Arkansas Legal Ethics
V. LAW FIRMS AND ASSOCIATIONS
5.1 Rule 5.1 Responsibilities of a Partner and Supervisory Lawyer
5.1:100 Comparative Analysis of Arkansas Rule
- Primary Arkansas References: AR Rule 5.1
- Background References: ABA Model Rule 5.1, Other Jurisdictions
- Commentary:
5.1:101 Model Rule Comparison
The Arkansas Rule is the same as the Model Rule.
5.1:102 Model Code Comparison
The comparison accepted by the Arkansas Supreme Court is identical to the comparison in the Model Rules.
5.1:200 Duty of Partners to Monitor Compliance with Professional Rules
- Primary Arkansas References: AR Rule 5.1(a)
- Background References: ABA Model Rule 5.1(a), Other Jurisdictions
- Commentary: ABA/BNA Ñ 91:201, ALI-LGL Ñ 12, Wolfram Ñ 16.2
Arkansas has no case law or authority on this topic.
5.1:300 Monitoring Duty of Supervising Lawyer
- Primary Arkansas References: AR Rule 5.1(b)
- Background References: ABA Model Rule 5.1(b), Other Jurisdictions
- Commentary: ABA/BNA Ñ 91:201, ALI-LGL Ñ 12, Wolfram Ñ 16.2
Arkansas has no case law or authority on this topic.
5.1:400 Failing to Rectify the Misconduct of a Subordinate Lawyer
- Primary Arkansas References: AR Rule 5.1(c)
- Background References: ABA Model Rule 5.1(c), Other Jurisdictions
- Commentary: ABA/BNA Ñ 91:201, ALI-LGL Ñ 5, Wolfram Ñ 16.2
Arkansas has no case law or authority on this topic.
5.1:500 Vicarious Liability of Partners
- Primary Arkansas References: AR Rule 5.1
- Background References: ABA Model Rule 5.1, Other Jurisdictions
- Commentary: ABA/BNA Ñ 91:201, ALI-LGL ÑÑ 8, 10, Wolfram Ñ
These rules do not address the tort liability of attorneys. An attorney may not ethically attempt to limit his liability in the rendition of legal services and must stand behind his work product. AR Rule 1.8(h). The partnership is liable for the negligent acts of its partners or employees. See Ar. Code Ñ 4-42-305.
Arkansas attorneys may form, individually or collectively, a professional corporation. See Ar. Code Ñ 4-29-201 et seq. An attorney's personal liability for his own acts or omissions is not limited by virtue of practicing in or as a professional corporation. Ar. Code Ñ 4-29-205. Whether the attorney is personally liable for the malpractice of other attorneys within the firm when he does not personally participate in the tortious acts is less clear. Act 1146 of 1991, codified as Ar. Code Ñ 4-29-101, provides that a shareholder, employee, or officer of a professional corporation shall not be personally liable for the obligations or liabilities of the corporation, or of those of any person connected with the corporation, simply by occupying a position with the corporation. See R. Craig Hannah, Note, Professional Corporations: Shareholder Liability and the Saving Clause, 42 ARK. L. REV. 777, 787 (1989).
Act 1003 of 1993, codified as Ar. Code Ñ 4-32-101 et seq., authorizes a limited liability company which is designed to offer its members the limited liability of a corporation while preserving the tax status of a partnership. This business entity was designed for the professional services of attorneys and others. See Lonnie Beard, The Small Business Tax Entity Pass Through Act - The Birth of a Duck, 1993 ARK. L. NOTES 15. Ar. Code Ñ 4-32-308 provides that individuals providing a service can be held personally liable for their acts and omissions, but no member of a limited liability company is personally liable for the acts or omission of any other member or employee of the company. However, the limited liability company may not offer any greater protection from malpractice liability than a professional corporation would. See Mary Elizabeth Matthews, The Arkansas Limited Liability Company: A New Business Entity Is Born, 46 ARK. L. REV. 791, 843-48 (1994), for a comparison of the options available to attorneys and other professionals.
Act 912 of 1997 authorizes registered limited liability partnerships and registered limited liability limited partnerships. See Carol R. Goforth, Limited Liability Partnerships: The Newest Game in Town, 1997 Ark. L. Notes 25 (discussing three unresolved issues).
5.2 Rule 5.2 Responsibilities of a Subordinate Lawyer
5.2:100 Comparative Analysis of Arkansas Rule
- Primary Arkansas References: AR Rule 5.2
- Background References: ABA Model Rule 5.2, Other Jurisdictions
- Commentary:
5.2:101 Model Rule Comparison
The Arkansas Rule is the same as the Model Rule.
5.2:102 Model Code Comparison
The comparison accepted by the Arkansas Supreme Court is identical to the comparison in the Model Rules.
5.2:200 Independent Responsibility of a Subordinate Lawyer
- Primary Arkansas References: AR Rule 5.2(a)
- Background References: ABA Model Rule 5.2(a), Other Jurisdictions
- Commentary: ABA/BNA Ñ 91:201, ALI-LGL Ñ 5, Wolfram Ñ 16.2
Arkansas has no case law or authority on this topic.
5.2:300 Reliance on a Supervisor's Resolution of Arguable Ethical Issues
- Primary Arkansas References: AR Rule 5.2(b)
- Background References: ABA Model Rule 5.2(b), Other Jurisdictions
- Commentary: ABA/BNA Ñ 91:201, ALI-LGL Ñ 5, Wolfram Ñ 16.2
Arkansas has no case law or authority on this topic.
5.3 Rule 5.3 Responsibilities Regarding Nonlawyer Assistants
5.3:100 Comparative Analysis of Arkansas Rule
- Primary Arkansas References: AR Rule 5.3
- Background References: ABA Model Rule 5.3, Other Jurisdictions
- Commentary:
5.3:101 Model Rule Comparison
The Arkansas Rule is the same as the Model Rule.
5.3:102 Model Code Comparison
The comparison accepted by the Arkansas Supreme Court is identical to the comparison in the Model Rules.
5.3:200 Duty to Establish Safeguards
- Primary Arkansas References: AR Rule 5.3(a)
- Background References: ABA Model Rule 5.3(a), Other Jurisdictions
- Commentary: ABA/BNA Ñ 91:201, ALI-LGL ÑÑ 4, 5, Wolfram Ñ 16.3
Arkansas has no case law or authority on this topic.
5.3:300 Duty to Control Nonlawyer Assistants
- Primary Arkansas References: AR Rule 5.3(b)
- Background References: ABA Model Rule 5.3(b), Other Jurisdictions
- Commentary: ABA/BNA Ñ 21:8601, ALI-LGL ÑÑ 4, 5, Wolfram Ñ 16.3
An attorney is permitted to delegate certain tasks to his assistants, but is responsible for their failure to comply with the ethical standards of the profession. Mays v. Neal, 327 Ark. 302, 938 S.W. 2d 830 (1997) (failure to keep client informed and improper handling of settlement offer; attorney disciplined).
5.3:400 Responsibility for Misconduct of Nonlawyer Assistants
- Primary Arkansas References: AR Rule 5.3(c)
- Background References: ABA Model Rule 5.3(c), Other Jurisdictions
- Commentary: ABA/BNA Ñ 91:201, ALI-LGL ÑÑ 4, 5, Wolfram Ñ 16.3
See 5.3:300.
5.4 Rule 5.4 Professional Independence of a Lawyer [Restrictions on Form of Practice]
5.4:100 Comparative Analysis of Arkansas Rule
- Primary Arkansas References: AR Rule 5.4
- Background References: ABA Model Rule 5.4, Other Jurisdictions
- Commentary:
5.4:101 Model Rule Comparison
Arkansas has not adopted Model Rule 1.17 and the 1990 amendments to Rule 5.4. The Arkansas Rule remains the same as the Model Rule adopted in 1983.
5.4:102 Model Code Comparison
The comparison accepted by the Arkansas Supreme Court is identical to the comparison in the Model Rules.
5.4:200 Sharing Fees with a Nonlawyer
- Primary Arkansas References: AR Rule 5.4(a)
- Background References: ABA Model Rule 5.4(a), Other Jurisdictions
- Commentary: ABA/BNA Ñ 41:801, ALI-LGL Ñ 60, Wolfram ÑÑ 16.4, 16.5
Arkansas has no case law or authority on this topic.
5.4:300 Forming a Partnership with Nonlawyers
- Primary Arkansas References: AR Rule 5.4(b)
- Background References: ABA Model Rule 5.4(b), Other Jurisdictions
- Commentary: ABA/BNA Ñ 91:401, ALI-LGL Ñ 60, Wolfram ÑÑ 16.4, 16.5
Arkansas has no case law or authority on this topic.
5.4:400 Third Party Interference with a Lawyer's Professional Judgment
- Primary Arkansas References:
AR Rule 5.4(c)
- Background References: ABA Model Rule 5.4(c), Other Jurisdictions
- Commentary: ABA/BNA Ñ 51:901, ALI-LGL Ñ 60, Wolfram Ñ 8.8
5.4:500 Nonlawyer Ownership in or Control of Profit-Making Legal Service Organizations
- Primary Arkansas References: AR Rule 5.4(d)
- Background References: ABA Model Rule 5.4(d), Other Jurisdictions
- Commentary: ABA/BNA Ñ 91:401, ALI-LGL Ñ 60, Wolfram Ñ 16.4, 16.5
5.4:510 Group Legal Services
Prepaid legal insurance, which requires payments by or on behalf of the beneficiaries, is closely regulated by the state. See Ar. Code Ñ 23-91-201 et seq. Those statutory provisions are not applicable to the advice and consultation that accompany referral services; simple legal matters arising on an informal basis in the context of an employment, education, or similar relationship; retainer contracts made with individual clients or a group of clients in a class action; and, legal services provided by unions or employee associations to their members in matters relating to employment or occupation.
5.4:520 Nonprofit Organizations Delivering Legal Services
Arkansas has no case law or authority on this topic.
5.5 Rule 5.5 Unauthorized Practice of Law
5.5:100 Comparative Analysis of Arkansas Rule
- Primary Arkansas References: AR Rule 5.5
- Background References: ABA Model Rule 5.5, Other Jurisdictions
- Commentary:
5.5:101 Model Rule Comparison
The Arkansas Rule is the same as the Model Rule.
5.5:102 Model Code Comparison
The comparison accepted by the Arkansas Supreme Court is identical to the comparison in the Model Rules.
5.5:200 Engaging in Unauthorized Practice
- Primary Arkansas References: AR Rule 5.5(a)
- Background References: ABA Model Rule 5.5(a), Other Jurisdictions
- Commentary: ABA/BNA Ñ 21:8001, ALI-LGL ÑÑ 3, 4, Wolfram Ñ 15.1
5.5:210 Practice of Law by Nonlawyers
Only a licensed attorney can represent another person in court. Ar. Code Ñ 16-22-206. See Abel v. Kowalski, 323 Ark. 201, 913 S.W. 2d 788 (1996); Jones v. Ragland, 293 Ark. 320, 737 S.W.2d 641 (1987). A natural person can represent himself in court, but a corporation or partnership may not. Accordingly, such an entity must employ, retain or otherwise associate a licensed attorney to represent it in court. All City Glass & Mirror, Inc. v. McGraw Hill Information Sys. Co., 295 Ark. 520, 750 S.W.2d 395 (1988) (trial judge properly struck the answer filed by the non-lawyer president of the defendant corporation). Ar. Code Ñ 16-22-211(d). For example, in foreclosing a mortgage, a bank must use an attorney, not a non-lawyer. Arkansas Bar Association v. Union National Bank of Little Rock, 224 Ark. 48, 273 S.W.2d 408 (1954). This attorney may be either a salaried employee of the bank or from an outside law firm.
Several recurring issues concerning the activity of non-lawyers have been clarified:
(1) In connection with simple real estate transactions, real estate brokers may fill in the blanks of standardized, printed legal instruments, such as warranty deeds, release deeds, lease agreements and mortgages with the power of sale. Pope County Bar Ass'n v. Suggs, 274 Ark. 250, 624 S.W.2d 828 (1981). The restrictions are that the forms must be approved by a lawyer; the client must consent; the forms can be completed only in the usual course of the broker's business; and the broker may not charge a fee, or render legal advice or opinions.
(2) An abstract company may not draft documents or give title opinions. Beach Abstract & Guarantee Co. v. Ark. Bar Assn., 230 Ark. 494, 326 S.W.2d 900 (1959).
(3) The standard of care applied to a person who engages in the unauthorized practice of law should be at least the same that would be applied to a licensed attorney and possibly higher. Wright v. Langdon, 274 Ark. 258, 623 S.W.2d 823 (1981) (negligence of real estate broker in drafting a contract).
(4) Some small or family corporations may represent themselves as plaintiff or defendant in small claims court. Ar. Code Ñ 16-17-605.
(5) Ar. Code Ñ 16-22-501 makes it a criminal offense for any non-attorney, with intent to obtain a direct economic benefit for himself, to contact, advise, or enter into a contract with a person in regard to cause of actions for personal injuries or property damages.
5.5:220 Admission and Residency Requirements for Out-of-State Lawyers
In 1985 Arkansas abolished admission to practice by reciprocity and also abolished the residency requirement. All applicants for admission must take the Arkansas Bar Examination. See 8.1:230.
5.5:230 Pro Hac Vice Admission [see also 8.1:240]
Under the authority of Amendment 28 of the Arkansas Constitution, the Arkansas Supreme Court has adopted rules governing the practice in Arkansas by non-resident attorneys. Ex Parte Arkansas Bar Ass'n., 258 Ark. 1027, 528 S.W.2d 140 (1975). These rules require the non-resident attorney to be in good standing, to associate with a resident attorney in trying the case, and to sign a written statement submitting to all disciplinary procedures applicable to Arkansas attorneys. However, if the state of the non-resident does not accord similar comity and courtesy to Arkansas lawyers, the privilege to practice in Arkansas is not extended. Attorneys who are not licensed in Arkansas and not admitted pro hac vice may still be disciplined for activities in Arkansas. See 8.5:100.
5.5:240 Performing Legal Services in Another Jurisdiction
Arkansas attorneys may be disciplined for unethical acts committed while practicing in another jurisdiction. 8.5:200.
5.5:300 Assisting in the Unauthorized Practice of Law
- Primary Arkansas References: AR Rule 5.5(b)
- Background References: ABA Model Rule 5.5(b), Other Jurisdictions
- Commentary: ABA/BNA Ñ 21:8201, ALI-LGL Ñ 4, Wolfram Ñ 15.1
The definition of the practice of law is elusive. Smith v. National Cashflow Systems, Inc., 309 Ark. 101, 827 S.W.2d 146 (1992). Providing legal services in courts and giving legal advice certainly constitutes the practice of law. Undem v. State Board of Law Examiners, 266 Ark. 683, 587 S.W.2d 563 (1979). The preparation of legal documents usually constitutes the practice of law. Pope County Bar Association v. Suggs, 274 Ark. 250, 624 S.W.2d 828 (1981). Rule 5.5, with its prohibition against the unauthorized practice of law, impacts both lawyers and non-lawyers. An attorney runs afoul of this rule by assisting a non-lawyer in the practice of law.
When the trust department of a bank serves as executor of an estate, the bank may not serve as attorney for the executor because a corporation may not practice law. Further, the presence or participation of an attorney as an officer, director or employee does not permit the corporation to practice law. Ar. Code Ñ 16-22-211(c). Therefore, the salaried attorney of the bank cannot serve as attorney for the executor, both because the attorney would be assisting in the unauthorized practice of law and because the corporation cannot do indirectly what it is forbidden to do directly. Arkansas Bar Association v. Union National Bank of Little Rock, 224 Ark. 48, 273 S.W.2d 408 (1954). Similarly, the bank cannot draft wills or trusts for individuals; nor can the salaried attorney, working through the facilities of the bank, draft such documents.
5.6:100 Comparative Analysis of Arkansas Rule
- Primary Arkansas References: AR Rule 5.6
- Background References: ABA Model Rule 5.6, Other Jurisdictions
- Commentary:
5.6:101 Model Rule Comparison
Arkansas has not adopted Model Rule 1.17 and the 1990 amendments to Rule 5.6. The Arkansas Rule remains the same as the Model Rule adopted in 1983.
5.6:102 Model Code Comparison
The comparison accepted by the Arkansas Supreme Court is identical to the comparison in the Model Rules.
5.6:200 Restrictions on Lawyers Leaving a Firm
- Primary Arkansas References: AR Rule 5.6(a)
- Background References: ABA Model Rule 5.6(a), Other Jurisdictions
- Commentary: ABA/BNA Ñ 51:1201 ALI-LGL Ñ 10, Wolfram Ñ
Arkansas has no case law or authority on this topic.
5.6:300 Settlements Restricting a Lawyer's Future Practice
- Primary Arkansas References: AR Rule 5.6(b)
- Background References: ABA Model Rule 5.6(b), Other Jurisdictions
- Commentary: ABA/BNA Ñ 51:1201, ALI-LGL Ñ 10, Wolfram Ñ 16.2.3
Restrictive provisions in employment contracts may be valid under Arkansas law, see Howard W. Brill, THE ARKANSAS LAW OF DAMAGES, Ñ 19-3 (3rd ed. 1996), but such provisions are unethical for both employer and employee attorneys.
5.7 Rule 5.7 Responsibilities Regarding Law-Related Services
5.7:100 Comparative Analysis of Arkansas Rule
- Primary Arkansas References: AR Rule 5.7
- Background References: ABA Model Rule 5.7, Other Jurisdictions
- Commentary:
5.7:101 Model Rule Comparison
The Arkansas Supreme Court has not adopted Model Rule 5.7.
5.7:102 Model Code Comparison
This topic is not available.
5.7:200 Applicability of Ethics Rules to Ancillary Business Activities
- Primary Arkansas References: AR Rule 5.7
- Background References: ABA Model Rule 5.7, Other Jurisdictions
- Commentary: ABA/BNA Ñ 101:2101, ALI-LGL Ñ, Wolfram Ñ
Attorneys in separate firms, and a non-lawyer, may create, own, and operate a title insurance, escrow and closing company, which will also issue title insurance policies. However, four restrictions are applicable to attorneys entering into the company.
1) Clients who will be referred to the company or will be customers of the company must be informed in writing that the attorney has a financial interest in the company, and their written consent to the transaction obtained.
2) Likewise, individuals who deal with the company must be reasonably informed that the company is not practicing law or rendering legal services, and the protections of the profession are not applicable.
3) The attorney-owner cannot engage in an adversarial relationship with the company or with other owners of the company in regard to related property disputes.
4) The attorney-owner can engage in an adversarial relationship with other owners on non-property related disputes, only upon proper notice to and consent by all affected parties.
Ark. Bar Assn. Op. 98-01.