JULY 1974

~

July 1974

Arkansas Lawyer

Some Intelligence on Intellectual Property

ARKANSAS BAR ASSOClATION COMMITTEE REPORTS

The Severed Mineral Estate Problem: Are There Legislative Solutions?

for -R obert R. Keegan

Some Tax Considerations for Practicing Lawyers: Part II -

DEPRECIATION

-Bruce R. Hopkins

Bar Year 1973-1974

-Oliver M. Clegg

FALL LEGAL I STITUTE Professional Responsibility= Public Relations

September 19.21, 1974

-Carleton Harris

Camelot Inn A rkansas Bar Center Little Rock

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ARKANSAS BAR ASSOCIATION 400 West Markham, Little Rock, Arkansas Phone: 375-4605 WANTED

21 section glass covered bookcase, 34 inches long and 9 1/2 inches deep with 3 tops and 3 bottoms. Call 982· 8556 for more information.

JULY 1974 VOL. 8, NO.3

THE OFFICIAL PUBLICAliON OF THE ARKANSAS BAR ASSOCIAliON

OFFICERS James B. Sharp, President Robert C. Compton, Vice路President James M. Moody. Secretary-Treasurer

~e

Arkansas Lawyer SPECIAL FEATURES 1974 Fall Legal Institute Admissions Ceremony.

132 115

PR= Professional Responsibility'" Public Relations...

EXECUTIVE OIRECTOR C. E. Ransick

.........

Some Intelligence on Intellectual Property............

. . Carleton Harris 116 . . Robert R. Keegan

120

The Severed Mineral Estate Problem: Are There Legislative Solutions?

EXECUTIVE COUNCIL Douglas O. Smith, Jr. Robert Hays Williams Thomas F. Butt Julian B. Fogleman David Solomon Wayne Boyce Herman Hamilton. Jr. John A. Davis. til LeRoy Autrey Winslow Drummond Leonard Scott Boyce Love

Practicing Lawyers: Part II - DEPRECIATION. . . . . . . . .. . .

142

Committee Reports

119

Aegis.

REGULAR FEATURES .. James B. Sharp 114

President's Report ..

EDITORIAL COMMITTEE Robert O. Ross Phillip E. Dixon C. E. Ransick

. . Bruce R. Hopk ins 134

Arkansas Bar Association

. .... C. R. Huie 126

Juris Dictum.

Ex-Officio James B. Sharp Robert C. Compton James M. Moody James E. West R. Keith Arman Guy Amsler. Jr.

..... Oliver M. Clegg 128

Some Tax Considerations for

140 .. B. Ghormley 139

Law School News

Oyez-Oyez In Memoriam Executive Council Notes Service Directory ..

.

141 .James M. Moody 131

131

Published bi-monthly by the Arkansas Bar Association. 408 Donaghey Bldg ..

Little Rock, Arkansas 72201. Second class postage paid at Little Rock, Arkansas. Subscription price to non-members of the Arkansas Bar Association $6.00 per year and to members $2.00 per year included in annual dues. Any opinion expressed herein is that 01 the author, and not necessarily thaI of the Arkansas Bar Association, The Arkansas Lawyer, or the Editorial Committee. Contributions to Ihe Arkansas Lawyer are welcome and should be sent in two copies 10 the Arkansas Bar Center, 408 Donaghey Bldg., Little Rock, Arkansas 72201.

All InquIries regardmg advertIsing should be sent to The Arkansas Lawyer. above address.

July 1974/Arkansas Lawyer/113

1

PIESIJIIT~S

IIPOIT

by James B. Sharp

FALL LEGAL INSTITUTE

As some of you may already know, the Legal Education Committee had planned a great return to Fayetteville for the Fall Legal Institute. Several of us now have faces as red as a Razorback. Through what may best be termed a "Tremendous Confusion", we now find ourselves without the expected blocks of hotel reservations in Fayetteville for next September. After valiant and sustained. but totally unsuccessful. efforts by several of our stoutest Washington County lawyers and jurists, and after a telephone poll of the members of your Executive Council, we have very reluctantly concluded that we must change the Fall Legal Institute.

We will have it beginning on Friday morning and extending through to noon on Saturday, on September 20th and 21 st. Hotel space now has been reserved at the Camelot Inn and each of you may make your reservations through till Sunday so that you may attend the Oklahoma State game at 7:30 p.m. on the 21st.

Fortunately, we will be able to have the same fine program in Little Rock that had been planned for Fayetteville. We are planning an outstanding social program that we believe that each of you will thoroughly enjoy. A gourmet buffet and ball will highlight the Friday night festivities.

The program for the institute has been devised to stimulate your mind and give you some penetrating thoughts to take home with you concerning our profession. Several of our speakers will be nationally prominent in their fields, and all of our program will be designed to brush away the cobwebs of everyday law practice by giving us a new perspective on several aspects of our profession. Dean Wylie Davis and Steve Clark, Director of Continuing Legal Education at the University, have done an able job in obtaining this excellent Legal Institute.

114/Arkansas Lawyer/July 1974

HOUSE OF DELEGATES

Under the provisions of the Constitution of the Bar Association, the ultimate governing body of the Association is the House of Delegates. It was designed to represent each twenty members of the Association. If the House of Delegates is to function as is intended under the Constitution, then you as members of the Association must contact your delegates to give them your views on the many issues which will be coming before this House during the next twelve months.

At the annual June meeting of the House, two of the Districts of the Association had less than a majority of their delegates present. These were the Northeast District, in which I live, and the Southern District.

I think that it is very clear that if a delegate finds that he is not able to fulfill his primary responsibility at being present when the House of Delegates meets, I think it is clearly his duty to resign from that office so that someone else can be elected by the membership of his delegate district to properly represent them in the House.

Unless the delegate is present, the lawyers in that District have no effective voice in the operation of the Bar Association or the decisions which are made by the House. I strongly urge each of you members of the Association to see that your delegate is present and that if he is not present that you take the steps required to elect some delegate who will be present and fulfill his duties of that office.

The House of Delegates is scheduled to meet in two special sessions, one on September 19 and the other on October 26. Please let you r delegate know how you feel about proposed legislation to be presented to the 1975 General Assembly and also about other important matters which will be coming up for decision by your House of Delegates. iI-.....

Adm issions Ceremony Arkansas Supreme Court April 8, 1974 "I do solemnly swear路 I will support the ConStitutIon of the United States and the ConstitutIon of the State of Arkansas.

I will malntam the respect due to Courts 01 Justice and Judicial Officers: I will not counselor mamtam any SUll or proceeding which shall appear to me to be unJus!. nor any defense except such as I believe to be honestly debatable under the law 01 the land I Will emplOy lor the purpose of mamtammg the causes conllded to me such means only as are conSistent with truth and honor. and WIll never seek to mislead the ludge or JUry by any artIfice or talse statement or fact or law.

I Will mamtaln the confldence and preserve inviolate the secrets of my chent. and WI!: accept no compensation In connection with his buSiness except fra,n him or With his knowledge and approval.

I Will abstain from all offensive personality, and advance no lact prejudIcial to the honor or reputation of a party or witness, unless requIred by the Justice of the cause wIth which I am charged: I Will never reject. lor any conSideration personal to myself, the cause 01 the defenseless or oppressed, or delay any man's cause for lucre or malice So help me God."

Arkansas Supreme Court

"I do Solemnly Swear"

Guests -

Applicants

Bar Briefing

Note: See page 116, this issue, for remarks by Chiel Justice Carleton Harris to new admittees during luncheon In their honor. The luncheon was co-sponsored by the Arkansas Bar Association and the American Bar Association.

July 1974/Arkansas Lawyer/115

[JJRO FESSIO NAL I]ESPONSIBILlTY=

[J)UBLIC I]ELATIONS

By Carleton Harris

The number one need for the legal profession today is better pUblic relations. Back in the days when I commenced to practice. the legal profession was highly respected and the general feeling was that one could not enter a more honored field of endeavor. Of course, we have always heard the Jokes about "shyster" lawyers and I suppose we have always had some "shyster" lawyers, but they were so much in the minority that their acts were rarely seriously noticed. Even then, it was pretty much a matter of "ambulance chasing" rather than hard-down illegal acts; but during the course of the last several years, our standing has seriously dropped in the eyes of our citizenry. Our Court has recognized this problem by provid ing an office to hand Ie complaints against attorneys, this being the reason for the raise in Bar dues from $2.00 to $15.00. I do not have time to make a report on that office, other than to say that you would be amazed at the number of complaints received. While it is true 116/Arkansas Lawyer/July 1974

that most of these only relate to some person who lost a lawsuit and accordingly thinks he was "sold out" by his attorney, or he was charged too much, or some similar complaint which really has no sound basis-you would also be amazed at the number of complaints that are serious enough to require a full-scale investigation and disciplinary action. This situation is the most distrubing element connected with the law profession today. The Watergate affair. involving as it does. numerous attorneys, has contributed in large measure to this mounting impression about lawyers.

Of course, it is true that both the ministry and the medical profession have their own members who fall short of their standards, and this is to be expected in all professions. I do not know whether the percentage of transgressors in the legal field is higher than the others mentioned-but I do know that the acts of those who violate the Legal Code of Professional Responsibility have received much more publicity than

those of other professions who have short-circuited ethical standards.

I say all of this as a matter of impressing upon you the fact that you have not only a responsibility to yourselves in the practice ot law; not only responsibility to those whom you represent; but also a responsibility to the profession ifself, i.e., not by any act should you lay yourself open to the charge of unprofessional conduct. I suggest, as I mentioned this morning, that you make it a point, not only to read, but to study, and thoroughly acquaint yourselves, with the Code of Professional Responsibility, and if something arises which gives you doubt as to whether the act contemplated might or might not be covered by the Code-resolve such doubt against yourselves.

This is a fine looking group today-one that I hope and expect to bring honor to our profession; the individuals here should be leaders in the community; people have always respected the knowledge of

lawyers on matters relating to politics and government. I want them to continue to have that respect.

Perhaps my feelings can best be summed up by giving you a little personal illustration that I have frequently used on these occasions.

My Mother and Father (particularly my Mother). from the time that I can first remember. always wanted me to be a lawyer because they felt that lawyers were leaders in the community. highly respected citizens. looked upon as sub~tantial. useful. and necessary citizens in any locality. I remember my Mother started teaching me readings at four years of age because she thought the main qualification in becoming a lawyer was the ability to make a good speech. My parents had a real financial struggle in enabling me to

acquire a college education. I only had three years-two years of prelaw and then one year of law at the only one-year law school in the country-Cumberland University;' this. of course. because they were not able financIally to send me to a three-year law school. It might be here menlioned that some lawyers. after reading my opinions. have stated that it was obvious that I only had one year of law (humorous). I need not add that these lawyers were those who lost their appeals!

I shall never forget the day that I returned home from graduation. I took my law diploma from by bag and handed it to my Mother. I will say one thing for Cumberland though it was only a one-year law school. it gave the biggest diploma that I have ever seen. My mother took it. looked at it. and then with such pride as I have never seen be-

fore. said to me. "Son. you are a big man now!

I want the lawyer-I want you-to be a big man. Not big in the sense that you are better than somebody else-because. of course. that is not true. But big in the sense that you have a big mind - i.e.. you are tolerant of the views of others. I want you to have a big heart. in the sense that problems brought to you by your clients will be viewed with understanding and sympathy - and big in your sense of public duty - i.e.. you will recognize your obligation as an attorney. your civic responsibilities In your community. and your obligation to your State and Nation to aid in doing what shou Id be done to make this a beller place in which to live. both for ourselves. and our posterity.

"'"

ThIS ""-'IS In :932. .vld. ot coo,se Cumbelland UnIverSity nO>" loc,lled ,1IS"mongh.lm AI,lb lm,l ,s "nd h.lS been 'or 'i n",mbe, ot ye irS I recognlled three-yea' 1.lw SChOOl

Chief Justice Carleton Harris of the Arkansas Supreme Court made these remarks to the new admittees of the Arkansas Bar at a luncheon in their honor on April 8. 1974. His comments are particularly noteworthy for all members of the Bar in the "Watergate" era.

Judge Harris became the first Judge to be awarded the Arkansas Bar Foundation's Outstanding Lawyer Award. He was so honored at the Banquet of the 76th Annual Meeting of the Arkansas Bar Association on June 6.1974.

Judge Harris received standing ovations on both occasions.

JUDGE HARRIS

July 1974/Arkansas Lawyer/117

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Want more details? Call or write Arkansas Bar Association Administrator Rather, Beyer & Harper Three Hundred Spring Building lillie Rock, Arkansas 72201 (501) 372-4117 118/Arkansas Lawyer/July 1974

Editor's Comment: AEGIS is a feature of the Arkansas Bar Association's educational program concerning docket control and other areas of high risk experience in professional liability cases.

Smith, we've just got to do something about this diary system!

Ridiculous? Perhaps.

But it vividly illustrates the fact that in many law firms systems for case follow-up and docket control are not much better. The result: almost 50% of all legal malpractice claims stem from inadequate diary systems.

And that fact can hurt you-in the pocketbook.

What hurts more is that such claims are not truly "professional" errors-just the result of insufficient

attention to the everyday requirements of operating a business office.

The answer is simple. Set-up efficient procedures properly-then maintain them on a daily basis.

Every office, large or small, should check its existing diary system now to make sure it is working and that all proper controls are included.

July 1974/Arkansas Lawyer/119

Some Intelligence on Intellectual Property An article on patents trademarks and copyrights for general practitioners

by Robert R. Keegan'

When a client consults his general lawyer on a matter which could Involve patents, trademarks, or copynghts. he should be advised with the same confidence and quality of service that he meets with other less esotenc problems.

The situation IS similar to a patient with an unusual disease seeking attention from his family doctor. The family doc路tor is not expected to be an expert In every specialty but Should have sufficient familiarity to know the proper avenue of investigation and to provide treatment as Indicated. Concomitantly a general practitioner of law IS expected to have only a modest familiarity with such specialized fields as patents. trademarks and copyrights to serve his "unusual clients" effectively. This modest familiarity IS Important. however. If only to aVOid the embarrassment 01 bemg unprepared for an unusual situation.

Intellectual and Industnal Property Law IS the cumbersome name given to this held of law which deals elth all the vanous Intangible properties resultmg from mnovatlon by artists. mventors and others The name alone IS enough to discourage one from wanting to know very much about It. In sImpler terms It may be considered basically as the law of patents. trademarks and copynghts.

Except for certain large metropolitan centers. notably Washington and New York City. few law schools curricula recognize. let alone emphasize. this field. The University of Arkansas Law School IS commendably ahead of most that It has from time to lime offered a course in this field and is continuing to do so.

The practicing Arkansas Lawyer of substantial experience has probably been dismayed to find that clients do have. even in Arkansas. problems in this field for which he has not been abu nd-

I"

anUy prepared by formal education or expenence. Even assuming that a lawyer elects (as the maJonty do) to enlist specialized helpl In handling the "unusual" client's problem. It IS not always easy for the general counsel to make the Inlllal diagnosIs and provide the preliminary advice to the chent which he is called upon to do.

A Little Knowledge Can Be A Good Thing A relatively small parcel of knowledge concerning patents. trademarks. and cOPYflghts IS especially helpful In enabling the general practitioner to survive the mltlal shock of encountenng one of these rare problems In the patent. trade路 mark or copyflght field It also serves to reduce the risk of embarrassment from an encounter with some mere layman engmeer. artist or pnnter who purports to know more about thiS area of law than the "Attorney at Law" And. of most 1m路 parlance. It should render the lawyers service to these unusual clients more effiCient and more effective.

A first area of potential confUSion most needmg to be clarified concerns the way that the Intellectual and Industnal prop-. erty field IS divided among patents. trademarks and copynghts. 2 To lend an air of erudition It will here be noted that the baSIS for patent and copyright law resides In The Constltullon.'J while trademark law IS deflved from common law together with federal statutory enactments lJustifled by the Commerce Clause of the Constitullon). Fascinating though the complete histonc develop-. ment of this field might be, the space permitted here would not begin to do justice to that subject. Furthermore. it would not appreciably aid one's under路

*Copyright '1974, Robert R. Keegan 120/Arkansas Lawyer/July 1974

Robert R. Keegan attended Oklahoma State University and Oklahoma University Law School before movmg to New York City where he graduated from New York University Law School in 1957. For the next sixteen years he practiced faw in the patent and trademark specialties with the firm of Darby & Darby in New York City. In 1973 he resigned as a partner of that firm to move his practice (and his

wife and six children) to Fayetteville and was admitted to the Arkansas Bar in November 1973. He is a member of the State and Federaf Bars of Arkansas and New York. the First, Second and Eighth Circuits Courts of Appeal, fhe Court of Customs and Patent Appeals, the U. S. Patent Office. the Court of Claims and the U. S. Supreme Court. He is teaching a course in Patents and Copyrights at the University of Arkansas Schoof of Law (Fayetteviffe) in the Fall of 1974.

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square which represents a reasonably well-defined class of Innovations having those two characteristics.

The large dotted area In color deSignates the normal ambit of patent protection. The somewhat larger shaded area overlapping the patent area is the ambit of copyright protection.

While trademark protection is primarily an adjunct of the law of unfaIr competition. the original user of a graphic or three dImensional commercial designation may acquire a trademark right to prevent its use by others ol Similar to the right associated with the intellectual properties. patents and copyrights. This trademark area has been designated in Figure 1 by a crosshatched colored field.

While the boundaries of the regions in Figure 1 are not nearly as neat as one might like. It is possible to gain an insight into the nature of the rights involved by considering the center of gravity. so to speak. of each region. The center of the copyright region will be seen to fall in the area which might generally be described as "communication media" involving graphics. recordings and to a lesser extent three dimensional works.

Trademarks apply to the commercial

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Applicability of Patents, Trademarks and Copyrights

standing of present formal and substantive distinctions between patents, trademarks and copyrights. Regretfully then, we shall pass from historical considerations to the fundamentals of the present law.

Patent?

Copyright? Trademark?

Basically this field is concerned with preventing another, without authority. from mak ing or doing something by virtue of rights established by the innovator. Note that. in addition to making things, other acts lsinging a song or chemically treating a product) may be within the field of patent. trademark and copyright protection. Even as to the mak ing of things, the range of products potentially coverable by a patent is immense. Consider that a patent may be obtained for a huge bridge or office building, for a molecule of a new chemical compound and even for a rose plant.

How then does one determine whether patent protection, copyright protection or trademark protection or some combination of these is appropriate in a particular case? First let it be said that this determination cannot always be made with perfect precision and confidence in borderline cases. Fortunately ou r initial concern is only in noting all the possibilities, and a rare lack of precision is

not a matter of great concern for the present purposes.

In trying to grasp the respective metes and bounds of patent. trademar1<and copyright protection it is useful to focus on two main characteristics of an innovation.

The first example an innovation cou Id be a creation in the fine arts, a scientific writing, a popu lar art creation, a reproduction, a creation of commercial art, a practical art creation or a pu rely functional device. The other characteristics on which it is useful to focus is simply the physical characteristic of the innovative subject matter; for example is it graphic. such as a picture. book, or magazine article, or at opposite end of the scale. perhaps. a new chemical compound.

In Figure 1. "Applicability of Patents, Trademarks and Copyrights." a graphic presentation of the general boundaries which may be assigned to patent. trademark and copyright protections is given.

Arrayed vertically along the left side of Figure 1 are the designations of major value or usefulness characteristics of protectable innovations, In a similar fashion the actual physical characteristic designations are distributed along the horizontal axis of Figure 1. Thus at the intersection of a horizontal line from the usefulness charactenstic and a vertical line from the physical characteristic is a

other hand, patents are heavily oriented to functional and practical devices and to mechanical. electrical and chemical arts. This is an appropriate place to note that patents cannot be considered to be completely in the functional area, and in fact there is one variety of patent. referred to as a Design Patent. s which IS for the particular purpose of covering the non-utilitarian or esthetic properties 01 a useful article.

To assimilate the information presented in Figure 1 it is instructive to consider a few examples. Thus, in the extreme lower left corner one finds an area described by the usefulness characteristic, "fine arts," and the physical characteristic, "graphics." A traditional oil painting or a sonnet might be typical residents of this area. Obviously such creations would be an appropriate subject for copyright protection, and for no other form of protection.

Moving to the extreme upper left-hand corner one finds a space which is outside all of the regions of potential protection. This is the region of purely functional devices which are either graphic in nature or "electro-mechanical records" (e.g. magnetic tape, punched cards. etc.); a prominent resident of this area is the electronic computer program.

If the United States Supreme Court ever decides that such programs are patentable,6 the patent region would have to be expanded to include this area. There is also a considerable deg ree of uncertainty as to whether copyright protection (Continued on page 122)

July 1974/Arkansas Lawyer/121

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(Continued from page 121) would apply to computer programs, but it is submitted that to be eligible for copyright a computer program would have to qualify as a scientific writing, and could be covered as a resident of that area in Figure 1.

Moving to the top right corner of Figure 1 we again note that a new chemical compound is patentable. In the lower right corner of Figure 1 there are areas which are obvious nullities. In fact the likely question as to this region is what sort of creation could conceivably be classified 3S a "fine art process" susceptable of copyright protection. Consider for this classification a musical composition for symphony orchestra (or any other musical composition for ,that matter). The performance of such a fine art work is' certainly a process as to which performance rights are protected by the copyright law 7 (performance rights are granted to certain other nonmusical literary creations as well). A few readers may wish to test their ingenuity by finding examples for all of the regions of Figure 1. For them, here are a few hints. A "practical art electromechanical record" is your cassette recording of "How to Handle Personal In· jury Actions." A "commercial art three dimensional" is a soda bottle. A "reproduction - mechanical device," is a two-thirds scale Model 1928 Chevrolet A "popular art - electrical device" is a display of changing colored lights. A "scientific writing-process" is the performance of an illustrated lecture on new

122/Arkansas Lawyer/July 1974

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aspects of these problems, so to speak;

discoveries and theories in astronomy.

Clearly, it is not possible for a lawyer in general practice or even for a specialist to know the respective boundaries of patent. trademark or copyright protection in every case. The courts themselves are still struggling with the difficult areas. One interesting and practical question is whether both patent and copyright protection can apply to the same article. Recently an unusual unqualified answer of "yes" was given by the Court of Customs and Patent Appeals on this question. s

of patents. trademarks and copyrights with major differences of outstanding interest and value. A statement could be made, sacrificing some accuracy for generality, that there are three steps in the development of a right in intellectual or industrial property. These steps, not necessarily in order. are: 1. Filing an application in the appropriate government agency.

2. Providing notice of the right being obtained.

Procedural CurkJaltlea Having considered some guides for deterrnining which ones if any of the fields of patent, trademark or copyright law may be applicable to a problem, it is appropriate to consider the procedures which must be followed in each case.

Offhand one wou Id hope that the procedures in all the cases might be generally similar, but nothing could be farther from the truth. Just for a start, the patent and trademark areas are handled by the United States Patent Office, while the copyright area is handled by the Register of Copyrights in the Library of Congress. The other procedural (and even substantive) differences between these three areas are so numerous that one cannot begin to even mention them all in a brief treatment.

Remembering. however, that the gen3ral practitioner is probably only concerned with the diagnosis and first aid

some manner.

The importance of each of these steps and the order in which they should be taken differ radically among the three areas of patents, trademarks and copy· rights. These differences are not difficult to understand, however, and once un· derstood a good overall view of the basic procedures for patent, trademark and copyright protection is attained, Therefore, have courage and do not be dismayed to learn: that for copyright protection one muat mark the copyright notice on the literary or other work prior to the first publication and before filing a claim for copyright registration; yet, patent coverage may be loa' and a fine in· volked 9 if a patent notice is marked on a product prior to filing for and obtaining a patent. In the trademark area under U. S. law the use of a trademark is the matter of toremost Importance and precedt:::5 filing an application; also with trademarks a notice which indicates that one's mark is registered (an "R" in,a circle) may re-

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Figure 2 Chronology of Procedures

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su It In serious penalties if the application has not matured Into a Trademark Registration.

Fundamentally. the most important step with respect to copyrights is marking the notice indicating an tntent to claim copyright: with patents it is filing of the patent application: and with trademarks it is use of the trademark In commerce. If one accepts thiS ranking of the procedural steps In the respective areas It then becomes easy to understand the different chronological order of the steps taken for patents, trademarks and copyrights respectively.

A Contorted Chronology Attention IS directed to FIgure 2.

"Chronology of Procedures'" which graphically depicts the variations In procedures for trademark. copYright and patent protection. particularly as It relates to the order In which the major steps must be taken by the applicant.

The following symbolism IS employed In Figure 2: The dollar Sign denotes explOitation of the Innovahon, publication In the case of copyright or commercial use of trademarks or patented products.

The envelope denotes fihng of an application with the appropriate agency.

The rubber stamp denotes marking of notice of the Innovator's nghts.

The trademark procedure is illustrated at the left of Figure 2 where IS may be seen that the commercial exploitation of the trademark is followed by liling an application in the Patent Office: only after a registration is actually issued may the trademark notice be marked (with an

"R" In a circle). The copyright procedure (for published matenals) is illustrated in Figure 2 as being. first, marking of the Intent to claim copyright by the proper notice. Note In each field the most Important step of the process (as prevIously specified) is indicated by a halo around the symbol Involved. Copynght procedure lor published matenals next calls for publication (with the prevIously applied notice) as Indicated by the dollar Sign under the rubber stamp. In the copyright of published matenals the flnal step IS submitting an application for registration 01 the copyright. There IS a relatively rare procedure for copyright of unpublished matenals which IS also illustrated In Figure 2 for the sake of completeness ThiS procedure permits, for only certain types of work, the flllng of an application pnor to publication. Note. however, that even here the all-Important marking of copYright notice must precede the publication of the matenal.

Two patent procedures are Illustrated In Figure 2. On the extreme right the application-filing step IS shown first followed by exploitation of the invention.

Then. alter a patent is Issued, the patent number may be marked on the patented product to give constructive notice of the patentee's nghts. The other patent procedure Illustrated shows exploitation of the invention first, followed by application flhng. Here It IS Vital to note that

only one yea, Is allowed from the time the Invention IS on sale until the application is filed (actually received) in the Patent Office. The patent applicant may mark hiS product "patent pending" once

hiS application is actually on file (but such a "patent pending" notice has no legal effect). In Figure 2 It will be observed that the procedures for establishing trademark, copyright or patent properties are markedly different. and In their entirety they present a somewhat complicated picture.

There IS a proposItion most valuable to retain from Figure 2; that the essence of trademark protection is use of the mark In commerce, but with copyright protection it is marking of the proper notice according to statute on each publlshed copy, and with patent protection it is the filing of an appllcatlon completely and fully disclosing the Invention, The reader may have noted In Figure 2 that the stamp symbols, the letter symbols and the dollar sign symbols, are respectively connected with distinctive tracks runnlng through Figure 2 generally from left to nght. Cunoslty with respect to the presence of the tracks IS JUStIfied. and should be satlsfled. TheIr purpose IS to emphasize the complex nature of these procedures and inferentially testify 10 the wisdom of patent lawyers who are (usually) able to avoid entanglement In the complexities.

In clOSing It IS necessary to advert to the monumental bulk of substantive and procedural taw 10 the held of patents. trademarks and copyrights of which there has been no mention whatever in this article, This omission is not regretted or apologized for: rather any apology would be for inclusion of more (Continued on page 124)

July 1974/Arkansas Lawyer/123

(Continued from page 123)

than the general practitioner may really want to know about this subject. One such omiSSion IS worthy of special mentIOn. however. and that IS the great body of common law applicable to trademarks and copYrights (and a substantial body of state trademark law). Also related to the patent field IS the common law and state law of trade secrets. There has been no Intention whatever to down· grade the common law and state law In the field of Intellectual and industrial property: however. In the vast majority of cases the federal statutory law is of Primary Importance. and It IS a far more fruitful subject with which to give the general practitioner a new or renewed acquaintance. 1f this article helps in small measure to provide such an ac· qualntance. It will have served Its purpose.

FOOTNOTES 1. Patent and trademark law are recognized legal specialties; copyright law is not. Patent practice in the U.S. Patent Office is limited to persons meeting admission requirements of scientific or engineering training and examination on patent law and practice; non-lawyers (patent agents) may prepare and prosecute patent applications; a lawyer of any state bar may handle trademark matters in the Patent Office.

2. Title 35 U.S.C. deals with patents. Title 15 U.S.C. with trademarks and Title 17 U.S.C. with copyrights.

3. U.S. Constitution Article I. paragraph 8. The Congress shall have power ...

To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.

4. A beverage botUe design. if sufficiently distinctive. may function as a trademark to indicate origin (and at the same time the design may be patentable). In re Mogen David Wine Corp., 328 F. 2d 925. 51 C.C.P.A. 1260. 140 U.S.P.O. 575 (1964). Mogen David later lost on the question of whether its particular bottle design effectively indicated origin. 372 F. 2d 539. 54 C.C.P.A. 1046. 152 U.S.P.O. 593 (1967).

5.35 U.S.C. 171 6. For the present somewhat uncertain status of this question in the U.S. Supreme Court see Goffschalk, Com'r.

Pal•. v. Benson 409 U.S. 63. 175 U.S.P.O. 673 (1972).

7. 17 U.S.C. section 1 (e).

8. In re Yardley, F. 2d.• 181 U.S.P.O. 331.

(C.C.P.A. 1974).

9. ". .. not more than $500 for every such offense." 35 U.S.C. section 292.

J--.

124/Arkansas Lawyer/July 1974

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I t t

MEMORIAL GIFTS

" It 'IS more bl esse d to give . . ..- H o\,'ever, a mem b er pro f'Its t h an to recelve both ways with a memorial gift to the Arkansas Bar Foundation. One's gift is a ooautiful way of honoring a former colleague. The family must be most alJpreciative of such remembrance. The gift is n,.)tOO in the Foundation's

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Memorial Book and, of course, is tax deductible. Memorial gifts may be sent to the Arkansas Bar Center. The memorial cards (below) of the Arkansas Bar Foundation are formal and are promptly delivered upon receipt of the

I, memorial

gift.

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WE ACKNOWLEDGE WITH GRATEFUL ApPRECIATION THE RECEIPT OF A GENEROUS MEMORIAL GIFT

I t t I

t

FROM

OF

IN MEMORY OF THE LATE

.9'k J<1danJ<uJ .CflJeu< &i;".na0.~ LITTLE ROCK, ARKANSAS

DATE WE ACKNOWLEDGE YOUR GENEROUS MEMORIAL

GIFT IN THE AMOUNT OF

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IN MEMORY OF THE LATE

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1974 NALS Manual, 2nd Ed ition,

Completely Revised, Expanded Ideas and matenals requested by legal secretaries, teachers and attorneys are among features of the completely revised and expanded 2nd edition of the OffIcial 1974 NALS Manual for the Legal Secretarial ProfeSSion. The manual IS prepared and edited by NALS and avaltable through West Publishing Company. St. Paul. Minnesota.

Expanded to over 900 pages. the 1974 edition IS the fIrst Since 1965 and In· eludes major additions. The most significant new area In the volume IS Its cover· age on the role of the secretary as a para-legal. New chapters also en· compass Torts, Real Property. Contracts. the Uniform Commercial Code.

Business Organizations. Family Law. Wills and Intestate Succession, Criminal Law, Sources of Substantive Law, Bankruptcy and Creditors' Remedies, Social Secunty and PubliC Welfare, Workmen's Compensation. Zonmg and Consumer Protection. Many were added at the suggestion 01 legal secretaries and other users.

MaJor emphaSIS throughout IS on those subjects most pertinent to the legal secretarial profeSSion. There is a unique reference for legal abbreViations. punctuation. words and phrases. rules and hmts on preparing common legal m· struments. and time and labor saving Ideas and suggestions In law office procedure In addition to explamlng reasons for many of the duties of the legal secretary. the manual helps prOVide a fundamental understanding of our legal system.

In additIon to a handy desk top gUide for the legal secretary. the book. along With a speCial work book. IS also the matenal for the offiCial legal secretaries cou rse offered by NALS. Mrs. Toni Jochems, PLS, preSident of NALS, supervised preparation of the new edition and Mrs. Rhonda V. Polley. PLS. served as chairman of the book com· mlttee. Significant contributions also were made by Mrs. Thelma M. Bam· bauer, second vice-president of the National Association of Legal Secretaries,

The publication IS being offered at the price of $12 per copy For further Information on the 2nd Edition 01 the OffICIal 1974 NALS Manual for the Legal

Secretanat ProfeSSion. contact West Publishing Company. 50 W. Kellogg Blvd. St Paul. Mmnesota. " '..

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"I spent all morning looking for that case" You might have found it in seconds with the Arkansas Digest

West's Arkansas Digest is designed to find cose law fast. It's the busy lawyer's index to your Arkansas Cases. It classifies Arkansas points of law in logical subject matter arrangement-the Key Number System.

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JURIS 0 ICTUM

by C.R. Huie Executive Secretary. Judicial Department

The fact that all attorneys are not familiar with the several committees which come under the supervision of the Supreme Court is evidenced by the numerous calls and letters to the Judicial Department. the Bar Center and the Supreme Court Clerk's office making inquiry as to the proper procedure 10 be followed in presenting a matter to one of the Committees or the Law Examiners Board. It was therefore considered appropriate that an up-la-date review of the composition and location of these committees would be appropriate at this time.

By constitutional authority, by statute and by Court order. the Supreme Court is responsible for and supervises the activities of one Board and several Committees. The followmg bnefly describes their duties and how the Chairman or Secretary may be reached.

STATE BOARD OF LAW EXAMINERS This Board prepares the questions for the Bar examinations conducted twice yearly. grades the papers of those taking the examination. and certifies to the court the names of those who pass. It also investigates and recommends applicants for admission by reciprocity.

The Secretary of the Board is Robert L. Rogers. II. P.O. Box 7175. or 5105 North Lookout. Little Rock. 72205. Telephone 663-4619. Members of the Board are' (3 YEAR TERM) CONGRESSIONAL DISTRICT FIRST Bill Penix Jonesboro Charles B. Roscopf Helena SECOND Robert W. Henry Conway Little Rock Guy Amsler. Jr. THIRD Jack Yates Ozark Fort Smith P.H. Hardin Albert Graves. Jr. Hope FOURTH Magnolia Joe. D. Woodward EI Dorado AT LARGE Jerry W. Watkins Little Rock Jacob Sharp. Jr. Pocahontas John Burris

TERM EXPIRES 9/30/75 9/30/76 9/30/75 9/30/76 9/30/76 12/31/74 12/31/74 9/30/76 12/31/74 12/31/74 9/30/76

CLIENT SECURITY FUND COMMITTEE This Committee is authorized to consider claims of clients who have suffered losses by reason of dishonesty of attorneys who represented them. The Committee is authorized to pay such claims (within limits) from a fund established by the Court and supported by a portion of the annual 515.00 license fee.

Members 01 this Committee are: 126/Arkansas Lawyer/July 1974

Chairman' W J WIlliams. Jr" 2200 Worthen Bank BUilding Little Rock. AR 72201 Secretary' J. E. Lightle. Jr.. 310 North Spnng Street Searcy. AR 72143

(5 YEAR TERM) CONGRESSIONAL DISTRICT FIRST SECOND THIRD FOURTH STATE AT LARGE

TERM EXPIRES John W. Mann. Jr. Forrest City 6/30/74 J.E. Li9htle. Jr. Searcy 6/30/75 Roy E. Danuser \11. Home 6/30/76 James H. Pilkinton Hope 6/30/77 W.J. Williams. Jr. Little Rock 6/30/78

COMMITTE ON PROFESSIONAL CONDUCT The Committee on Professional Conduct receives and investigates complaints against attorneys who are charged with profeSSional misconduct.

The Committee has a full time Executive Secretary. Mr Taylor Roberts. whose address is 211 Prospect Building. 1501 North UniverSity. Little Rock. AR 72207. Activity of this Committee is financed by a portion of the annual license fees. Members of the Committee are: (7 year term) CONGRESSIONAL TERM DISTRICT EXPIRES Davin Solomon Helena 12/31/75 FIRST William M. Moorhead Stuttgart 10/ 1/77 SECOND Ben Core Fort Smith 12/31/78 THIRD Don Smith Pine Bluff 12/31/76 FOURTH Stloam Springs 12/31/79 AT LARGE Russell Elrod James A. Ross Monticello 2/12/75 E.L. McHaney Little Rock 2/12/75

CRIMINAL CODE REVISION COMMISSION Following the passage of Act 400 of 1971 the Supreme Court Jointly with the Attorney General established the Arkansas Criminal Code Revision Commission. Two Committees. one Procedural. the other Substantive were then appointed. The Substantive Committee. appointed by the Attorney General. IS charged with recommending a complete revision of the sub~ stantive criminal laws.

The Procedural Committee. appointed by the Supreme Court. is charged with preparation of procedural rules which may supplant many of those now in effect.

Work of the Commission is progressing on schedule. and submission of reports to the Supreme Court and Legislative Council are expected late in 1974. Commission members are as follows' Judge Bobby Steel. President and Frank Newell.

Project Director. 809 West 2nd Street. Little Rock. AR. Telephone: 375-2378.

SUBSTANTIVE COMMITTEE (Appointed by Attorney General) Judge Harrell Simpson, Chairman John Elrod.

Vice Chairman H. Clay Robinson Jack Holt. Jr. W. H. Arnold Ray Guzman Morrell Gathright Billy 8ert French Eugene Hunt Virginia Tackett

PROCEDURAL COMMITTEE (Appointed by Supreme Court) Ed Bethune. Chairman Jack Lessenberry.

Vice Chairman Justice John Fogleman James W. Murphy John T. Harmon William P. Thompson Judge Terry Shell Judge Bobby Steel

MODEL JURY INSTRUCTIONS Two Committees exist, charged with the preparation of model jury instructions.

Work of the Civil Committee on Civil Jury Instructions was completed several years ago, however the Committee remains active for the purpose of updating and revising the instructions as needed. and has recently completed publication of a revised edition of Arkansas Model Jury Instructions (Civil) cited as AMI. Members of this Committee are as follows: Henry Woods, Little Rock, Chairman Philip S. Anderson, Jr., Little Rock W.H. Arnold, Ill, Texarkana Justice Lyle Brown, Little Rock Phillip Carroll, Little Rock Winslow Drummond. Little Rock Kaneaster Hodges. Newport Robert L. Jones, Jr., Fort Smith Dale Price, Little Rock W.B. Putnam, Fayetteville Jacob Sharp, Jr., Little Rock Justice George Rose Smith, Little Rock Prof. Frederic K. Spies. Fayetteville Judge Audrey Strait. Morrilton James I. Teague, Little Rock Paul 8. Young, Pine Bluff Work of the Committee on Criminal Jury Instruction was begun, and then halted temporarily until the completion of the work of the Criminal Code Revision Commission. It is an 4 ticipated that the Committee will resume its work in 1975.

Members of this Committee are: Judge Charles W. Light, Paragould, Chairman Justice George Rose Smith. Little Rock Judge Paul Wolfe, Fort Smith David Hodges, Newport William Lee, Clarendon Jask Lessenberry, Little Rock William L Prewett, EI Dorado Richard S. Arnold, Texarkana John. C. Calhoun, Little Rock Winslow Drummond, Little Rock Frederick S. Ursery, Little Rock. Secretary

COMMITTEE ON RULES OF PLEADING, PRACTICE, AND PROCEDURE Act 38 of 1973 provides that the Supreme Court shall promulgate rules .of pleading, practice, and procedure in Civil cases which will supplant the present statutory Code of Civil

Procedure. On May 20, 1974 the Court by per curiam order ap4 pointed the Committee to prepare for the Court's consideration rules governing pleading. practice, and procedure in civil cases in all courts of the state, and prescribing the time for and manner of taking appeals. Members of this Committee are: Judge Andrew Ponder, Newport, Chairman.

David Blair, Batesville.

JUdge Thomas Butt, Fayetteville.

Judge W.H. Enfield, Bentonville.

John P. Gill. Little Rock.

Wendell Hall, Benton.

Phil Hicky, Forrest City.

Frank J. Huckaba, Mountain Home.

Steve A. Matthews, Pine Bluff.

Prof. William David Newbern, Fayetteville.

JUdge Alex Sanderson, Texarkana.

Dennis Shack leford, EI Dorado.

W.H. Sutton, Little Rock.

ARKANSAS STATUTE REVISION COMMISSION This Commission established by statute (Acts 1945, No. 50,51) is responsible for publishing the various amendments to the statutes of Arkansas. Members are: Ex officio, Wiley H. Davis, Dean, University of Arkansas Law School; Ex officio, Honorable Jim Guy Tucker, Attorney General. Appointed by the Supreme Court: (4 YEAR TERM) Albert Graves Hope June 30, 1975 Gerald Brown

Paragould

Ju ne 30. 1975

Leland Leatherman

Little Rock

June 30, 1975

STATE-FEDERAL JUDICIAL COUNCIL FOR ARKANSAS Arkansas maintains an active State-Federal Judicial Council. The Council meets twice yearly and at its meetings discusses ways in which relationship between the state and federal jUdiciary may be enhanced. Established by a per cu riam order of the Court. present membership of the Council is as follows: Honorable Carleton Harris, Chief Justice, Supreme Court, Chairman Honorable Pat MeHaffy, JUdge, United States Court of Appeals, Eighth Circuit, Vice Chairman Honorable John A. Fogleman, Justice of the Supreme Court Honorable J. Frank Holt, Justice of the Supreme Court Honorable Harrell Simpson, Circuit JUdge, 16th judicial Circuit Honorable Henry M. Britt, Circuit Judge, 18th Judicial Circuit Honorab'le Elmo Taylor. Circuit Judge. 1st Judicial Circuit Honorable Richard 8. Adkisson, Cricuit Judge, 6th Judicial Circuit Honorable John W. Goodson, Circuit Judge, 8th Judicial Circuit Honorable Jim Guy Tucker, Attorney General Honorable J. Smith Henley, Chief JUdge, United States District. Eastern District of Arkansas Honorable Paul X. Williams. Chief Judge, United States District Court, Western District of Arkansas Acting ;;ecretary: Honorable C.R. Huie, Executive Secretary, Judicial Department.

July 1974/Arkansas Lawyer/127

Oliver M. Clegg is a member of the Keith, Clegg & Eckert law firm of Magnolia, Arkansas. He was the first Chairman of the Mineral Law Section of the Arkansas Bar Association. Currently, he is a member Of the Legal Committee on the Interstate Oil Compact Commission.

His paper on "The Severed MineraI Estate Problem: Are There Legislative Solutions?" was presented at the 13th Annual Arkansas Oil & Gas Institute, April 11-12, 1974. In view of the energy crisis, his discussion is of particular interest to Arkansas lawyers whether or not they are engaged in the mineral law practice.

"It is becoming increasingly apparent in Jurisdictions which have a long estat>-lished coal or oil and gas industry that something must be done to eliminate title problems stemming from mineral conveyances executed in years gone by.

The problem results from the fact that

In 1923, Bodcaw Lumber Compeny Y. Goode firmly placed Arkansas among the "ownership in place" states. 1 Adopting the view of two of our neighboring states. Texas and Oklahoma, and expressly rejecting the "servitude" doctrine of Louisiana, Chief Justice McCulloch closed his opinion with the following paragraph: "Counsel for appellee also discuss the question of public policy involved in the

128/Arkansas Lawyer/July 1974

separation of mineral rights from surface rights. but we perceive no question of public policy involved, in the absence of an express statute declaring such policy."

Fifty years later. "the question of publie policy involved in the separation of mineral rights from surface rights" is very much alive in Arkansas and, indeed, in practically all of the oil and gas producing states.

The problem has been well described in a 1972 article:2

perpetual or very long term mineral interests may be created during a period of activity in a particular industry, and these interests do not terminate when the activity ceases. Ownership of the minerals may thus be lodged in individuals who have long disappeared from the area, leaving no trace, and making it impossible to further develop the mineral estate at this time.

"The problem is inherent in our common law system in which a separate estate, whIch may be in fee simple absolute, may be created in the minerals.

Suth a mineral interest has all the sanctity of an estate in land generally in that title to it cannot be lost by abandonment, and yet it is virtually Immune to the various title curative devices, such as adverse possession. the tax deed. and the marketable title act, wnich Keep land in the stream of commerce."

In 1973. the Legislature adopted House Concurrent Resolution 34 creatIng the Mineral Resources Commission .. to study the problems of abandoned. severed mineral interests." The CommiSSion is composed of 12 members. 3 appOInted by the Governor, representing various facets of the problem and has held two public hearings required by the JOint resolution. The Commission was charged "to make such recommendation. If any. as the CommissIon determines necessary lor legislation to assure that the mineral resources of Arkansas are adequately and timely developed in an effort to meet the eXisting energy CriSIS EXISTING ARKANSAS LEGISLATION The first attempt at a leglslatlve solution was made in 1935 by provIding a procedure as in partition lor the sale of an oil and gas lease where there was no production and no outstanding lease covering the entire oil and gas leasehold estate.<l Constitutionality was upheld in 1944. 5 Unfortunately. no record eXists of history of laws enacted In the 1930路s. but at

the next session of the legislature, in 1937. a further attempt to deal with the problem was made. 6 It should be noted that the 1935 Act had been limited to 011 and/or gas and provided only for sale of a lease on the entire mineral Interest In the land by a commissioner using the statutory procedure of partition. ProVISion had been made for the appointment of a receiver If. pnor to a sale of the lease. "It should be made to appear to the court that the Interests of the various owners would be more fully protected and the value of the vanous interests of the partIes Increased by the execution of an 011 and gas lease. providing for the prospecting and drilling of oil and/or gas upon the property involved in said suit or upon property near thereto."7 A principal objection to the 1935 Act which may have prompted the 1937 leg Islation. was the reqUirement that the lease be sold by the commiSSioner on the entire minerai estate In the land. when. as a matter of practice. In most instances one or more of the owners of undivided minerals would have already executed a lease. Therefore. the necessity lor leasing through court procedure extended only to the unleased. undivided mineral interests. In addition. the disadvantages of a public auction were apparent in eliminating opportunities to negotiate lor such terms as additional royalty. amount of delay rental. length or primary term. etc.

The 1937 Act met some of these objections by permitting the appointment of a receiver on the application of less than all of the mineral owners and giving the receiver some latitude to privately

negollate the terms of the lease.

However. the 1937 Act proved dellcl~ ent In a number of all and Gas CommiSsion to Integrate unleased Interests In drilling unlts. 12 In 1963. the statute was amended to empower the Commission to fIx risk factor penalties or even require a transfer (or lease. In practice) by the non-consenting parties on terms fixed by the CommiSSion, While thiS procedure IS effectIve where drilling units have been established for a prodUCing field and drilling IS Imminent. It has no practical application In a wildcat-area where minerai owners' whereabouts or eXistence are unknown.

POSSIBLE LEGISLATIVE SOLUTIONS In 1955 two Senate Bills. Nos 114 and 443. approached the problem on the baSIS of reuOltlng the minerai mterests With the surface title In the absence of development or payment of taxes. Senate Resolution No. 27 directed the Research Department of the Arkansas LegislatIve Council to make a study of the legal problems involved. The resu It was Research Report No. 54 raiSing seriOUS constItutional questions.

Since 1955. almost every session has seen a bIll of some type directed to a solUtion of thiS problem, but none has achieved passage.

Most of the bills Introduced have used the assessment and payment of taxes approach to reunite the dormant minerai Interest with the surface ownerShip. The underlying practical objection to this suggested solution. regardless 01 constl路 tutlonal questions. IS the reluctance. and even refusal. of tax assessors to assess non-prodUCing mineraI Interests. Since only a nominal value can be accorded. the tax realized IS often said to be less than the cost of assessing and attempting to collect the tax.

The other approach has been that used in S.B. 114 of 1955: that after a severance of 20 years or more the owner of the surface flI'lght brmg an action to qUiet IItle to the land. mcludlng the severed minerai interests. on the theory of abandonment. While the general opInIon has been that such a law could only act prospectively. because of constltu路 tional requirements. as we shall see, a Similar law has recently been adopted In Virginia and successfully overcome such constitutional important aspects. primarily the problem of obtaining jurisdiction over the mineral owners whose eXistence or whereabouts were unknown and incapable of being determined. As Originally enacted. the 1937 Act also required that all mineral owners be made parties even though some had already leased.

An attempt was made in 19638 to clarify the language of the 1937 law and resolve the problems mentioned and

others which eXisted The MineraI Sectlon of the Arkansas Bar ASSOCiation drafted the remedial leglslallon and It was sponsored by the Arkansas Bar Association In the General Assembly The principal objectives of the 1963 legislation were (I) ellmmatlon of the reqUirement that eXIsting lessors be made parties. (ii) provIsion for the payment of the bonus. rents and royalties received by the receiver Into the Registry of the Court. and (Ill). an effort to provide more flnallty to the JUrisdictional problem 9 In 1972, thIS effort received a very thorough review In Davis v. Schimmel 10 . and the constitutionality of certain prOVISIons was upheld. although the case did not Involve a frontal assault on constltutlonal questions However. the court went to some lengths to Interpret various proVISIOns so as to bring them Within constttutlonal requIrements of due process On the whole. the consensus of the bar now seems to be that the receiver procedure obtained a judicial bleSSing In the DaVIS case so as to remove Critical doubts of constitutionality. However. serious problems stili eXist in the practicalities of the present law and may be summarized as follows 1. The expense of Judicial proceedlOgs 2. The problem of JUrisdiction over defendants whose eXistence or whereabouts are unknown and cannot be determined 3. The effectIveness of the receiver. who. usually servmg as an accommodation to the plamtlff路lessee. IS placed In seriOUS confllct-ol-Interest Situations visa-vis the lessee and the absent de~ fendants. 11 One other eXisting procedure should be mentioned that touches the problem to a limited extent. namely. the pC'Ner of the Arkansas Objections In the State Supreme Court. 13 Enacted legislation in other states has taken one of two general approaches FIrst, and most numerous. are the 50called "registration" statutes. which provide that In the absence of production or conveyance for a penod of years (usually 20 to 25 years) such mterests shall be deemed to have been abandoned, unless the owner registers In some manner In the county where the land IS located Within a short period (often 3 to 5 years) his name. whereabouts. and other pertinent information. Such statutes have been adopted In IlimOls. Michigan. and Nebraska. 1 <l

In 1973 a bill of that type (H.B. 5521 probably caused the adoption of HCR 34 creating the "Mineral Resources Commission." An interesting feature of H.B. 552. however. differing from the Michigan-type statutes that would unite the dormant mineral with surlace ownerShip, (Continued

on

page 130)

July 1974/Arkansas Lawyer/129

(Continued from page 129)

was the provIsion that "The owner or owners of the surface as of the date when such severed mineral Interest IS deemed abandoned shall be the exclusive beneficiary or beneflclafles 01 the leasing pnvlleges and benefits and the abandoned Interest becomes a non·partlclpatlng royalty interest."

Another vanatlon IS a 1971 Indiana statute providing that the dormant Interest revert to "the owner of the Interest out of which It was carved "I!l This would meet the objection that has often been raised In Arkansas that the surface owner should not logically be the recI· plent of the "wlndfall.·· but rather It should revert to the minerai estate.

The draftsman of the Indiana statute has wfltten a very Illuminating artlcle 16 In discussing the general problem. reviewIng the legislation In other states. and appending COpIOUS notes to the Indiana statute. While the logic behind this approach may be salutary, Identifying the recipient of the reverting interest will no doubt raise many complex and Iitigous questions. The draftsman himself suggests a number, but one that readily comes to mind IS the case of a mineraI interest acquired through a mortgage foreclosure proceeding. If the interest terminates. to whom does it go. the mortgagor. the mortgagee. or. conceivably, the commissioner?

Virginia has taken a different approach. one similar to that used In Senate Bill 114 of the 1955 General Assembly, previously mentioned. The VirginIa statute provides for a JudiCial proceeding after a severence of 35 years. during which there has been no development. subjection to taxation. or conveyancing.

The statute raises a rebuttable presumption which the defendant-owner must overcome In order to aVOId an extinguishment of hiS Interest. It further allows the defendant a grace penod of SIX months after the case has been ijocketed and set for hearing In which to commence development of the minerals.

The Virginia Court met the constItutional objections by reasoning that where the facts and circumstances establish the non-existence of anything of value, nothing IS being taken. How far such a theory wou Id be accepted In other Jurisdlction~ or in the United States Supreme Court is surely a matter of some conjecture.

While not a legislative SOlution, mention should be made of the 1968 decision of the California Supreme Court 17 holding that while a severed mineral interest might be a fee estate from the standpoint of duration, it is, nevertheless, properly characterized as a profit a' prendre, an incorporeal hereditament, capable of being abandoned.18

130/Arkansas Lawyer/July 1974

In order to estabhsh abandonment, the California court held that It was necessary to find. In addition to mere non-user, "elther that the owner's future use of the fight could result only from a palpably unsound bUSiness Judgment. or that the owner had gIven a further Indication of hiS Intent to abandon" CONCLUSION The vanety of approaches taken by different states indicates the difficulty of a satisfactory solution. legislative or otherwise It IS too early to properly ap· praise the various alternatives; only ex· penence In their use Will proVide answers.

In the meantime. Arkansas IS lortunate to have JudiCial and administrative procedures that have stood the tests of time and legal attack Improvements are needed, to be sure, but a good base IS already available It IS to be hoped that the Minerai Resources CommiSSion and the Minerai Section of the Arkansas Bar Association will continue to mom tor the experience In other JUrisdictions and weave Into eXisting or future legislation those Improvements which meet the requIrements of fairness and practicality.

FOOTNOTES 1.160 Ark. 48. 254 S.w. 345 (1923); Summers Oil and Gas Section 131; 38 Am. Jur. (2) 477.

2. Polston, Legislation, Existing and Proposed, Concerning Marketability of Mineral Titles, 8 Land and Water L. Rev. 73 (1972). Increasing interest in the problem is eVIdenced by acceleration in legal writing: Street, Need for Legislation to Eliminate Dormant Mineral Interests, 42 Mich. SI. B.J. 49 (1963) Note. Severed Mineral Interests, A Problem Without a Solution, 48 N. Dak. L. Rev. 451 (1970): Kuntz. Oil and New Solutions To the Problems the Outstanding Undeveloped Mineral Interest, Twenty.

Second Institute on Oil and Gas Law and Taxation 81 (Southwestern Legal Foundation 197113. I) A member of the Arkansas all and Gas Commlsslon~ ii) A member of the Minerai Section of the Arkansas Bar Association; iii) A member of the Arkansas Geological Commission; iv) An oil and gas lease broker: v) A member of the Legislative Council; vi) An owner of substantial severed mineral interests; vii) A member of the Arkansas Forestry Commission; viii) An employee of a major oil company; ix) An employee or owner of an inde· pendent oil company; x) An abstracter licensed to do business in this State;

0'

Xl) A county tax assessor; XII) An owner of a substantial surface Interest of lands In thiS State.

4. Act 15 (Ark. Stats. Anno. Sections 53401 et seq.).

5. Overton Y. Porterfield, 206 Ark. 784.

177 S.W. 2nd 735 (1944).

6. Act 220 (Ark. Stats Anno. Sections 52201 et seq.).

7. Ark. Stats. Anno. Section 53-406.

8. Act 84.

9. Ark. Stats. Anno. Section 52-203.

10.252 Ark. 1201.482 S.w. 2d 785 (1972).

11. A similar statute In Mississippi makes the Chancery Court Clerk the receiver In all cases. MISS. Code.

1972.

Section 11-17-34.

The MISSISSIPPI law applies only to (1l non-residents, and (2) persons whose whereabouts are unknown "after diligent search and inquiry." The law has never been before the Mississippi Supreme Cou rt.

12. Ark. Stats. Anno. Section 53-115.

13. Code of Va. Section 55-154; Loye v.

LynChburg Nan Bank & Trust Co., 140 S.E. 2d 650. 22 O.&G.R. 235 (Va. 1965).

14. III Rev. Stat.. Ch. 30 Sections 197-198 (1969); Mich. Camp. Laws Anno.

554.191: Nev. Rev. Stat. Sections 57228 to 57-231. Professor Kuntz, Note 2 supra, critizes this type of statute: "It is also submitted that the developing statutory pattern that requires a periodic filing of a claim by the owner in order to avoid a loss of title does not strike a good balance in that it im· pairs security of ownership without necessarily protecting the right of the property enjoyment. It impairs the security of ownership by exposing the owner to loss of title In the absence of the tiling of a claim. It does not necessarily protect the right of property enjoyment in that the enter· pflsing co-tenant may be frustrated by the simple filing of a claim by an uncooperative or absentee co-tenant."

15. Indiana Code Sections 46-1807 et

seq.

16. Polston. Note 2 supra.

17. Gerhard v. Stephens. 69 Cal. Rptr.

612. 412 P. 2d 692. 31 O.&G.R. 28 (1968).

18. Without the slightest suggestion that the case is authOrity in Arkansas, the language of Hanson v. Ware, 224 Ark. 430. 274 S.w. 2d 359 (1955). dealing With the nature of a non-participating royalty, is interesting: "It is hard for us to conceive of an estate in real property which vests barrel by barrel or stratum by stratum. In the analogous case of a profit a prendre, such as the perpetual right to take game or fish from another's land, the estate in real property is a present vested interest which is unaffected by the rule against perpetuities." J- _.

EXECUTIVE COUNCIL NOTES

by James M. Moody

At its last regular meeting under Jim West on May 10, 1974, the Executive Council created a committee composed of James Sharp, Louis Ramsey. And C. E. Ransick to invest excess funds of the Association in securites of their choice rather than leaving the money on time deposits in local banks.

Col. Ransick reported that because of increased fuel costs the Scandinavian Adventure excursion would be more expensive than was originally advertised.

The travel agency which organized the trip has agreed to split the additional cost with persons who have signed up or will refund their money, if they desire.

The Council voted to admit faculty of the Law Schools to technical

sessions of Continuing Legal Education programs without charge.

Dale Price was commended for his outstanding performance as Chairman of the Executive Council for the past year.

At the first meeting under new president, James Sharp, and new chairman, Guy Amsler, Jr., on June 8. the Council discussed the possibilities of a new codification of the Arkansas Statutues and heard a presentation from representatives of Lawyers Cooperative who recently published the statutes of Mississippi.

Judge Andrew Ponder, Wayne Boyce and Gerald Brown were appointed as a committee to collaborate on a new desk book and a request will be made to the legislature for an appropriation for

publication of a volume of Arkansas pleading and practice forms.

David Blair reported on the status of proposed new legislation as chairman of the Jurisprudence and Law Reform Comm ittee. The committee will consider all proposed measures between July 1 and July 10 with a target date of August 1 for submission of all proposed legislation to the House of Delegates for their consideration.

The next meeting of the Executive Council has been scheduled for August 3. 1974. and the next meeting of the House of Delegates has been scheduled for September 19, 1974.

Membership remains at a record high with 1,930 active members compared with 1,712 in May 1973.

1/- .~.

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July 1974/Arkansas Lawyer/131

FALL

Foreword As some of you may already know, the Legal Education CommIttee had planned a great return to Fayetteville for the Fall Legalinstttute. Several of us now have faces as read as a Razorback. Through what may best be termed a "Tremendous Confusion." we now find ourselves without the expected blocks of hotel reservations in Fayetteville for next September. After valiant and sustained. but totally unsuccessful. efforts by several of our stoutest Washington County lawyers and JUrists. and after a telephone poll of members of your Executive Council. we have very reluctantly concluded that we much change the Fall Legallnstllute. We will have it beginning on Fnday morning and extending through to noon on Saturday. on September 20th and 21 st. Hotel space now has been reserved at the Camelot Inn and each of you may make your reservations through till Sunday so that you may attend the Oklahoma State game at 7:30 p.m. on the 21st.

SEPTEMBER 19-21

Fortunately, we will be able to have the same flne program In Little Rock that had been planned for Fayetteville. We are planning an outstanding social program that we believe that each of you will thoroughly enJoy. A gourmet buffet and ball will highlight the Friday night festivities.

The program for the institute has been devised to stimulate your mind and give you some penetrating thoughts to take home with you concerning our profession. Several of our speakers will be nationally prominent in their fields, and all of our program witl be designed to brush away the cobwebs of everyday law practice by giving us a new perspective on several aspects of our profession. Dean Wylie Davis and Steve Clark, Director of Continuing Legal Education at the University. have done an able jOb in obtaining this excellent Legal Institute.

James B. Sharp President Arkansas Bar Association

p_EdwnW.C~

"Codifying E.-"'.: The F - ' I E.p....

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PANEL: .....GAL ETHICS AND PROFESSIONAL AESPONS.IUTY"

13Z/Arkansas Lawyer/July 1974

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LEGAL INSTITUTE with SPECIAL MEETING of HOUSE of DELEGATES CAMELOT INN - ARKANSAS BAR CENTER LITTLE ROCK, ARKANSAS

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July 1974/Arkansas Lawyer/133

Some Tax Considerations For Practicing Lawyers Part II: Depreciation

by Bruce R. Hopkins

Mr. Hopkins was a featured speaker at the Arkansas Bar Association's Fall Legal Institute in 1972. His remarks are being presented in three Parts on "Deductions," "Depreciation" and "Billing Practices." Part 1 on "Deductions" appeared in the November 1972 and January 1973 issues of The Arkansas Lawyer. Mr. Hopkins is a partner in the law firm of Williams, Myers and Quiggle of Washington, D.C. He is Co~author of the Chapter, "Federal Tax Considerations for Practicing Lawyers" in the ABA's Lawyers Handbook, and author of several articles for The Tax Lawyer, The Practical Lawyer and the American Bar Association Journal.

Lawyers. like others engaged In business. must determine whether Items purchased for use in connection with theIr practice can be "expensed." that is. whether tile expense can be deducted in fUll with respect to the year of acquISItion. or must be "capitalized." with the cost recovered through annual depreciation deductions. For the typical law office. the items requir'ing capItalization (usually. those having a useful life in excess of one year) are primarily the permanent law library and the major items of office furniture and equipment.' For example. the cost of annual 100se~leaf services is deductible in lutllor the year of purchase. while the cost of permanently bound law volumes should be added to a library account and depreciated annually.

The Concept of Depreciation A "reasonable" allowance is permitted. as a depreciation deduction. for the exhaustion, wear and tear. and ob~ solescence, of property used in a trade or business or held for the production of income. 2 The deduction is an amount

134/Arkansas Lawyer/July 1974

determined for the taxable year in ac~ cordance with a reasonably consistent plan. SO that the aggregate of the amounts set aside for each year. plus the property's salvage value. will. at the end of the property's estimated useful life, equal the basis of the property. ("Basis" is, in addition to the cost of the property, the cost of acquiring -or perfecting title. improvements. additions and better路 ments. 3 The "estimated useful life" of an asset is the period over which the asset may reasonably be expected to be useful to the taxpayer in his trade or business or in the production of his income. 4 ) An asset may not be depreciated below its reasonable salvage value. 5 ("Salvage value" is the estimated amount realiza~ ble from the sale or other disposition of an asset. the usefulness of which has been exhausted. 6) Moreover. the depreciation allowance may not reflect amounts representing merely a reduc路 tion in market value (unless obsoles~ cence results.)7 The depreciation deduction is allowed so that taxpayers. in determining taxable income. may treat as a deductible expense an allocable part 01 the cost of the

bUSiness assets which have an ascertainable useful life.

A depreciation deduction based on proper cost alloct'llion IS deSigned 10 result in a correct statement of income, since treating the cost of a depreciable asset as an expense in the year of acquisition would result in understatement of income for that year.

Depreciation is allowed. generally. for tang ible property used in a trade or business or held lor the production of in路 come, as long as the property is subject to physical decay or obsolescence and has a definite useful life.

Thus, the deduction is not available for vehicles devoted solely for personal use, a bu ilding used by the taxpayer wholly as his residence. for furniture and furnishings therein. or for personal effects or clothing. S However. for property used for both business and personal pur~ poses, a depreciation deduction is available for the portion used in business. An intangible asset, such as a patent or copyright, may be the subject of a depreciation allowance. 9 The depreciation deduction is not available for land apart from improvements of

physical development added to it. 10 WIth respect to depreciable items. a lawyer. like any other business person, can establish special accounts for each asset item and depreciate each separately or he can combine two or more items In a single account. 11 Items similar in kind with approximately the same useful lives may be grouped together in a "group account." items may be segregated according to use without regard to useful life (e.g" furniture and fixtures) in a "classified account." or items may be included in a "composite account" regardless of their character or useful lives. These accounts may be further broken down on the basis of such criteria as location. date 01 acquisition. cost and the like. 12 Lawyers usually lind the broader grouping by composite account the most practical. perhaps ac· companied by a subsidiary accounts ledger, although a separate group account for the permanent law library may be desirable.

Probably the most important aspect of depreciation - and one which can most easily trigger a dispute with the Internal Revenue Service - is the determination of the useful life of depreciable assets.

The Internal Revenue Service, in 1962, abandoned the so·called Bulletin F and established guidelines to assist in the determination of appropriate depreciable lives for about 75 broad industry classes of assets. 13 To avoid an audit. under the 1962 guidelines a taxpayer had to demonstrate consistency be· tween the depreciation approach used and his actual practice in retiring and replacing depreciable assets. using the reserve ratio test (see below) or on the basis of all of the facts and circumstances. Under these guidelines. office furniture, fixtures. machines, and equipment (including accounting, calculating, and data processing machines) have a suggested depreciable life of 10 years. while an office building has a guideline life of 45 years. It is possible to overcome the government's guidelines by entering into an agreement with the government respecting estimated useful life, method and rate of depreciation. and salvage. 14 Depreciation need not be a static system of equal deductions spread over a lengthy period of time. Rather. the depreciation deduction can be utilized to boost depreciation writeoffs in high in· come years to generate a tax savings.

This flexibility with respect to depreciation has been considerably enhanced with the adoption of the "class life system."

Class Life System The Department of the Treasury promulgated depreciation rules in 1971 15 , which, having generated con-

siderable controversy. were subsequently given statutory basis in the Inter· nal Revenue Code by enactment of the Revenue Act of 1971. 16 These rules were known as the Asset Depreciation Range (ADA) system and worked in combination With the guidelines I1ves established in 1962. The term "ADR" has been dropped. however. and replaced by the term "class life system." BaSically. the class life system is the same as the ADR system. 17 With respect to deslganted classes of assets placed In service 10 1971 and afterwards. a taxpayer may elect to determine hiS depreCIatIon deduction on the baSIS of the class life system. The class lIfe system is optional with the taxpayer and the election may be made annually for all addtlons of eligible property during the taxable year of etectlon. 18 Under the class life system. eligible items of bUSIness property may be depreciated over useful lives selected from a range of years (the "asset depreciation range") 20 per cent shorter to 20 per cent longer than the intermediate "asset guideline period,"19 Thus. the class life for furniture. fixtures. machines. and equipment is from a lower limit guideline period of 8 years to an upper limit of 12 years. 20 The assets subject to the class lile system must be accounted for in "vintage accounts", which include all the eligible depreciable assets 21 placed in service by a taxpayer in a year for which a class life system election IS made.

Each vintage account may only include assets Within a single asset guideline class,22 A taxpayer electing the system is required to include In his income tax return a schedule showing acquisitions and retirements with respect to each vintage account,23 Other aspects of the class life system are worthy of mention: 1. There is a first-year convention 24 . which can work in either of two ways: a. All eligible property placed In ser· vice dunng the taxable year is deemed to have been acquired on the first day of the second half of the year ( the regUlar half·year convention). or b. All eligible property placed in service during the lirst half of the taxable year is deemed to have been placed in service on the first day of the year and all property placed in service on the first day of the year and all property placed in service in the second half of the year is deemed to have been placed in service on the first day of the next taxable year (the modified half-year convention).

2. A deduction for expenditures for repair and maintenance is permitted. based on a percentage of the assets in a guideline class on which depreciation under the class life system is elected. 25 3.

The controverSial "reserve-ratio" test was abandoned.

This test was

deSigned to assure that taxpayers would not be permItted continually to depreciate their assets over a period of time substantially shorter than the period of actual use. The ratIO itself compares the amount of depreciation reserves to the acquiSition costs of the assets being depreciate their assets over a period of time substantially shorter than the period With the wnteoffs. The ratio was built on the assumption that the actual useful life of assets could be determined by It. When Introduced In 1962. the test was initially suspended for three years and.

In 1965. It was effectively delayed by tranSition rules until the advent of the ADA svstem.

4. There is now an Office of Industrial Economics in the Treasury. which analyzes the annual information submit· ted by taxpayers using the class life sys· tem and will be able to revise the asset guideline classes, guideline lives. depreciation ranges and the repair al· lowances.

5. The Revenue Act of 1971 made buildings and improvements to realty eligible for class lile treatment. although the election need not be made with respect to real property as to which a shorter useful life is Justifiable under the 1962 gudielines.

Transitional rules govern these assets until the Treasu ry is able to establish separate class lives or until 1974. 26 Any deciSion to switch from conventional depreCiation rules should take Into account not only the difference In the depreciation deduction itself. but also the expenses of the old property and any savings in costs from the new.

One other factor to note in this connec· tion involves the fact that the class life system. once elected. will apply to both new and used assets placed in service during the taxable year. 27 If most of the equipment purchased is new equipment and only a small portion is used. the used assets wou Id be SUbject to the same life range as the new assets, although the used equipment actually had a shorter useful life. However. if used assets exceed 10 per cent of the total un· adjusted basis of all assets placed in service in the year. the useful lives for such assets may be determined without regard to the class life system. 28

Depreciation Method s Any reasonable and consistently ap· plied method of computing depreciation may be used or continued in use. whether the taxpayer elects to use the class life system or use the property's actual life as determined on the basis of the particular facts and circumstances. 29 Such methods include' 1. The straight line method.

2.

The declining balance method (Continued on page 136)

July 1974/Arkansas Lawyer/135

(Contmued from page 135)

(however. If this method IS to be used. the taxpayer can only use a rate not exceeding tWice the rate which would have been used had the depreciation deduction been computed under the straight line method). or 3 The sum 01 the years-digits method JO A taxpayer may also use any other consistent depreciation method which. dunng the Initial two-thirds of the property's useful hfe. would not generate a greater depreciation amount than would the declining balance method. as descnbecP' To use the declining balance method. the sum of the yearsdigits method. or other available method. the useful life of the asset (other than intangible property) must be at least three years.J 2 Ordinarily. a law office will utilize the straight-line method of depreciation. whereby the baSIs of a depreciable Item (less ItS estimated salvage value) IS deductible in equal annual amounts over

the period of the estimated useful life of the property.JJ ThiS method IS the Simplest. and provides an acceptable and reasonable annual depreciation allowance.

As Illustration. an asset having a cost less salvage value of

$1,600 and a usefu I life of 10 years wou ld. under the stralght-hne method. give rise to an annual depreciation deduction of 5160 over the 10-year period ThiS method IS also available for computing the depreciation deduction In the case of multiple-asset accounting (I.e.. group. classified. or composite accounts).

Other permissIble methods of computIng the depreciation deduction. which are optional with the taxpayer. provide an accelerated deduction. that IS. a depreciatIon deduction which IS higher In the early years and consequently lower In subsequent years. Under the declining balance method. a uniform rate IS applied each year to the unrecovered basIs of the property.34 For example. an asset having a cost of 51.000 and an estimated useful life of 10 years would. under the straight-line method. give rise to an annual depreciation of 5100. However. under the declining balance method. the maximum rate of depreciation (no more than twice the straight-hne rate) would be 20 per cenl or a first-year deduction of $200. In su~ sequent years. this 20 per cent rate would be applied to the unrecovered balance. so that the second-year deduction

would be $160 ($800 x .201. and so forth.

Under the sum of the years-digits method. the annual allowances for depreciation are computed by applying changing fractions to the basis of the property reduced by estimated salvage.

The numerator 01 the fraction changes

l36/Arkansas Lawyer/July 1974

each year to a number which corresponds to Ihe remaining useful life of the asset and the denominator. which remains constant, IS the sum of all the years digitS corresponding to the eSllmated useful life of the asseP~ USing the prevIous example of the asset costing 51.000 and having a to-year estimated useful life. the first-year deduction. unde' the sum 01 the yearsdigits method. would be about S181.80 (S1.000 x 10 55). Here. Ihe numerator IS the full useful life 01 the asset (10) and the denominator IS the sum of the dIgitS corresponding to the assets useful life (55 - 10 + 9 + 8. etc.). Thus. the secondyear deduction would be about S163.36 ($1.000 x 9 55) It IS often more advantageous. however. to use the stralght-hne method of depreciation In the grow 109 law practice. waiving the larger depreciation deductions In the early years which the acceleration methods allow, In order to save depreciation for future years. At the same time, if a higher depreciation deduction would be advantageous in a higher Income year. the election to the class life system. as discussed. could be made.

Repair Allowance As part of the new class life system depreciation rules, taxpayers are given a separate (optional) election for the treatment of repairs 10 or maintenance. rehabilitation or 1m provement of property. ThiS IS the "repalr allowance rule."36 ThiS rule IS designed to obJectively determine which expenditures are to be capitalized and which are properly currently deductlble. Generally. expenditures whIch substantIally prolong an assefs life, Increase ItS value. or adapt It to a different use are capital In nature 37 The repair allowance rule may be elected for one or more gUideline classes of assets and for any year. J8 However. to be able to use the repair allowance rule. the class life system muSt be elected. J9 Chances are that the repair allowance rules Will not have much bearing on a lawyers deduction practices, although they may prove worthwhile for a client Most lawyers. of course. rent certain equipment (such as a photocopier) or repairs to equipment are covered by a maintenance agreement. Moreover. the onerous record-keeping required upon election of the repair allowance may render the election impractical.

The repair allowance rule works as follows' Based on the anticipated repair experience of each class 01 property. the Internal Revenue Service has prescribed a "repair allowance percentage."40 This percentage is applied against the average basis of aU repair allowance property in the asset guideline class, to arrive at the "repair allowance." The

Camelot Inn. It's no place like home.

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standards of sen'icc 10 provide for your every pleasure.

LuxlIrious room accommodations. dinil1~. dancing. live entertainment. in-season swimming. Your wish is our command.

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ctamelot

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taxpayer IS thus able to presently deduct Without Internal Revenue Service challenge expenditures for repair. maintenance. rehabilitation. or improvement of the class of property involved. up to the amount of the repair allowance. 41 The repair allowance percentage for office furniture and equipment IS 7.5 percent and other assets used in the provision of profeSSional services have a repair allowance of 6.5 percenl,42. To the extent repair expenses exceed the repair allowance. the excess amount must be capitalized ..u Certain expenditures are ineligible for the repair allowance rule and must be

capitalized in a vintage account. 44 Such expenditures are known as "excluded additions." Excluded additions are expenditures which substantially increase productivity, change the function of an asset. or add a previously non-existing unit of property.4 5 (A substantial increase in productivity is an increase of 25 percent or more of the unit's original capacity.)

One attractive feature of the repair allowance rule is that some expenditures which might have the character of capital additions could be currently deductible. Conversely, if a taxpayer's expenses are clearly deductible repairs and are in excess of the repair allowance, it wou Id be disadvantageous to elect the special repair allowance.

Election of the repair allowance requires substantial record-keeping. The records would have to include amounts spent for repair, maintenance, rehabilitation or improvement of property in the class. the basis for not classifying expenditures as excluded additions, and the method of allocation of general maintenance expenditures.46

Bonus Depreclallon In computing depreciation, many taxpayers wish to avail themselves of the bonus first-year allowance. Under the bonus depreciation rules 47 , a taxpayer can write off 20 per cent of the cost of tangible personal property for the first year in which the depreciation deduction is available for the property.48 This deduction has the following attractive features: 1. It can be taken in addition to the regular depreciation allowance on the balance of the cost. 49 2.

It is deductible in full without proration in terms of the date of actual acquisition of the property.50 3. Salvage value is not considered when computing the bonus allowance. 51 4. 1t is available for used as well as new property.

5. It can be used in conjunction with the class life system.

The bonus depreciation deduction may be taken in any year up to the cost of eligible property not exceeding $10,000, or $20,000 where a Joint return is filed. 52 A taxpayer may select the items for which the bonus allowance is made. 53 However, only property having a useful life of at least six years may be utilized. 54 The remaining cost - that is, the cost after reduction for the bonus and salvage value - may be depreciated under any allocable method of depreciation.

To make the election to take the bonus allowance. a taxpayer need only show on his tax return a separate item showing the total first year depreciation

claimed.

However, records must be maintained identifying specifically the property eligible for the bonus allowance and how the properties were acquired.55

Relallonship of Class Life System to Inyestment Tax Credit There is an important interaction between the class life system and the investment tax credit. 56 A depreciation advantage may work an investment tax credit disadvantage. The full investment tax credit is 7 percent for property having a useful life of 7 years. 57 Two-thirds of the credit is available for property having a useful life of 5 to 7 years and one-third of the credit is available for property having a useful life of 3 to 5 years. 58 Thus, if under the 1962 guidelines, an asset has a five-year life, but the class life system is elected and the property's life is reduced to 4 years, the investment tax credit is reduced from two-thirds to one-third of 7 percent. Conversely, if the standard life of an asset is 6 years and the class tife system is elected for a 7 years plus-life, the investment tax credit wou Id be increased from two-thirds to 100 percent of 7 percent.

23 P.op Reg Sechon 1157(a).1 1(lj (Form 4832) 24 , R C $echon 1167(m) (2). Prop Reg SectIon 1167(a). lI(c) (2\

Prop, Reg Sechon 1167(a)·11(d) (2) p L 92-178. Secl10n 109(e) (11 27 Prop Reg Section 1157(a)·11 (b) 15) (Ill 28 PlOP Reg SeClion 1167(a)·11(b) (5) (III) 29 Reg Section 1167(b)-O(a) 30 IRe Sachon 167(b) 31 I R.C Secllon 167(b) (4): Reg Secllon 1.167(b)-4 32 I R.C Sechon 1671cl.

33 Reg Section 1167(b)·I(a) 34 Reg $ecliOn 1167(b)-2(a) 35 Reg Section 1,t67(b)-3(al.

36 IR.C. SeeliOn 263(1). Prop. Reg Se<;hon 1167(a)-11(d) (2).

37 Prop. Reg. Section 1.167(a)·I1(dl (2) (I) 38 Prop Reg. SectIOns 1157(al·l1(d) (2) (inl, (Iv) 39. Prop. Reg Section 1167(a)-111d) (2) (u) 40 Rev Pice 72.tO. 1972..£1 1 R B 13 ' 41 Prop Reg Secti()l"ls 1167(a)·I1(d) (2) (iii). (IV) (al 42 Rev P,ce 72.10 1972..£1 I R B 13 43 Prop. Reo Secllons 1 167\a)-11 (d) (2) (ivl (al. (vliil 44 Prop'Reg Sechon 1167(a)_II(d) (2) (viii) Ic) 45 Prop Reg section 1 167{a)." 1(d) (2) (VI) 46 Prop Reg 'SeCllon 1 167{al-l1(d) (2) (v) 47 IRe Section 179 48 I R C' SeeMn 179(a) 49 Reg Secllon 1179-1(a) 50 Reg Secllon 1179·1 (0) 51 Reg SecllOn 1179.I(d) 52 IRe Secllon 179(bl 54 1 ReSection 179(dl {ll (Cl 55 Reg Secllon 179-4(a) 56 (R e Secllon 38 57 IRe SacHon 46(a) (1) 58 (R e Secllon 46(cl (2) 59. l.R e Secllons 703(a,. 704 60. IRe Sechon 703(b) 61 Reg Sechon 1 179-2(d) (ll 25

26

62. kl.

Partnership Treatment 0' Depreciation The regular depreciation deduction is taken by the partnership in computing the taxable income derived from the partnership.59 The election of the bonus depreciation allowance is made by the partnership60, although the amount of the allowance must be determined separately as to each partner. 61 The amou nt of the bonus allowance available to a partner is 20 percent of the maximum amount of the cost of the property allocable to the partner. 52 FOOTNOTES 1 Elrt King, 9 8 T A 502 (1927)

,.,

2 Inlemal Revenue Code (helelnalter

"I

Re") Sec\lon 167

3 I RC Sechons 167 (91. 1011. 1016 4 Reg Sechon 1167(a)-I(bl See K.tth MIMgld_, 53 Te 477 (1969) 5 Reg Section 1167(a)·1(a) 6 Reg SeclIOn I 167(a).1(cl 7 Reg SeclIOn 1167(a)·1(a) 8 Reg Section I 167(a)-2 9 Reg Sections 1167(a)-3 1167(a)-6(,a) 10 Reg SeclIOn 1167(a)·2 11 Reg Sechon 1167(a).7[a) 12 kl.

13 Rev P,oc 62·21. 1962-2 CB 418. ampllf!eC1 by Rev Proc 65-13. 1965.1 C B 759 14 IRe Secllon 167(d) 15 Reg Secl,on 1167(a).11 (T 0 7128\ 16 1 A e SectIOn 167(m). applying 10 lhe class IIle syslem to p.opel1y placed In service afler December 31, 1970 A class Ille sySlem '0' pr.1971 assets has been proposed P'op Reg Sech()l"l 1157(a\·12 17 P.op Reg Secllon 1167(m)_I(a) Regs Section 1167(a).

11. lhe ADA legulallons. have p.oposed amendments pending. In light of IRe SecMn 167{m) (T 0 7159) 18 Prop Reg Secllon 1167(a)-l tla) (11 19 I A C Secllon 167(m) (1); Prop Reg section 1167(a)l1(b) (4) (I) 20 Rev Proc 72.10.1972..£1 I RB 13 superseding Rev Proc 71·25. 1971-2 C B 553, supplemenled by Rev Proc 73-2 and 73-3. \973-4 I R8 22, 24 21 Prop Reg Secllon 1 167(a)-11(b) (2) 22 Prop Reg SecMn 1167(a)·11(b) (3)

Young Peoples View of

Law Profession Improves A recent Gallup survey indicates that the younger generation likes the legal profession better today than it did in 1962, while some other professions have declined in the preference of young people. People under thirty were queried on their preferences with the following results: 1962 26% 8% Lawyer 17% Engineer-Builder Professor-Teacher 18% Business Executive 3% Dentist 5% Government Career 7% Banker 2% Clergyman 4%

Doctor

Today 25% 20% 14% 14%

9% 6% 6% 2% 1%

The fact that the profession is beset by detractors and critics does not seem to affect the esteem of the younger generation.

July 1974/Arkansas Lawyer/137

FAMILY LAW PRACTICE AND PROCEDURE HANDBOOK

STATISTICAL ANALYSIS

Author: Neva B. Talley-Morns Publisher' Prentlce-Hall. Inc. 1973 Reviewer- Harry M. Fain

OF THE COST OF PRACTICING LAW

BOOK REVIEW (Editor's note: Mrs. Talley-Morris of Ultle Rock, Arkansas has a long record of service in the Arkansas and American Bar Associations. She was the first woman Chairman of the ABA's Family Law Section and also Chairman of the Arkansas Bar Association's Juvenile and Family Law RefOrm Committee. She has been a Delegate in the Houses of borh Associations. Mr. Fain also Is 8 former Chairman of the ABA's Family Law Section and Is an active practioner In the family law field with offices in Beverly Hills, California. For reasons of space limitations, It has been necessary /0 give ex/recls only of his Book Review.)

In an era when family law IS literally bursting at the seams. there is common recognition that family law can no longer exist in a traditional atmosphere of legal Isolation. Increasingly we have recognized that collaboration and cooperation with the behavorlal sCiences. including psychiatry, psychology, marriage and family counseling. are essenttal to effective knowledge and service to our clients.

•• ••••• To this practicing specialist of family law, Neva's Handbook of Famity Law Practice and Procedure IS refreshing and rewarding. 11 has gathered and presented sound. practical, therapeutic, legal guidelines and adVice In the complex and ever changing demands of modern legal counseling.

• • • • • •• The handbook IS replete with proven and workable charts, forms, check lists. client questionnaires. covering the many family legal problems with which the average practll10ner is concerned. But the inspiring and persistent emphasIs of her message is towards legal counseling as opposed to advocacy for adversary procedures. The handbook sets forth effective practical gUidelines for harmonious negotiation and representation of our clients In a never-ending objective to seek compromise and therapeutic adjustment for all parties involved In the family dispute. and ultimately. to benefit society.

••••••• In sum. no matter what the family difficulty, from the legal status of the unborn child to the legal complications of the deceased, thiS useful. practical Handbonk provides the practitioner of family law with sound directives for a successful family law practice.

The book does not pretend to be. nor should It be regarded as. a source of text matenal for a sophisticated or In depth research on any speCIfic prOblem of family law. While each chapter contains footnotes of Important source matenal. the book does not cite extenSively the deCISions of the vaiious states or sophiSticated procedures for the attorney who IS stili steeped In the role of an advocate in an adversary system.

Unfortunately. much 01 the continuing practice of the matnmonial lawyer IS In an area Of hard negotiating or IllLgatlng experience.

The book IS wntten In a manner which can be used by the non-professional as welt as the lawyer. The clanty and simplicity of the author's language proVides opportunity for qUick stimulated reading. The forms used are Integrated Into the text. and many realistiC Illustrations derived from the author's knOWledge and expenence, are set forth throughout the book.

The Handbook embodies practical. down-to-earth gUidelines for the establishment and maintenance of a successful law practice. More Important. It emphaSIZes a practical approach for the role of the Family Law Counselor at a time when he must assert leadership In the inlluence of clients and the administration of Justice to re-establish marriage and the family as Institutions that must endure. If Clvlltzatlon IS to survive.

138/Arkansas Lawyer/July 1974

COMPARATIVE

(REFLECTIONS OF AN UNHAPPY HOOKER) .. 100 Consumer Price Index Base Period 1967 138.3 Consumer Prtce Index December. 1973. .38.3 Increase In six-year penod 1968-1973 .. $25.00 1968 Hourly Rate. $25.00 per hour today returns an ellectlve hourly rate of

$15.43.

Hourly rate today necessary to equal effective hourly rate of $25.00 .$34.58 This only represents the actual increase in the cost of living as reflected by the Consumer Price Index and makes no allowance for the Increase In the cost of practicing law.

In 1973 alone. the Consumer Pnce Index Increased 8.B°'c, over the previous year. This is the largest Increase In any single year Since 1946. I have prcJected the effect of thiS increase of one (1 J year and the effective purchaSing power of the dollar:

1973 NET EARNINGS $10.000.00 $12.000.00 $15.000.00 $20.000.00 $30.000.00

'973 EFFECTIVE PURCHASING POWER COMPARED TO '972 $ 9.'2000 $10.944.00 $13.680.00

$18.24000 $27.360.00

If you earned $30,000.00 In 1973. the increase In the cost of liVing In that year alone robbed you 01 $2.640.00 In effecllve purchasing power compared to 1972.

To reflect the Increasing cost of practicing law. I have drawn a statistical comparison of the cost of practiCing law In our firm for a live-year period beginning 1969 and ending 1973. During this period. there was no change In the number 01 lawyers in the firm or the status of those lawyers In the firm.

Our office overhead Increased 61 % In that five-year period.

Our hourly overhead for each attorney In 1969 was $8.19. In 1973. thiS had Increased to $13.52. Thus. each attorney In our office in 1973 had to earn S 13.52 per hour Just to cover overhead before he earned anything to support himself and hiS family.

Sell·employed FICA In 1969 was $538.20. In 1973. It was

$864.00.

In March. 1974. postage Increased 25°~.

In January. 1974. IBM Increased Its typewriter mamtenance cost 10°0.

On February 25. 1974. XEROX announced a price Increase of 92°10 on their monthly minimum charge for their 660 machine.

An IBM correcting selectriC typewriter today costs S690.oo.

Machine technology which did nol eXist live years ago IS In use today In law offices throughout Arkansas.

Automatic typewnters costing SB.ooO.OO a piece have been purchased and are In use by Arkansas Lawyers.

Improved and advanced typewriters With logic and electromc memory costing 5295.00 per month to rent or $11.800.00 to purchase are In use In law offices In Arkansas today.

In March. 1974. IBM announced ItS new Memory Typewriter which Will not be aVaJlable even for demonstrallon until April.

1974. and Will lease for approximately $160 per momn WltrJ a sale pnce In excess of $5.000.00.

Any attorney who has been removed from the active management of a law oillce for more than two (2) years can not Imagine the changes which have occurred In the practice 01 law and the Increased cost of practicing law today

by B. Ghormley

(Editor's Note: OYEZ-OYEZ! will again carry the by-line of B. Ghormley. Barbara has returned as Membership Secretary of the Arkansas Bar Association. Items for the column should be addressed to her attention.)

Jr. have become associated with Reinberger. Eilbott. Smith & Staten of Pine Bluff. John V. Phelps has Joined the law firm of Barrett. Wheatley. Smith &

Southwest Chapter of the American Association of Law Libraries in Texas.

Eldon Coffman's article "Social Security Offset", appears in the March/April 1974 issue of Trial newsmagazine. Edward L.

Deacon of Jonesboro.

Wright

Don A. Eilbott and Charles M. Hinton,

Ron Young is

now a member of the Walker, Campbell & McCorkindale law firm at Harrison.

Dickey. Dickey & Drake. LTD .. Pine Bluff. has announced that Michael R. Dennis has become associated with that firm. Richard L. Peel has Joined W. H. Schulze of Russellville, The law firm of Bridges. Young. Matthews & Davis. Pine Bluff. announce that Roy T. (Rick) Beard has becom e a partner and Jack A. McNulty has become an associate.

Stephen A. Choate, formerly of Little Rock. has Joined the law firm of Olmstead and McSpadden of Heber Springs.

William C. Rea has Joined Faubus & Orintas in Little Rock. Tom A. Buford has become associated with Spitzburg.

Mitchell & Hays of Little Rock. Eichenbaum. Scott. Miller. Crockett & Bryant has announced the new firm name of Eichenbaum, Scott, Miller, Crockett and Darr ( James E. Darr) and that Boyce E. Hawk has become an associate. James M. Bryant II no longer a member of that firm, has formed a partnership with

Robert M. McHenry with offices

10

the

Tower Bldg.. Little Rock. Jeff Davis, Jr., Little Rock. has been appointed as Ad~ ministrative law jUdge with the Social Security Administration with offices in Mobile. Alabama. The law firm will continue as Plegge, Lowe & Whitmore with offices in the Pyramid Life Bldg. Joseph V. Svoboda has opened a law office in Carlisle.

George W. Mason III has become associated in the practice of law with R. H. Peace in EI Dorado.

Elsijane T. Roy has been initiated into the Delta Theta Phi law fraternity. In April Ruth Brunson presided at the

IS

the recipient of the Man of the

Year in Arkansas Award by the Arkansas Democrat. Dr. Jean Woolfolk received the Woman of the Year in Arkansas Award.

Dr. Woolfolk has also been promoted Senior V ice President and Secretary of the American Foundation Life Insurance Company and has been named to the Board of Visitors of UALR. An appreciation dinner was given for Judge Henry Wilson at a meeting of the Poinsett County Bar Association.

William J. Smith, General Attorney for Arkansas for Missouri Pacific Railroad, and John T. Williams, Senior assistant General Attorney. retired June 1 and Herschel H. Friday and William A. Eldredge, Jr., will succeed. respectively.

B. S. Clark will serve as Assistant General Attorney for MOP, Charles Mat路 thews has been appointed to the Commission on the Future of the South. Dr. Richard K. Burke has been appointed Dean of the School of Law at the University of South Dakota in Vermillion. Bernice Kizer, Fort Smith. will succeed Zed Gant as Chancery Judge of the 2nd Division of the 10th Chancery District.

Joe Michael Fitzhugh has been appointed as Assistant State Attorney for the Western District of Arkansas. The North Pulaski County Bar Association held classes May & June on law and the American legal system as part of its continuing public education program.

Jim Hendren, Sid McCollum, Gary Kennan & James Burley assisted in a series of seminars at Bentonville High School to inform the students of Arkansas law.

William S. Arnold, Crossett. participated in the 6th Annual National Conterence

on Law Office Economics and Management conducted by the ABA In California In Apnl. Gov. Dale Bumpers was the concluding speaker at this conference. George Steel, Jr., Nashville. was the luncheon speaker at an April meeting of the Nashville Rotary Club.

Luther (Lu) Hardin of Searcy. a first year law student at Fayetteville. has been selected to work in the su mmer law internship program and will be working for Prosecuting Attorney Alex G. Street in RussellVille.

Stuart W. Hankins and Patrick H. Hays have become associated with Wallace. Hilburn & Wilson. LTD. In N, Little Rock. Charles L. Carpenter has moved his office to

1405 MaIO St.. N. Little Rock. Thurman Ragar has moved his office to 625 State Street, Pine Bluff.

Dewey Moore, Jr. now has his office at 1523 Broadway. little Rock. William H. Hodge, formerly in Little Rock. has opened his law office in DeQ ueen.

Poinsett County Bar Association elected new officers: John Henry, President; Lohnes Tiner, VicePresident; Mike Everett, SecretaryTreasurer.

Jefferson County Bar Association elected new officers: George Howard, President: Eugene S. Harris, V ice-President; John Rush, Sec retary路 Treasu rer.

Washington County Bar Association's new officers: Walter Niblock, President: F. H. Martin, Vice-President: Ann Henry, SecretaryTreasurer: Executive Committee, W. W. Bassett and James D. Cypert. Phillips County Bar Association elected Douglas Anderson as its new President.

Arkansas Association of Women Lawyers elected new officers: Francis

Holtzendorlf, President: Judge Dorothy Yancy Howard, Vice-President: Alma Lowrey, Recording Secretary; Mary Measler, Corresponding Secretary: Mary Edmiston, Treasurer. University of Arkansas Law School Chapter of Phi Alpha DeUa elected new officers: Doug Mays, Justice: Mike Bearden, ViceJustice: Paula Hall, Clerk: Jeanie Hill, Treasurer. The American Bar Association released their April 1974 Membership Report and indicates that percentage wise Arkansas ranks 11 tho ...,

, \.

NO S"\..J:S T"X OUTSIOJ:

.. \.. .. 8 ......

July 1974/Arkansas Lawyer/139

Brunson Memorial Award The John H. Brunson Memorial Award has been established at the University of Arkansas School 01 Law ~ Little Rock Division by friends 01 Mrs. Ruth Brunson.

The award will be presented annually to a member of the Little Rock staff of the Arkansas Law Review in recognition of distinguished service to that publication.

Tony R. Skogen, a 1974 graduate from Little Rock and a former Associate Editor of the Review, was recently named as the first recipient of the Brunson Award.

Mr. Brunson, known as "Jack" by his many friends. received his LL.B. from the University of Arkansas in 1950. While a student at Fayetteville he was an active

member of the Review on which he served as an Associate Editor. For a short time following his graduation, Jack and Ruth. who earlier had earned a law degree and been admitted to the bar, engaged in private practice at Prescott. Mr. Brunson was recalled by the United States Army in 1950 and served as an officer in the Judge Advocate's Corps until his untimely death in 1959.

Since being widowed. Mrs. Brunson has worked in the Governor's office. served as a briefing attorney for the late Associate Justice Paul Ward of the Arkansas Supreme Court. and, from its founding in 1965. has been Professor and Librarian at the Little Rock Division

of the Law School.

Some of the funds initially donated to create the John Brunson Award have been used to purchase a handsome plaque. which is displayed in the main reading room of the University of Arkansas - Pulaski County Law Library at the Arkansas Bar Center in Little Rock.

Names of recipients of the award will be added to the plaque through the years.

A small cash stipend accompanies the award. (Note: If other friends of Ruth and Jack wish to contribute to this fund. checks made payable to "John Brunson Memorial Award" may be mailed in care of Professor J. W. Spears, University of Arkansas Law School Littte Rock Division, 400 West Mark ham. Little Rock, Arkansas 72201.)

A brief article by Dr. Robert A. LeHar eulogizing Jack Brunson appears at 14

Arkansas Law Review 275 (1960).:}, 140/Arkansas Lawyer/July 1974

""-

UNIVERSITY OF ARKANSAS School of Law Office of Dean May 1. 1974 Mr. Philip S. Anderson Chairman. Arkansas Bar Foundation Dear Phil' This is to express my great satisfaction. and that of our law faculty and students at both DIVISions. that the Arkansas Bar Foundation has recently made avaiable to us S2.0Cl0 for lawschool scholarship awards during 1974. We are also gratified to have these funds designated for the Foundation in the names of several distinguiShed Arkansas lawyers, liVing and deceased - including CeCil R. Warner (1890-1955). Harry Preston Warner (1885-1969). G. Otis Bogle (1884-1931). William Wilson Sharp (1891-1955). Edward Lester. and Henry Woods.

Pleased as we are. however. I should like to emphasize our great need for additional scholarship funding in the future. Such funding is vital to our overriding Objective of auracting and sustaining good students. We continue to lose each year a very Significant number of potentially excellent lawyers to out-ot-stale law schools. Many of those who do enter our Law School are compelled to do outside work up to 40 or more hours a week. and in so doing to impair and sometimes imperil their legal educations. We cannot effectively discourage this. even lor fulltime students. with our presently anemic scholarship resources.

Somehow the puzzling rumor has circulated among Arkansas lawyers and Citizens that the Law School does not need additional scholarship money. This is totally Inaccurate. Each year we now have five times as many meritorious scholarship appllcallons as available awards. and nearly all of our actual grants are embarraSSingly modest-less than hall 01 resident tuition and book expenses.

Our scholarshIp funds for the 1974-75 academiC year. including the Arkansas Bar Foundatlon's new allocation. will aggregate less then $10.000. By contrast. the scholarship gifts thiS year to the University 0' Texas Law School. mostly by law firms for the aId of needy students. came to $32.000 - and this does not include awards from 28 different endowed scholarship funds and revolving loan funds.

Nor does it Include many cash prizes 'or scholastic excellence and various lawschool activities. such as moot court. Although the Texas student body is about three times larger than ours. its annual scholarship. loan. and award grants probably exceed ours In dollars by more than a factor 01 ten. The key to their success IS the extensive participation of numerous Texas lawyers and law firms.

Despite this comparison. however. I view the future of our scholarship program and the role of the Arkansas Bar Foundation therein with some optimism. I do not believe that Arkansas lawyers and other lriends of the Law SChool will remain content with the Challenge of assuring parity With the University of Texas in intercollegiate athletics.

Our commitment to the future of this State's legal profession and the quality of ils service to our people and institutions is worth a great deal more than thaI. Cordially.

Wylie H. Davis Dean

3Jn memoriam None of us Lives to Himself, and None of us Dies to HimselfRomans 14:7 (RSV)

CHARLES H. EARL Chari.. H. Earl, a friendly and personable gentleman, aged 65. of Summitt House Apartments. little Rock, Arkansas. died Monday. 18 March. He was an attorney and insurance executive. He was born at Morrilton, Arkansas, the son of Robert David and Clara Hinkle Earl.

He was a graduate of Hendrix College and the University of Arkansas, where he was a member of Kappa Sigma Fraternity.

After entering the practice of law. Mr. Earl became Assistant State Revenue Attorney from 1937 to 1941. He later served as Assistant to the Arkansas Attor· ney General from 1945 to 1950.

Mr. Earl was a mem ber of the First United Methodist Church of Little Rock, and its Board of Trustees. He was a Veteran of World War II; a member of ScimItar Shrine Temple; and belonged to the Little Rock Country Club.

Mr. Earl is survived by a son. John C. Earl of lillie Rock; a daughter. Mrs. Alvin Nichols. Jr. of Coy; and one grandchild.

JUDGE WENDELL O. EPPERSON Judge Wendell O. Epperson, age 62.

Malvern City Attorney and former Municipal Judge expired on Saturday. May 11, 1974, at Malvern, ArKansas.

Judge Epperson was a native of Center Point In Howard County, Arkansas, but reSided in Matvern for the last 22 years. Ounng his lifetime he was active in CIVIC, church and Bar activities. He was a past President of the Malvern Rcr tary Club; a member of the First United Methodist Church of Malvern; 1963 PreSident of the Arkansas MUnicipal Judges Association; and a member of the Hot Springs County, Arkansas and American Bar Associations.

Judge Epperson is survived by his widow Mrs. Mable Jones Epperson of Malvern; a son, Tom Epperson of Little Rock; three daughters. Mrs. James McAllister of Pine Bluft, and Mrs. Dale Orr and Miss Kathy Epperson, both of Malvern; and a brother. two sisters. and three grandchildren.

MAX HENDRICK, JR. Max Hendrick, Jr" age 57. a longtime reSIdent of Midland, Texas; passed away on January 16. 1974, while on a business tnp in Fort Worth. Born on May 7. 1916 In Dickinson. N.D., he was reared In Hot Spnngs, Arkansas. In 1936. he moved to EI Dorado where he was employed with lion Oil Co. He became a Certified Pubhc Accountant in 1937. and was admitted to the Arkansas Bar in 1942. He was a member of the Arkansas Bar Association from 1943 to his death. He moved to Texas in 1947. He was a partner in the Hendrick and Evitt accounting firm at Midland. His sister, Amelia Hendrick. still lives in Hot Springs. He is survived by his widow. Enid W. Hendrick. three sons, and two grandchildren all of whom reside In the state of Texas.

JETA TAYLOR Jeta Taylor, a prominent Ozark. Arkansas. attorney. cattleman, civic leader. and pioneer as well as permanent figure In the Arkansas River NavigatIon Prcr Jeet. died unexpectedly December 31.

1973. at age 66. Mr. Taylor was survived by his son. David. of the home; four brothers. James T. of Hot Springs.

Robert L. of Fort Smith. Giles C. of Ozark. and Joe F. Taylor of San Jose.

California: and four Sisters, Mrs. Vera Jean Smith, Mrs. Mary Kay Smith, and Mrs. Carrie June Smith. all of Ozark; and Mrs. Grace Barlow of Fort Smith. Mr. Taylor was preceeded in death by his Wife, the former Carolyn Patton of Van Buren, Arkansas.

Active in Arkansas River Valley Affairs for many years. Mr. Taylor's passing leaves a great void. He was a big man in stature, a big man in heart. in energy. and in the capacity to do many things for others including his community, State, Area, and Nation, while at the same time. conducting a private Law practice and extensive callie and farming operations. He was a front runner in the Arkansas River Valley Development Programs, development of the Natural Gas Industry. and in Area Planning and

Development. Perhaps, he is best descnbed by a young lad. who upon looking at Mr. Taylor's footprints in the wet soil of a farm, said. "He leaves a mighty large foot prlnt.·· Born in CeCil, Arkansas. October 7.

1907. as one of the ten children of the late Aubrey and MinnIe Taylor. pioneer reSidents of Franklin County, Arkansas.

"Squire Taylor" as he was sometimes called. knew farm life at ItS best and hardest. With much energy and perserverance he he set out to make his mark and accomplished Just that. He graduated from Ozark High School. Hendrix College. attended Duke University Law School on a scholarship, and obtained his Law Degree from the UniverSity of Arkansas Law School at Fayelleville In June. 1934 He immediately began to conduct an actIve Law Practice at Ozark which he pursued until his untimely death. He was a member of the Arkansas and American Bar Association. and practiced In the State and Federal Courts and was licensed to practice in all the Courts of the Land, including the United States Supreme Court.

Mr. Taylor was actIve In CIVIC affairs in the Ozark area. He was Chairman of the Ozark Airport Commission. which at the time of his death. had Just secured Federal Funds for extensive improvement.

He was for many years a Director of the Bank of Ozark and the Bank of Mulberry, Arkansas. He was active 10 the First United Methodist Church of Ozark. where lie was a member of its Board of Trustees and an adult Sunday School Teacher. In addition to hiS area and commuOlty actiVities, Mr. Taylor was active in State and NatIonal matters. He was Past-President of the Ozarka Asso· ciatlon and its Executive Committee; a member and Chairman Elect of the Four State Committee of Arkansas. Oklahoma. Kansas, and Colorado; a member and Treasurer of Western Arkansas 1m· provement ASSOCiation; PreSident of Ozark Dam ASSOCiation; Past-President of Arkansas Basin Association: a former Director of MISSIssippi Valley Association and National Waterways Association. He made many out-of-state trips, many State Meetings. and tnps to appear before Congressional Committees in Washington. D.C., in furtherance of these Associations and their Programs.

Mr. Taylor was a highly successful bUSInessman. He promoted progress of his community, area and state, and was well recognized as Master of Ceremonies at the many "Appreciation Dinners," He arranged and promoted for others.

The one such Appreciation Dinner which was never quite given, was his own. These are all "marks of accomplishments" or, "large foot prints" of a "Big Man," who will be greatly missed.

J-.,..

July 1974/Arkansas Lawyerl141

1973-74 COMMITTEE REPORTS "The realization of an ambitious bar association program hinges in large measure in which that association's committees operate." ABA Key Handbook

AWARD OF MERIT The fu nction of the Award of Merit Committee during the year 197374 was to prepare the application for the Award of Merit Citation for the American Bar Association. This invblved assim ilating information regarding the Arkansas Bar Association together with concentrating on the major project, which was the Arkansas Bar Center.

The report was prepared and submitted to the American Bar Association in April, 1974.

CIVIL PROCEDURES The Committee continued to study and refine those bills sponsored by the Arkansas Bar Association which the 1973 General Assembly failed to pass for one reason or another.

The Committee undertook an in-depth study of the Federal Rules of Civil Procedure with the view that recommendations by this Committee might be helpful when the Supreme Court of Arkansas adopted Rules of Civil Procedure as authorized by the 1973 142/Arkansas Lawyer/July 1974

Legislature. With a few exceptions, it was the consensus of the Committee that practically all of the Federal Rules - especially all of those dealing with Discovery _ should be adopted. The results of our Committee's deliberation on the Federal Rules of Civil Procedure will be made available to the Supreme Court's Committee on Rules of Civil Procedure.

CLIENTS' SECURITY FUND During 1973 the Committee with the assistance of the Executive Committee moved forward with a fund raising drive for an initial source of funds for a Clients' Security Fund.

With the assistance of the entire Association, $10,000 was raised from Association members and was delivered to the Chief Justice of the Arkansas Supreme Court.

The Arkansas Supreme Court matched this $10.000 with $10,000 of court funds derived from annual fees paid by practicing attorneys, and on April 30, 1973 after being petitioned to do so by the Clients' Security Fund and the Association, entered its per curiam order establishing the Arkansas Clients' Security Fund.

Thereafter, the Arkansas Supreme Court appointed a Clients' Security Fund Commit-

lee to administer this fund. This Committee is compo,ed of five practicing attorneys, one from each congressional district and one member at large. This Committee has now met on several occasions, has established its Rules of Procedure and has prepared a form for application for relief.

Now that the Arkansas Supreme Court has established a Clients' Security Fund and has appointed a committee to administer it in cooperation with the Supreme Court Committee on Ethical Standards. the Association committee for Clients' Security Funds has recommended to the Long Range Planning Committee of the Association that the purpose for which this Committee was formed has now been met and that it should be dissolved. If at any time the Association can assist the Supreme Court Committee in funding or administering a Clients' Security Fund. a new association committee could be created at that time.

As chairman I am happy to make this report to you and the Association that this Committee was successful in its efforts to have the Arkansas Supreme Court create a Clients' Security Fund. There are now only about seven jurisdictions in the United States that do not have a Clients' Security Fund.

CONSTITUTION AND BY-LAWS

CREDITORS' RIGHTS The Creditors' Rights Committee in the current Bar year has been very active. and we are pleased to report full participation by all members of those serving on the present Committee. In outline form we hereby report the Committee's activities.

A. The Committee, after much discussion. has proposed legislation for the allowance of attorney's fees in open accounts and on certain notes. It is felt that creditors who must put their claims in litigation should not be completely penalized by defraying all of their attornev's fees; that the allowance of attorney's fees against debtors would also encourage the payment of amounts due.

B. The Creditors' Rights Committee has also proposed legislation providing for the allowance of attorney's fees in Municipal Courts on open accounts and small notes. It is particularly felt that in this area the allowance of fees would encourage the payment of debts.

You will note there is a proviso in the proposed legislation to prevent collection agencies, credit agencies, or the like, from using the statute for profit.

C. The Committee has also discussed possible revisions of garnishment statutes in light of recent United States Supreme Court and Arkansas Supreme Court decisions. At this point we have no specific reCOmmendations.

D. Bankruptcy. Hon. Charles Baker, Bankruptcy Referee, a member of our Committee, has written and pUblished an article on the recovery of collateral by creditors in bankruptcy actions which always has been and continues to be problematical. This article appears in the April, 1974, edition of the Arkansas Lawyer at page 73.

E. At the request of several of the Circuit Clerks of the State Court system we have prepared a proposed recommendation on legislation to allow the removal of out of date chattel mortgages.

Pursuant to action taken at the meeting of the House of Delegates in June, 1973, this committee prepared an amendment to the Constitution to require the filling of any vacancy in the House of Delegates by special election within the affected Delegate District. This amendment has been submitted to a vote of the membership of the Association.

This committee has also prepared proposed amendments to the By-Laws as they relate to the dues structure of the Association. and these will be submitted to the House of Delegates at the 1974 Annual Meeting.

The proposed legislation as to the allowance of attorney's fees is the basic work product of the over-all Committee and is recommended by the Committee.

DEFENSE OF CRIMINAL INDIGENTS Our activities for the year have been concerned solely with the drafting of a public defender bill and a proposed offering of it for passage to the 1975 General Assembly.

This was reported in the September report and the activity has been carried forward subsequent to that report.

(Continued on page 144)

July 1974/Arkansas Lawyer/l43

(Continued from page 143)

On January 9, 1974, the Chairman sent a letter to the members outlining what he proposed in the way of a pUblic defender bill. The proposals of the letter of January 9, 1974. were discussed at the committee meeting which was held during the Mid-winter Bar Association meeting. Several suggestions on the content of the bill were made at that meeting by various members which are now under consideration in a proposed draft of a public defender bill.

After the Mid-winter meeting, on February 27, 1974, the Chairman sent a copy of House Bill 677 and a copy of the report of January 9, 1974 for committee perusal. In the letter the Chairman called for suggestions on a proposed bill from committee members who had not attended the Mid-winter meeting.

Several suggestions were received from members which are being considered in the proposed draft of the bill. The Chairman had hoped to have a proposed bill ready for the April 27, 1974, committee meeting. However, a proposed draft has not been completed at this time.

The Chairman proposes to have a draft prepared and distributed prior to the Annual Bar Association Meeting in Hot Springs. The bill can then be discussed and perhaps sent forward for consideration in accordance with a letter dated April 12. 1974.

It is necessary that the committee speed up its work as time is growing short. The! Chairman hopes that the committee can meet its deadlines.

ECONOMICS OF LAW PRACTICE Annual Meeting to be Held June 1974 This Committee has collaborated with the Annual Meeting Committee in connection with the annual meeting of the Arkansas Bar Association which will be held in June 1974, and which will feature the subject of Legal Economics. Jointly the two committees made a determination of the content of the program, and while the Annual Meeting Comm ittee is doing most of the 144/Arkansas Lawyer/July 1974

work in procuring speakers and making detailed arrangements for the annual meeting. Our comittee is giving assistance as to certain activities which will take palce at the annual meeting having to do with Legal Economics. The chairman of our SUbcommittee on Annual Meeting is W. Dane Clay.

Local Bar Association Programs As a part of our overall program. we determined to continue, as this committee has done in the past. to present programs to local bar associations from time to time. At the time of this writing, programs have been presented at Harrison and West Memphis, and it is anticipated that another program or so will have been presented by the time of the annual meeting in June. Robert B. Branch has done a fine Job as chairman of our Subcommittee on Local Bar Association Programs.

Legal Economics Programs for the Law Schools This is a new project for our committee, and the results have been most gra.tifying. Philip K. Lyon is chairman of our Subcommittee on Legal Economics Programs for the Law Schools. He planned and arranged for, and there were presented, a program at the Fayetteville Law School on November 10, and at the Little Rock Law School on November 17, 1973. The student reception of these programs was enthusiastic. We believe this project should be continued, with the idea of having one Legal Economics program at each of the law schools each year.

Articles for the Arkansas Lawyer This too is a new project for our committee, and while we have not been able to get this project fully underway as yet, much progress has been made. Paul L. Giuffre and Richard F. Hatfield are co-chairmen of this committee. We hope to make a start this fiscal year in providing articles for the Arkansas Lawyer; or if the project is not actually started, we believe that sufficient planning will have been done to enable fairly regular future publications of articles in the Arkansas Lawyer.

FEDERAL LEGISLATION AND PROCEDURES The most time consuming, and perhaps significant, activity of this Committee during the 1973-74 year has been its service to the Association and to the American Bar Association in liaison with the United States Senate and House of Representatives on the pending pension reforms bills.

This report has been delayed, hoping that confer-

ences between the two bodies would have. by now. resolved all differences for eventual and final approval of Congress.

Apparently, however, it will take most of May to complete the conference, and it is likely that the Staff will require most of June to write the results of the conference decisions and complete the conference report.

Adding to the confusion of this extremely complex piece of legislation is the fact that both of the bills - the one passed by the House and the one passed by the Senate - (each distinctively different) carry the number "HR 2." Truly, the maxim applies: "You can't enjoy the game without a score card'" While there are major dIfferences in many of the provisions. there was much "loosening up" of benefits for sell-employed professionals. - this last being the real objective of our Association.

It will be recalled that the House of Delegates enacted a resolution at its Mid-Winter Meeting at the request of this Committee urging such action. Representatives of the American Bar Association requested the assistance of this Committee, and received same, in the presentations of Bar Association recommendations. These presentations of the Bar were reasonably successful in the program of moving toward equivalence in retirement benefits to self-employed professionals.

It is our hope that the Conferees will soon resolve their differences for an early enactment.

In other matters before the Congress, the Committee On Federal Legislation has worked in liaison with Committees of the Section. Matters are pending with respect to both procedure and substantive law which, doubtless, will be reported on directly by such Committees.

GROUP INSURANCE PLANS During the past twelve months, the Committee held four formal meetings and numerous inmdividual meetings with our Insurance Consultants, Rather, Beyer and Harper. One meeting was held with the Executive Committee.

Our primary objective for 1974 was to secure Group Health and Accident Insurance coverage for participating members of the Bar Association at the best possible rate. In that effort twelve companies were contacted directly. As it developed, only one company submitted an actual bid consistent with our requirements, the reason for that circumstance being primarily that they either would not or could not guarantee absolute continuity of coverage for those of our members who over the years have developed "pre-existing conditions" which would have continuity under our present Contmentallnsurance Company's coverage, but would be excluded for a specified time under a new policy. We were operating under a time target of March 1, 1974, when our then current coverage would expire.

We furnished you and the Executive Committee our report and recommendation under date of November 1, 1973, and the Chairman personally presented that report on Saturday, November 2, 1973, at which time the Executive Committee adopted it unanimously.

Because of the adverse loss experience for the past three years, our premium rate increased 41 % over the prior three-year guaranteed rate. Additionally, the Committee at the suggestion of many participating members voted to increase the daily room benefit rate from $32.00 to $40.00. Also, the maximum benefit payable under the policy increased from $15,000 to $20.000.

This additional coverage brought our per annum increase to a total of 48.9%. However, considering insurance availability on today's market, the Committee considered this increase not improper and voted it unanimously. We must comment here briefly on the outstanding performance by our Insurance Consultants. Rather, Beyer, and Harper generally and Me. Jim Harper and Mr. Kermit Tracey, specifically. They were readily available throughout the year. having a representative in attendance at the 1973 Annual Convention at Hot Springs, at the Fall, 1973, Seminar, and at the 1973 Mid-Year Convention in Little Rock. Their representatives met with the Committee collectively or with individuals on sixteen occasions, providing essential valuable assistance at every call. We commend Rather, Beyer, and Harper and its representatives, Messrs. Jim Harper and Kermit Tracey, for valuable assistance to the Arkansas Bar Association.

Finally, it was with great pleasure that the Chairman presented to the Executive Committee on November 4, 1973, a gift of $1,000 from Rather, Beyer and Harper to the Arkansas Bar Foundation in recognition of the Foundation's great contribution to the advancement of the Law and the expanded legal facilities now becoming available in the Great State of Arkansas.

INTERNATIONAL LAW During the present Association year th is has been more or less a "watchdog" committee attempting to keep informed on activities in the field of international law rather than trying to take an active part in proposing or opposing changes.

There are a number of significant things under consideration and during the calendar year the United States sponsored its first diplomatic conference in the private international law field.

Public International Law Two significant problems are receiving attention by the United States. One has to do with sovereign immunity.

Many foreign countries either in their sovereign capacity or through a government corporation similar to what we know in this country as the old Homeowners Loan (Continued on page 146)

JUly 1974/Arkansas Lawyer/145

(Continued from page 145)

Corporation. The Reconstruction Finance Corporation and the like transact commercial business In the United States. When a disagreement arises between a foreign nation and a citIZen of the United States. It has long been a problem of how to adJudicate the differences.

There IS a principal of International law that a sovereign IS Immune to suit. particularly when the activities out of which the disagreement arose is governmental rather than commercial Heretofore the Department of State has been called upon by the foreign sovereign or by the courts of the United States to pass upon the question of whether litigation In the courts of the United States would be detrimental to the United States' foreign policy. In thiS respect the Department of State acts In a semi-Judicial capacity It would like to be relieved of thiS obligation.

Means of relieVing the Department of State have been under consideration for many years by the Department. by the Secretary of State's AdVISOry Committee. by the Section on International Law of the ABA. by the American Society of International Law and other law groups.

A bill IS now pending in Congress that would leave the question of Immunity to a Judicial deCISion rather than an administrative one by the Department of State so long as the disagreement relates to commercial activities of a foreign government in the United States.

There are differences of opinion. among legal scholars on whether legislation of this type is desirable but the majority of the committee of this association feels that it is desirable and officials of the Department of State have been so adVised.

A second important question has to do with the resources of the deep sea bed. This has been studied by numerous law groups and by the officials of the Department of State. Several years ago Sen. Pell introduced a resolution to which he attached a proposed international convention on the subject. At about the same time Malta Introduced a resolution In the General Assembly of the United Nalions calling for an International agreement on the subject. The Malta resolution was referred to an ad hoc committee. which committee is still functiOning. trying to reach an agreement that It could recommend to the United Nations and to its members.

The position of the United States With respect to thiS problem as has been publicly stated and in brief covers the follOWing pOints: 1. That the limit of territorial waters under which the coastal state has exclusive furisdictlon be extended from three to twelve miles. provided that in doing so some one hundred straits and passages would still remain open to navigation on the same prinCiples as the high seas are open.

2. That the limits of the continental shelf over which the coastal state has exclusive Jurisdiction for exploraf,on and exploitation of the resources of the sea bed be established by political negotiations. At the present time the continental shelf is recognized as extending seaward to a depth of 200 meters and beyond to such depth as exploration is feasible. When this principle was established by the Geneva Convention. no one thought that a sea bed covered by water 200 meters in depth could either be explored or exploited. Modern tech146/ArKansas Lawyer/July 1974

nology demonstrates thiS to be Inaccurate and that exploitation can be had to depths extending Into the thousands of meters. The present problem arises by reason of the rubbery phrase "and beyond to the extent exploration is feasible."

3. That beyond the outer limits of the continental shelf the resources of the sea bed belong to the international community.

4. That some legal regime should be established to license. regulate and control the exploration and exploitation of the sea bed beyond the outer limits of the continental shelf.

5. That no offensive or defenSive military Installation shall be based on the sea bed. whether It be In territOrial waters. on the continental shelf or the deep sea bed.

6. That any exploitation of the sea bed not interfere WIth marine life or marine communications.

Ultimately. problems of the sea bed will have to be solved. This IS eVident from 011 and gas exploration in the North Sea and in the Gulf of Mexico as well as off of the west coast of the United States. There are so many details that will require an agreement that drafting of an International convention on the subJect Will be long and tedious. particularly in the light of the difference of opinion existing between legal scholars as well as hard metal industries and the petroleum industries.

Private International Law In the field of private international law the United States for the first time in its history sponsored a diplomatic conference held in Washington in the fall of 1973. at which an international convention was drafted relating to the execution and validity of international wills.

Need for this sort of agreement is important because of the present mobility of United States citizens and the fact that several million of them live more or less permanently abroad.

The Hague Convention has drafted an international commission on the recognition of foreign divorce decrees. Copies of this have been furnished all members of this committee and the majority of those commenting favor ratification by the United States.

The committee has kept Informed on work and progress looking Ultimately toward international conventions both at the Hague Convention and the Rome Institute but this committee has not undertaken to express opinions to the Department of State or to its Advisory Committee on Private International Law With respect to the contents. The committee feels that it cannot be sufficiently informed during the drafting stage to be of help. but will undertake to examine any drafts coming out of either of those institutions.

INTERNSHIP At the 1973 Annual Meeting the Internship Committee voted to inquire of Dean Davis and the Law School Faculty. interested judges and leaders in the bar. as to what programs might be created concerning legal interns or clerks.

Several members noted that the Committee had been relatively inactive in recent years because the scope of its proper function was ill-defined. Several meetings were held later in the summer in an effort to establish committee goals.

At the Fall Legal Institute in Little Rock a program of action was agreed upon. which included: (1) causing a survey to be made of the Association membership in an effort to identify those lawyers willing to employ law students as interns and then to place law students with lawyers in practice through the Law School's Placement Director. Steve Clark; (2) formulating a program for law clerks with trial judges; and (3) formulating a program for law clerks with administrative agencies of government.

The first two goals of the Committee have been met with some measure of success at the close of the association year. The bar was polled in October and a number of lawyers responded. The Committee does not have current figures on students placed under the program. however. A series of meetings were held during the late fall and winter leading to the establishment of a Criminal Law Internship Program presently being operated through the Law School. in which students serve as interns with various trial judges, prosecuting attorneys and public defenders. The Committee brought together representatives of the Comission on Crime and Law Enforcement. the Judicial Conference. the Judicial Department and the Law School in planning this program. The Committee plans to monitor the program and to assist however it may.

No progress was made toward the third goal. which remains for action by the 1974-75 Committee.

Statewide. there was billboard coverage March 15 to May 1; distribution to member stations of the Arkansas Broadcaster's Association and utilization by them of Law Day public service tapes: distribution and use of Law Day art work by malor advertisers; distribution and ~se of TV public service announcements of Law Day 74; Law Day programs by all four TV channels. including Channel 11. Channel4. Channel 7 and ETV Channel 2; high school essay contest lor $25 bonds on Law Day theme sponsored by Arkansas Association of Women Lawyers.

In addition. there were Law Day observances sponsored by local bar associations in high schools statewide. These programs consisted of lectures, seminars. classroom discussions and other types of programs.

Local attorneys and judges worked with the students.

The subjects varied from "Watergate and the Constitution" to "Dissent and Civil Disobedience." One school. and possibly others. featured a discussion of the state of the law followed by registration for voting of all students over 18 by a specially deputized teacher in the school.

Over 61 young people in that one school were registered to vote. One local bar association placed suggestion boxes in the schools to receive suggestions for changes in the laws.

The public information committee's pUblic relations consultant, Ron Robinson. of Cranford-Johnson-Hunt Associates in Little Rock. worked with the State Chairman and Local Bar chairmen most diligently and helpfully. and the radio and television sub-committee chairmen were responsible in large measure for the success of Law Day '74. along with Local Bar Chairmen across the State.

LAW STUDENT LIAISON LAW DAY On March 13th, Governor Bumpers issued the proclamation declaring May 1st to be Law Day 1974 in Arkansas. The proclamation. prepared by the State Law Day Chairman on the theme. Young America. Lead the Way. was read by the Governor and presented to the President. Jim E. West. who was accompanied

by Col. C. E. Ransick.

Executive Director of the Arkansas Bar Center. and the Law Day Chairman. There was newspaper and TV coverage.

The Comm ittee sponsored two recruiting drives for student members of the Arkansas Bar Association among students at the Little Rock Division of the Law School. The drives were held in September, 1973 and February. 1974 and resu Ited in 25 new student members.

The Committee also was responsible for coordinating programs by the Bar Examiners Committee at the Little Rock Division of the Law School on February 13. 1974. and at the Fayetteville Division on February 22. 1974. a short time before the March bar examination. Mr. Robert W. Henry of Conway and Mr. Joe Woodward of Magnolia presented excellent programs which were timely and well attended.

(Continued on page 148)

July 1974/Arkansas Lawyer/147

(Continued from page 147)

MEMORIALS

LONG RANGE PLANNING CONFERENCE This committee prepared and conducted a su rvey of the membership of the Association for the purpose of determining long range priorities. The response was far better than expected. approximately 500 members having responded to the questionnaire.

Tabulation of the survey results permitted a grouping of various priorities under lour malar subjects. Individual members of the Association were then invited to state their preferences for discussion. The Long Range Planning Conference was held in Little Rock on January 12. The consensus of each section of the conference has now been reported to the membership at large.

MARITIME LAW Meetings: 1. The Committee met during the annual meeting on June 8. 1973. At that same time. the Committee met jointly with three other committees to plan the program for the Fall Legal Institute.

2. The Committee met during the Fall Legal Institute on September 21.

1973 3. The Committee met du ring the mid-year meeting on January 11, 1974.

Activities: 1. The 1973 Fall Legal Institute had a Maritime Law Seminar. featuring Christopher Tompkins of the New Orleans firm of Deutsch. Kerrigan & Stiles on "Maritime Personal Injury Law."

Our first meeting was scheduled for the Annual Bar Association meeting in Hot Springs. ........

Arkansas. June 8. 1973.

Our stated oblective was to keep the State Bar Association advised of our departed colleagues throughout the state in order that a fitting memorial could be publicized by the association; and. to as well give encouragement to the local. area or district Bar Association of our State for implementing appropriate memorial programs.

We met with the local Bar Association Committee Chairman and representatives to express the above objectives in detail. to exchange ideas. and to furnish them with samples of memorial programs utilized by the Sebastian County Bar Association and the Tenth Chancery District Bar Association in past years.

During the year with the cooperation of the officers and members of the committee and the special assistance of Colonel C. E. Ransick. Executive Director of the Arkansas Bar Association we were provided with news clippings services and other information utilized in preparing the memorials section of "The Arkansas Lawyer" our Bar Association magazine.

We believe that our objectives have been obtained and continue to encourage this important phase of work by the Arkansas Bar and its local components.

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148/Arkansas Lawyer/July 1974

PRE-LAW ADVISORS A. Meetings.

This committee held four meetings during the Fiscal Year 1973-74. as follows: 1. Breakfast meeting during State Convention in Hot Springs - June 1973.

2. Breakfast meeting during Fall Legal Seminar at Sheraton Inn in Little Rock - September 1973.

3. Breakfast meeting during Mid-Year Sessions at Convention Center, Camelot Inn. Little Rock - February 1974.

4. Business meeting at Bar Center on Annual Committee Day - April 1974.

B. Scheduled Activities and Annual Plans: The working mmbership of this committee is geographically located so that one or two members can be designated as official liaison to nearby colleges and local pre-law aspirants. These pre-law advisors developed the following calendar of general annual contacts: 1. An early September get-acquainted meeting with facu Ity advisor assigned for pre-law students.

2. Then November or early December session with faculty advisor and known pre-law enrollees to encourage high scholarship attainments and to sponsor informal question-answer sessions relative to LSAT and LSDA requirements.

3. A January-February session on campus to further stimulate best efforts for the forthcoming LSAT tests and to guide student selection of ABA approved law schools.

4. An April-May pUblic relations session in connection with the Law Day annual observance.

C. Scope. Written reports which have come from various committee members appear to reach the following conclusions for expanded scope: 1. Today's challenges to the pre-law advisor committee members are much broader in scope than that of a mere recruitment and induction arm of the legal profession.

2. Recent historical events demand that we grasp every opportunity for promoting and encouraging the right kind of person to enter the legal profession. and the right kind of student attitude toward the law as a service vocation.

3. Professional responsibilities, codes of ethics, and moral concepts demand new emphasis in order to promote confidence. proper involvement. and more dedicated leadership in all intertwined professions.

4. Our challenge is to set new goals before student groups to encourage youth in cooperative endeavors to bring about a better law and order from the arena of prelaw. lawyer. and informed citizenry.

5. By stronger liaison with student organizations on our college campuses. we have opportunity in pre-law contacts to raise our standards to meet their expectations. to instill new confidence from the college-bred citizen as he looks to the lawyer as a trustworthy community leader. and to improve our pUblic image.

D. New Projects and Long Range Planning.

A pilot project has been planned this year for future implementation under the leadership of three committee members assigned to the pre-law students of the University of Arkansas at Little Rock. Our current law student member Jerry Glover. also a Journalism instructor at UALR. is chairing this project tentatively approved at our mid-year committee meeting. However. it was agreed that a better promotion timing would be at the beginning of a school year. In addition to spreading enlightenment on the LSAT channels of getting into law schools. this pilot project expands to a Liaison Student Advocate Team to promote cooperative endeavors involving students in pre-law. Criminal Justice Degree Candidates. Paralegal. business law. and political science students. This interprofessional student organization would be composed of students and faculty

interested in an extra-curricular forum for disseminating information and sponsoring programs on the law. the legal profession and its allied fields. This may keep our speakers bureau busy. and add a new depth to pre-law advisors involvement.

E. Conclusions and Recommendations.

This is a working committee of approximately 20 members with individual responsibility over 17 college campuses for year-around pre-law contacts. Necessarily these members are spread over the four corners of the State for the personal out-reach to college level students. Effort continues for further expansion to provide pre-law liaison for every college in the state of two year. four year, and graduate school level. Most of these campuses have administrative appointments of faculty advisors designated as "pre-law advisors." These professors are the first line of communication with the pre-law student. These professors are very cooperative with the lawyers on our committee. Suggestions have been made that our committee be titled the "Liaison" Representative from the Arkansas Bar Association. This will avoid confusion with their campus faculty 路'advisor." We therefore recommend: (1) That the committee title be changed from Pre-Law Advisors to Pre-Law Liaison Committee, and (2) That the attached list of members be appointed and each individual charged with specific liaison obligations to the pre-law contacts on the college campus noted opposite each name.

PROFESSIONAL UTILIZATION During the Bar year.

1973-74, your Professional Utilization Committee prepared. and through the services of the Bar Center. mailed to every member of the Association in Arkansas a questionnaire designed to develop information about the need for additional lawyers in Arkansas and the extent of the need and the general location of existing vacancies or opportunities. The questionnaire also attempted to determ ine the attitude of the practicing Bar as to the capability of the new law graduate to enter into private practice and if the conclusion was that they were not qualified then what was necessary in order to make them qualified.

Like any other survey result. it is difficult to determine valid generalizations from it. Presumably something like 1.500 questionnaires were mailed and we received 216 (Continued on page 150)

July 1974/Arkansas Lawyer/149

(Continued trom page 149)

responses. This is less than a 20 per cent response and therefore difficult to determine whether or not il is representative.

The responses have been divided into four categories for evaluation purposes and the categories and the number of responses in each are as follows' From Cities w/population 100.000 and up 41 Responses From Cities w/population between 50.000 and 100.000 20 Responses From Cities w/population between 20.000 and 50,000 51 Responses From Cities w/population under 20.000 104 Responses As you can see. almost 50 per cent of the responses came from lawyers practicing in cities having population under 20,000.

Altogether the respondents to the questionnaire indicated there are places for new lawyers totaling 30 in the State. Lawyers being graduated are in excess of 100. It seems apparent that there are going to be a large number of graduates unable to find suitable locations in existing law firms in Arkansas. One would therefore conclude that the additional outpouring of graduates will have to be absorbed either by the governmental sector or by entering into private practice as sole practitioners or in partnership with each other. The survey further indicates that it is general opinion of Arkansas lawyers that the number of lawyers available each year meets or exceeds the need in Arkansas. Those who indicated there may be an additional need almost without exception, when asked where that need existed, advised that it was in the rural areas or in small county seat towns in Arkansas.

The questionnaire inquired of the respondents the number of people residing within 20 miles of a proposed office necessary to support a practicing lawyer. As might be expected. the answers to this question varied considerably from a low of 500 to a high of 10.000; however. the average would seem to fall in the 1.000 to 5.000 range and a medium would apparently be around 3.000.

The question was "What in your opinion are the minimum number of people residing." We would have to assume that the respondents understood it to refer to population and since an average in the population is three people per family it would seem to foltow that the general opinion probably was that 1,000 families would support a lawyer.

In all groupings of the response. we found virtually no lawyer in Arkansas indicating an interest in acting as attorney for group legal service arrangements. We are unable to say whether the negative response resu Ited from a lack of information about group legal service contracfs or whether it indicated a general dislike for the concept. Some of the respondents did reserve judgment until additional information was supplied.

The one question that received almost unanimous negative response from all groups of respondents was to the effect that the law school graduate upon graduation is nol ready to enter private practice as a sole practicioner. The responses ranged all the way from "They don't know how to find the Courthouse" to "They do not 150/Arkansas Lawyer/July 1974

know how to draw the simplest kind of pleading."

Since the overall response Indicates that there are more lawyers being graduated each year than can be absorbed in existing firms and that the prinCipal areas where additional lawyers can be supported are generally in the small population areas such as county seat towns. it seems obvious If these young men and women are to find a place to utilIZe their education. unless they choose government work. It Will necessarily be as private practitioners in rural areas. The magnitude of the problem facing legal education In Arkansas today cannot be over emphasized.

The respondents to the questionnaire were equally unanimous in suggesting that some type of legal internship was the only reasonable answer to the lack of preparedness of the current graduate. It is to be noted that a number of leading law schools throughout the nation have. in the last few years. begun institution of "clinical programs" as a part of law school curriculum.

Although this is a trend which law schools traditionally have resisted, it would appear that at least so far as Arkansas is concerned, a continued resistance to it will be a critical dis-service to the graduates.

It would therefore at this time appear to be essential to the professional utilization that the persons entering into the profession be adequately trained to meet the demands of the profession. Failure to respond to this may very well resu It in greater and greater number of people in Arkansas finding legal service through governmental subsistance or "welfare" or "legal aid" type programs simply because the profession itself has failed to recognize and plan for the developing changes in meeting the need where it is found. The lure of city lights appears to be leaving people in many areas of Arkansas without medical service or legal service.

There is no doubt that a disparity in level of fees as between the urban and rural practitioner has contributed to this trend. The magnitude of the problem of utilization is substantial enough to be of concern to the entire profession. Finding the solutions will continue to be the objective of this Committee. We now think we know something about what the problem IS.

STANDARDS The Standards Committee has met three times during the past year in an effort to keep the committee together and functioning while awaiting the draft of the proposed Rules of the Procedures Committee of the Criminal Code Revision Commission.

Everyone is aware that the Revision Commission is preparing proposed ru les to su bm it to the Arkansas Supreme Court which will implement most of the Ameri-

can Bar Association Standards for Criminal Justice in Arkansas.

Plans have been made for the committee to serve as a conduit for the Arkansas lawyers' thoughts and suggestions on the proposed Rules to the Criminal Code Revision Commission. Drafts of the proposed Rules were not available until May 15, but have since been obtained and forwarded to each member of the committee. The drafts were received too late for the committee to meet before the annual meeting, but plans are underway to meet at that time and consider the proposed Rules.

Specific assignments have been made to each member of the committee to review and comment on a particular rule.

It is hoped that the proposed Rules can be considered and adopted by the Supreme Court by the end of the year. As soon as the Rules are adopted by the Court. the committee plans to conduct regional educational seminars to assist the practicing attorney in becoming familiar with the new Rules. Plans are now underway to secure the necessary financing from LEAA for this project.

Our committee has been in a holding action for the last two years waiting on the drafts of the proposed Rules. but we now feel that we can move ahead expeditiously with our work.

STATE AND FEDERAL SECURITIES As a new committee of the Bar Association the Securities Commlt-

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prove the Arkansas Bar's understanding and practice of state and federal securities laws and to assist in enactment of any appropriate laws, rules and regulations related thereto." To accomplish these objectives the

ARKANSAS BAR ASSOCIATION

members determined that the following long range undertakings would be constructive: (i) general article on securities laws and regulations in the Arkansas Lawyer, (ii) establishment or inclusion of securities studies in seminar presentations, (iii) Desk Book addition on securities as separate section, (iy) regular securities course at the University of Arkansas Law School, (v) provide a source for assistance to Arkansas Securities Commissioner in enactment and implementation of laws and regulations, (vi) industry oriented review of state securities laws, (vii) increased law review articles on subject. (viii) Securities Committee liaison for information on developments of the new Federal Securities Code and (ix) hosting of a PLI securities study in Arkansas. With the exception of the first three items, early efforts and/or accomplishments have been made in each area. The availability of a securities professor at the Law School and increased securities regulation. enforcement and litigation will help to develop future efforts of the Securities Committee in Arkansas.

WORKMEN'S COMPENSATION The highlight of the Workmen's Compensation Committee during th is year was its participation in the Legal Institute. The committee was well pleased with the attendance and comments received from that program.

This next year will be a very important year in the field of workmen's compensation and for your further information, I am enclosing copy of a letter that I have sent to President-Elect James Sharp concerning the meeting that the committee will hold on June 7. The federal encroachment into the field of workmen's compensation is now a reality and for the next several years this committee should play an important part in the future of Arkansas workmen's compensation. } .

1974-75 Fall Legal Institute Camelot Inn September 19-21, 1974 Bar Center, Little Rock 22nd Midyear Meeting Camelot Inn January 15-18, 1975 Bar Center 14th Oil & Gas Institute .. Arlington Hotel February 26-March 1, 1975 Hot Springs 77th Annual Meeting June 4-7, 1975

Arlington Hotel Hot Springs July 1974/Arkansas Lawyer/151

----------------------------------------

Arkansas Bar Association Publications ORDER FORM

o o

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o o o o

Desk book with at $13.50* 1971 revisions Revision, 1971 (13 at $5.50* re-edited Sections) Domestic Relations at $11.00* Manual* * Bridging-The-Gap at $11.00* form book at $ .25 Annual Legal Check-Up Form Executors & Administrators at $ .20 Handbook "What You Should at $ .07 Know About Wills" "How Do Lawyers at $ .05 Set Their Fees?"

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Taken frolll the :t\lexican collection of the Law Library of Congress.

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152/Arkansas Lawyer/July 1974

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WORKBOOK FOR ARKANSAS ESTATE PLANNERS MITCHELL D. MOORE. WILLIAM H. BOWEN

A Complete Source for Planning Estates in Arkansas Planned exclusively for Arkansas lawyers. it is based on the statutes, cases. regulations. and tax situations of the state. This workbook serves as a guide to drafting a simple will, testamentary phlOning for benefit of minor or aged, forms of property ownership. purposes and techniques of making gifts. drafting partnership and business purchase agreements and many other important topics. The handy loose-leaf format makes this source a unique working tool-an invaluable reference for the Arkansas lawyer.

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Over $475,000 in disability payments have been paid to members of the association since the plan was started in 1946. The rates are approximately half of what you would be required to pay for an Individual policy Other plans available Include Major Medical. Life, Accident. ProfessIOnal Liability & CatastrophIc.

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