAW PUBLISHING COMPANY The Arkansas Bar Association received on August 6, 1978, the American Bar Association's Award of Merit for "Single Project Excellence-Honorable Mention" and for "outstanding overall achievement in its law association activi路 ties during the current year". The Summary of the Principal Activity submitted is as follows:
"The Law Publishing Company Publishing companies are not interested in publishing books on small States' law and legal practice. As stated recently by the Vice-President of The Michie Publishing Company (Babbs-Merrill Law Publishing), it is not economically feasible. The small States' voluntary bar associations are almost precluded from the publishing business for obvious financial reasons and lack of staffing. However, the Arkansas Bar Association has successfully published during the past year not one, but four major systems on Arkansas law and practice, viz., the Arkansas Corporation System, the Arkansas
Probate System, the Arkansas Wills and Trusts System, and the Arkansas Workers' Compensation System. Furthermore, the Arkansas Form Book is in final stages, and two more systems are projected for early completion. Response by Arkansas lawyers and judges has been immediate, e.g., over 750 copies of the Arkansas Probate System have been sold. Each system was promoted through a major seminar. Followup regional seminars are now being presented. After the related seminars, the balance of the Systems are being donated to the Arkansas Institute for Continuing Legal Education. It is estimated that the book value for the four current systems to be donated will be almost $50,000. We know of no State bar association, large or small, which is meeting this law publishing challenge as completely and effectively as the Arkansas Bar Association." ' "
The Award of Merit plaque was presented by ABA President-Elect leonard S. Janofsky to Association President Wayne Boyce at the ABA's Award of Merit luncheon in New York City on August 6, 1978. January 1979/Arkansas lawyer/45
OYEZ
•
,, OYEZ ••
by Barbara Tarkington Membership Secretary
William S. Arnold, Crossell, spoke at a seminar session of the American Corree· tiona I Association at its annual meeting in Portland, Oregon. Charles E. Schartau, Fayelleville, was the speaker at the 12th annual Industriai Appreciation Banquet hosted by the Malvern Chamber of Commerce. Annabelle Clinton, Little Rock, spoke to the Welcome Wagon Club on laws concerning women and what ERA will mean in Arkansas. Justice George
Howard was featured speaker at the U of A at Pine Bluffs observance at Law Day. Kathlyn G. Farrar, Pamela D. Walker, G. Ross Smith, Henry L. Jones, Jr., Steve Jones and Bruce Cross, all of Little Rock, participated in a symposium on the U.S. Supreme Court's decision of the Bakke case held at UALR. Fred LiVingston, Batesville, is the 1978-79 president of the U of A Alumni Association. Prof. Milton Copeland, Fayetteville, has been appointed interim dean of U of A School of Law. James C. Hale, West Memphis, has retired as chairman of the Crittenden County Democratic Central Committee and Jake Brick has been named his successor. Louis B. Jones, Jr., Forrest City;
Judges Council for 78-79. Other officers are: Judge W. A. Eckert of Magnolia, vice-president and Judge Fred Engeler of Mountain Home, secretary. W. B. Guthrie, Jr., Des Arc, has been appointed a member of the Commatee on Probate Law and Estate Planning of the ABA for 78-79. Hillary Rodham, lillie Rock, has been elected chairman of the board of directors of Legal Services Corp. Webster L. Hubbell was appointed to fill a vacancy on the Little Rock Board of Directors created by the resignation of Director Mike Castleman. Henry Woods "of the Arkansas Bar" is the author of a new textbook "Comparative Faull". A Labor Law Section has been organized with Philip Lyon, Little Rock, chairman; Phil Kaplan, Little Rock, chairman-elect; and Tim Boe, Little Rock, Secretary. The law firm of Clark, Miller & Switzer, Ltd, Hot Springs, has announced that Richard L. Cox and Bruce A. MacPhee have become associates. A law partnership has been formed in Searcy under the firm name of Lightle, Beebe and Raney and they announce that A. Watson Bell is an associate. Sandy A. McMath has opened his law office at 904 West Second, Little Rock. Chester A. Baugus, former Washington County de-
JUdge Milas H. Hale JUdge John Holland, Ft. Smith; Mike Kinard, Magnolia; and Mlcheal E. Irwin, Heber Springs, are among the 7 appointed by Gov. Pryor to serve on the State Crime Laboratory Board. -Judge Milas H. Hale, Sherwood, has been elected president of the Arkansas Municipal 46/Arkansas Lawyer/January 1979
puty prosecuting attorney, has rejoined the law office of R. H. Mills, Springdale. Ector R. Johnson III has joined B. Frank Mackey, Jr., at his law office in the Union Nat'l Plaza Bldg., Little Rock. John H. Bradley has opened his law office at 115 North Second, Blytheville. Dale E. Adams, formerly with the Arkansas Crime Commission, has joined the office of the prosecuting allorney of Pulaski County. Junuls B. Cross, Jr. and Debby Davies Cross have joined Jack Holt, Jr. in the practice of law with offices at 1100 N. University, Little Rock. Charles P. Allen, formerly of West Helena, has joined Garland Q. Ridenour in Helena and formed the law firm of Ridenour and Allen. Richard Hlpp, formerly of Colorado, has opened his law office in association with
Bob I. Mayes of Fayetteville. Howard Brill, formerly wah U of A School of Law, has moved to Champaign. III. Lester & Shults, Little Rock, have announced that J. Thomas Ray has become an associate in their firm. Gene O'Oanlel l former Assistant U.S. Attorney for the Eastern Dis-
trict of Arkansas, has opened his law office at 904 West Second, Little Rock. Hugh E. Longino, Jr. has opened his law office in the First Place Bldg., Fayetteville. James R. Cromwell, formerly of Pine Bluff, has moved to Littie Rock. J. W. Barron, Randy Coleman and Gary Barket have formed a partnership, Barron,
Coleman & Barket, with offices in the 300 Spring Bldg., Little Rock. Bridges, Young, Mallhews & Davis of Pine Bluff have announced that H. David Young is associated with the firm. Winfred L. Thompson, a legislative assistant to Ray Thornton in Washington, D.C., is now associated with Richard Hatfield of Searcy. Kenneth H. Castleberry, former director of state Building Services, has joined a law firm in
Eureka Springs and its name changed to Epley, Epley & Castleberry, Ltd. Tom Allen of Batesville has announced the association of Don McSpadden in the practice of law under the firm name of Allen
and McSpadden. Harry Ponder and Dick Jarboe have formed the law firm of Ponder and Jarboe with offices at 110 W. Walnut, Walnut Ridge. Stuart W. Hankins, Zachary D. Wilson and Basil V. Hicks, Jr. have formed a partnership with offices in the Professional Bldg., N. Little Rock. The Pine Bluff law firm of Reinberger, EIIbott & Smith has changed its firm name to Ellbott, Smith, Eilbott & Humphries and announces that Thomas Edward Brown has become an associate. Steve Wester·
field has joined Sloan Rainwater, Jr. of Walnut Ridge in the practice of law. Ron Williams, former trust officer at First State Bank & Trust Co., has joined Branch & Thompson of ParagOUld. Paul R. Bosson has joined a Hot Springs law firm and its name changed to Hobbs, Longinotti & Bosson. Robert R. Claar, Fort Smith, has located his office for the practice of law in the Court Plaza Bldg. Robert Hargraves, Hot Springs, has resigned as Garland County juvenile referee to return to private
practice with Glover, Sanders & Parkerson. Gale Stewart, Little Rock, has been appointed as an Assistant US Attorney. Neva B. Talley has been appointed to the Arkansas Supreme Court to serve a five year term on the Client Security Fund
Commillee. Eugene J. Mazzanti, Little Rock, has relocated his office at #1
Spring SI.
continued on page 23
ADDENDA by C. E. Ransick Editor
MEMBERSHIP: THE THIRD DIMENSION
I
I~ No Matter Ho'W'
You ---==~ Measure it...
Your 'JII..II.,;J.PI.l::A.~II,J,,Il.I,,J'U is Worth While! ANNUAL AWARDS The following news release reminds that "now is the time" to begin thinking about nominations for the 1979 annual awards-Outstanding Lawyer, Outstanding Lawyer-Citizen, and Outstanding Local Bar Association. The Awards Committee may also create a new award to cover the unusual, noteworthy situation-as the Outstanding LawyerHumanitarian Award of 1978. Robert L. Jones, Jr. received the 1978 Outstanding Lawyer Award. The news release follows: CHICAGO: Robert L. Jones, Jr., partner in the law firm of Jones, Gilbreath & Jones, Fort Smith, has been re-elected to the Board of Directors of the American Judicature Society.
Every adult has two sides--jlersonal and occupational. But he adds another when he involves himself in group activities. This is the "third dimension" that rounds out his life and supplies the interests and benefits that really make it worth living. Growth in this sense is a sign of maturity. When people are young, the excitements of building a home and raising a family more than make up for the routines and limited mobility which characterize that stage in their careers. Friendships carried over from school days or gained in the new neighborhood generate enough occasions to keep a young couple on the go. But every rung up the ladder to success is a step away, both in time and perspective. Advancement takes its toll, often exacting a loss in personal life for every gain it confers. Social contacts wane in significance and sometimes are resented for the time they consume. The urge to "talk shop" becomes harder to gratify: as experts recognize, the more you know about a subject, the smaller your audience. Membership snaps the vicious spiral by providing meaningful contacts and uses for time outside the office. It opens new doors for the locked-in executive, casts new light on the problems he copes with, and identifies him with the more progressive, forwardlooking eiement in his business or profession. It means new and lasting friendships founded on that strong denominator, a common business interest. This "third dimension" also Includes broadening through travel. Conventions, conferences and committee meetings often take a member to places he probably would never have visited, otherwise. They combine the zest of historic or scenic attraction with the pleasures of reunion. No wonder attending conventions is a major pastime on this continent! There was a time when only the husband couid profit from this outlet. But now the ladies' program is as important to such a couple as the business agenda. Both spouses have something to look forward to-something to savour together. In short, the Third Dimension is the pertect squelch to the blind, unperceptive "What is there in it for me?"
The American Judicature Society is a national membership organization of lawyers, jUdges and nonlawyer citizens founded to promote the effective administration of justice through judicial improvements and court modernization. Mr. Jones is a past president of the Arkansas Bar Association and of the Sebastian County Bar Association. He was a member of the Board of Directors and chairman of the committee of the Arkansas Bar Association when the Statewide Lawyer Referral Service was established. In addition, Mr. Jones is a member of the International Association of Insurance Counsel and is a Fellow of the American College of Trial Lawyers, American Bar Foundation and of the Arkansas Bar Foundation. August 15, 1978.
Robert L. Jones
January 1979/Arkansas Lawyer/47
ADDENDA continued from page 47
THE LEGAL SECRETARY One should read CONTEXT, this issue, page 32, together with the following item. Mrs. Bobbie D. Jones PLS was selected first runner-up in the NALS (National Association of Legal Secretaries) Legal secretary of the Year Contest during its annual convention at Atlanta in
July. Mrs. Jones was one of three finalists for the top Secretary of the Year Award. The Arkansas Bar adds its congratulations.
the national board of directors as Arkansas National Director. When asked to name the most Important qualities of a legal secretary, she replied, "The most important qualities of a legal secretary are loyalty, dependability, integrity, and courtesy. In conjunction with these qualities must be a desire to learn and excel. Legal secretaries must have a respect for the law, attorneys, persons they come in contact with, and their actions must reflect self respect." She urges others to become legal secretaries because "There is no better way to be educated, while being paid, than to work as a legal secretary. The legal field is the most interesting, rewarding, and educational work you could find. You can learn much about life and people in the legal field; that is what education really is, life and the way we play the game. There is no boredom in legal work,
it has fascinating facets in each and every field of the law." In 1975 Mrs. Jones was certified as a "Professional Legal Secretary" by the National Association of Legal Secretaries. This certification is issued only to qualified persons with a minimum of five years' experience who successfully complete a
received. I note that you wish titles ex.. tended further back than I have presented them. I was unaware that any educated man in the world failed to know that Louisiana was purchased from France in
1803. The title to the land was acquired by France by right of conquest from Spain. The land came into possession of Spain
by right of discovery made in 1492 by a sailor named Christopher Columbus, who had been granted the privilege of seeking a new route to India by the then reigning monarch, Isabella. The good queen, being a pious woman and careful about
titles, almost, I might say, as the RFC, took the precaution of securing the blessing of the Pope for the voyage before she sold her jewels to help Columbus. Now the Pope, as you know, is the emmissary of Jesus Christ, the Son of God, and God, who is commonly accepted, made the world. Therefore, I believe it is safe to presume that He also made the part of the world called Louisiana, and I hope to hell you are satisfied."f-.,
ANNIVERSARY
two-day, seven-part examination cov-
ering all phases of legal secretarial work.
Bobby D. Jones These awards are made annually to
three outstanding members of the national organization on the basis of secretarial ability, service to the national, state, and local legal secretaries associations, and service to the community. They are selected from a membership in excess 01 23,000. Mrs. Jones has been employed in the law firm of Reinberger, Eilbott & Smith for 25 years, where she is the senior secretary and office manager. Her employer, Don A. Eilbott, praises her integrity and honesty. She was secretary to Mr. Eilbatt's father until his death in 1977, and her services to the firm are valued very
highly. Mrs. Jones is a member of the Jefferson County Legal Secretaries Association, and has held office as President, NALS Representative, and Governor. In addi路 tion she has served as Parliamentarian
and chaired all committees. On the state level, she has served as President, National Director, Director of Public Relations, and chaired several committees.
On the national level, she has served on 48/Arkansas Lawyer/January 1979
The members of the Jefferson County LSA think very highly of Mrs. Jones and indicate "She has continuously and diligently supported our local association as well as actively participating on the state and national level. She has served our local association well and has held just
about every position available."
LAWYER'S DILEMMA One of the better stories making the rounds follows: A New Orleans lawyer sought an RFC loan for a client. He was told that the loan would be granted if he could prove satisfactory title to property offered as collateral. The title dated back to 1803, and he had to spend three months running it down. After sending the information to RFC he got this reply: "We received your letter today enclosing appiication for loan for your client, supported by abstract of title. Let us compliment you on the able manner in which you prepared and pre路
sen ted the application. However, you have not cleared the title before the year 1803, and therefore, before final approval can be accorded the application, it will be necessary that the title be cleared back of that year." Annoyed, the lawyer replied: "Your letter regarding titles in Case No. 189156
It's the tenth anniversary of our employment with the Arkansas Bar Association and The Arkansas Lawyer. We have enjoyed our third career (lawyer, Army judge advocate, Bar Executive) immensely, Being editor of the Bar Journal has been one of the most rewarding facets of the job. In this connection, we wish to thank all our volunteer contributors of the RegUlar and Special Features. We know of no other Bar Journal which does not have to solicit articles for publication. We take this opportunity to wish all a Merry Christmas and a Happy, Prosperous New Year.
ATTORNEY'S ECONOMIC CONSULTANTS
Fred Myers Company Myers Investigation Agency
"A Division of Education and Research Associates, Inc." SERVING THE LEGAL PROFESSION WITH EXPERTISE IN THE FOLLOWING A~EAS: Workmen's Compensation (Lump-Sum Settlement Calculations) Evaluation of Lost Earnings Capacity from Partial or Total Permanent Disability or Wrongful Death Economic Valuation of Pecuniary Damages in Business Tort, Contract and Anti-Trust Cases Chapter 10 & 11 Bankruptcy Reorganization Plans Valuation of Minority Stock Holdings in Estate Settlements Valuation of Future Earnings Capacity for Stock Issuance Economic Anal~sis for Charters or Branch Applications for Financial Institutions
QUALIFIED AS EXPERT WITNESS IN ARKANSAS AND OTHER JURISDICTIONS 1209 Rebsamen Park Road Little Rock, Arkansas 72202 (501) 661-0161
PROFESSIONAL INVESTIGATORS Fred Myers, Owner and Manager 14 Years Private Investigation Experience Former Police Officer Member, World Association of Detectives Former President, Arkansas Private investigators Association • Generat Inveslilalion Service • Employee Theft InHslilalion • Missinl Persons Inwulilalion • Consultalion Service • References Furnished
Call .. . D~Y
PLEDGE Pledle To Mainllin Hilh Prolessional 511,,· dards - Morally and Elhi· ally - For The Good 01 Our SlIle. Dur Country and Our Clients.
we
DR NIGHT
372·1809
TOWER BUILDING/LITTLE ROCK
Service Directory MISSING PARAGON Printing & Stationery Company has been printing BRIEFS for over 35 years. May we be of service to you? 311 East Capitol 375-1281 Little Rock
**** BEACH ABSTRACT" GUARANTY COMPANY REPRESENTING:
COMMERCIAL STANDARD TITLE INS. CO. ABSTRACTS-ESCROWS-TITLE INSURANCE
AND UNKNOWN HEIRS LOCATED NO EXPENSE TO THE ESTATE
WORLD·WIDE SERViCE FOR
COURTS - LAWYERS - TRUST OFFICERS ADMINISTRATORS - EXECUTORS
213 W. 2nd 51. - Little Rock, Ark .. FR 6-3301
J. George Owen
****
Sales Representative Shepard's Citations, Inc. 405 Andover Lane Ballwin, MO 63011 Telephone 314/227-5514
American Archillej Ajjocialion INTERNATIONAL PROBATE RESEARCH 449 WASHINGTON BUILDING WASHINGTON. D. C.