News UpdateSource: ABA Journal, Vol. 70, No. 5 (May 1984), pp. 145-146, 148Published by: American Bar AssociationStable URL: http://www.jstor.org/stable/20757141 .

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Inside ABA

What's happening in the American Bar Association? The following pages contain a roundup of projects, programs and personalities of the ABA.

News Update

ABA, ABE win tax cases, but ABE deductions are not assured

145 News Update 149 Events 152 Preview of London '85 158 Directory 159 Membership

The American Bar Association and the American Bar Endowment have won tax cases against the United States, but sev eral individuals who purchased ABE sponsored insurance have lost theirs.

In the ABA case the issue was whether the costs of the ABA's Fund for Public Education should be excluded from the allocation formula used to determine the ABA's income from pub lications subject to the unrelated busi ness income tax. Judge John F. Grady of the U.S. District Court for the Northern District of Illinois ruled that the ABA properly included the FPE as part of the cost of its exempt activities in the cal culation of unrelated business taxable income. (American Bar Association v.

United States, Jan. 12, 1984, No. 83 C 4742.)

The ABA, an unincorporated associa tion, is exempt from federal income tax as a business league under Section 501(c)(6) of the Internal Revenue Code.

The FPE was established in 1961 and received tax-exempt status as a separate fund under Revenue Ruling 54-243. In 1963 the Internal Revenue Service ruled that the FPE was exempt from income tax as a fund described in Section 501(c)(3) of the code with charitable and educational purposes.

Net advertising revenue from maga zines published by exempt organizations is taxable as unrelated business income, and treasury regulations require an allocation of dues to produce these pub lications so that their expense is not borne entirely by advertising, thus reducing the taxable income of the organization. The IRS contended that the FPE is a separate entity and that its costs could not be lumped together with those of the ABA in computing the amount of dues to be allocated to pub lications. Under this interpretation the

ABA's unrelated business income and tax would increase.

Judge Grady concluded that the FPE is an exempt activity of the ABA and not a separate entity. He pointed out that the allocation formula does not differentiate among types of 501(c) organizations, that the FPE has no separate existence, that it owns no property and has no employees, and that the projects funded by it were activities of ABA sections and under the general supervision of the ABA. "The mere fact that the ABA applied for and received exempt status for the FPE is not enough for us to find that the FPE had, in fact, a separate legal existence," he declared.

The IRS also argued that the ABA could have changed its status to qualify under Section 501(c)(3) rather than creat ing the FPE. The FPE, it contended, cannot be "separate from the ABA for purposes of obtaining a deduction [for donors as provided by Revenue Ruling 54-243] but part of it for others.

" Judge

Grady said that the revenue ruling's pur pose was to enable the creation of a sep arate fund for public purposes and tax deductibility for contributors, and that the ABA was only complying with the ruling in keeping separate records for the FPE.

ABE is not a business In the American Bar Endowment case

the U.S. Claims Court held that the unrelated business income tax cannot be applied to the dividends and experience credits earned by the ABE under its group insurance plans and assigned to the ABE by insured participants in the plans. Chief Judge Alex Kozinski con cluded that the ABE's operation of the plans did not amount to a trade or busi ness but rather was related to its charita ble purposes under Section 501(c)(3) to promote legal research and education in order to advance the administration of justice and the science of jurisprudence. (American Bar Endowment v. United

States, Jan. 31, 1984, Nos. 465-82T,

May 1984 Volume 70 145

In the next issue The U.S. Jaycees are facing a challenge to their practice of exclud

ing women from full membership. The U.S. Supreme Court heard argu ments in the lawsuit in April. The outcome could affect clubs and associations across the country, and the details of the case will be set forth in the June issue.

You may know a lot about your field of the law, but what about the business side of your practice? Is your cash flow everything you'd like it to be? Next month a new department called "Your Finances" will debut to guide you through those financial shoals.

Competition is something that every law firm has come to know. So that you can stand out from the crowd, two articles in next month's Journal will explain how to use newsletters to attract clients, and will reveal how small law firms can "market" themselves.

The Uniform Marital Property Act was promulgated last year and has sailed into a sea of controversy. The uniform act has been intro duced in several state legislatures, and the arguments pro and con will be covered in detail.

It's must reading in the June issue of the ABA Journal.

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Inside ABA News Update 163-83T, 190-83T, 320-83T and 351-83T.)

Judge Kozinski noted that during the 28 years the group insurance programs have been offered the ABE has netted $81.9 million in dividends from insurance companies, $63 million of which was devoted to charitable endeavors. He pointed out in a detailed examination of the ABE's operations that it made every effort to maximize dividends and experi ence credits and that participants in the group insurance programs knew that the

dividends and credits were being used for charitable purposes. The insurance programs were not "operated in a com

petitive, commercial manner," he con

cluded.

Four individual participants joined the case to litigate whether they could deduct the portion of their premiums refunded to the ABE by the insurance companies that underwrote the pro grams.

On this facet of the case Chief Judge Kozinski ruled that the individual insur eds would have to prove that the pre miums they paid exceeded what they would have been willing to pay in a purely commercial transaction. He declined to take a unitary approach for all insureds, although he conceded the force of the argument that there would be "mechanical difficulties" in determin ing 55,000 or so individual cases. He said help would have to come from Con gress or the IRS commissioner. None of the four insureds in this case made the showing required by the court that similar insurance was available at a

lower price and that it was bypassed in order to make a contribution to the ABE.

Applications due for Harrison Tweed award

The ABA Committee on Legal Aid and Indigent Defendants and the National Legal Aid and Defender Asso ciation are seeking applications and nominations for the 1984 Harrison Tweed award, which recognizes bar

associations that have worked to improve legal services availability to the poor.

Any local or state bar association that has developed a project or program for expanding access to legal services for the poor may apply. Associations that have developed programs for joint involvement of the private bar with organized legal services or public defender offices are particularly encour

aged to respond.

146 American Bar Association Journal

ABA recognizes volunteer assistance to Haitians

Awards were presented at the midyear meeting to representatives of three legal organizations for volunteer services provided in the ABA Haitian Refugee Project, which has provided free legal assistance to 1,850 Haitian refugees since 1982.

The project was coordinated by the ABA Committee on Legal Aid and Indi gent Defendants, which presented certificates to three of an anticipated 50 organizations and individuals who will be honored for their volunteer service. Shown above (left to right) are Seymour Rosenberg, president of the American Immigration Lawyers Association; Neal Sonnett, president of the Dade

County Bar Association; Archibald Murray, executive director of the Legal Aid Society of New York; and F. William McCalpin of St. Louis, chairman of the ABA committee.

The award will be presented at the 1984 ABA annual meeting in Chicago in

August. The deadline for applications, nominations and supporting material is June 1, 1984.

Further information may be obtained from Harrison Tweed Award Commit tee, ABA Legal Services Division, 1155 E. 60th St., Chicago, 111. 60637 (tele phone 312/947-3663).

New volume of Reports of the ABA

Volume 103 (1978) of the Reports of the American Bar Association is now available. This is the hardbound volume of ABA proceedings issued for each Association year.

The price for this volume has been set by the Board of Governors at $20.00. A shipping and handling charge of $2.00

per order will be added. Orders should be directed to the Office of Policy Administration, American Bar Associa

tion, 1155 E. 60th St., Chicago, 111. 60637.

Workshop on professional responsibility set for Denver

The ABA Center for Professional Responsibility and the Committee on Professional Discipline will sponsor the 10th Annual Workshop on Lawyers' Pro fessional Responsibility in Denver on June 7-9. The program reflects a broad range of issues in lawyers' responsibility and focuses on matters of current inter

est to all lawyers. Further information may be obtained

from the center at 33 W. Monroe St.,

Chicago, 111. 60603 (telephone 312/621 9200).

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Inside ABA News Update

The Olincy Fund The George R. Olincy Fund has been

established under the American Bar Association* s Justice Funds program to honor the Los Angeles tax lawyer and estate planner who was identified with many important philanthropic activities that benefited hospitals and universities across the country. He died Jiily 28, 1982, at the age of 78. One of the earliest specialists in tax

law, Olincy encouraged clients to estab lish foundations and then channeled those funds to numerous local and national charities. He served as presi dent of the Andrew Norman Charitable Trust, established by the cofounder of the Merle Norman Cosmetic Co. The foundation has bestowed more than $6 million on hospitals, the Center for Law in the Public Interest, the University of Southern California and the American Civil Liberties Union, among others. Olincy also helped administer other foundations, and these have made more than $8 million in charitable gifts.

"George was a caring, gentle man, a true friend who was of constant good cheer with a contagious sense of humor," said George M. Treister, a Los Angeles lawyer. "Professionally he was a wise counselor and a master of his craft. He was selfless in his devotion to a wide range of worthy causes, and while he had very deep convictions, he never was

overbearing in urging the lightness of his, views."

Olincy was one of the founders of the Los Angeles tax bar and one of the first lawyers in the West who also was a cer tified public accountant. He was vir

New projects will provide legal assistance to runaways

Projects designed to provide legal assistance to runaway, homeless and

exploited children in Georgia, Texas, Ohio and New York have been awarded special grants totalling $29,350 by the ABA National Legal Resource Center for Child Advocacy and Protection.

Each project will develop a unique method of providing legal services to runaway youths. According to Catherine Hargrove, director of the center's Volun

teer Legal Services Project for Runaway, Homeless and Exploited Youth, each program will "demonstrate ways in

which shelter homes and local bar asso

ciations can work cooperatively to provide volunteer legal services to

148 American Bar Association Journal

tually self-taught, having studied law by correspondence.

The George R. Olincy Fund, which was created with a grant from the Andrew Norman Charitable Trust, has been approved by the ABA Board of Governors as one of the Justice Funds, an endowment fund program designed to give permanent recognition to lawyers who have demonstrated a dedication to the pursuit of justice and outstanding service to the profession and the public. Income from the funds helps support top-priority public service and educa tional programs sponsored by the ABA Fund for Public Education. Further information about the Justice Funds may be obtained from Carole Whitcomb, ABA Office of Resource Development, 33 W. Monroe St., Chicago, 111. 60603 (telephone 312/621-1742).

runaway youths and encourage the

development of similar projects elsewhere."

Estimates of the numbers of runaway youths in this country each year range from 700,000 to more than one million. These children often have a wide range of legal problems.

The ABA program was made possible under a grant from the Youth Develop ment Bureau of the Department of Health and Human Services.

The four projects include: A project in Atlanta, sponsored by

the Bridge Family Center of Atlanta Inc. and the Atlanta Council of Younger Lawyers. It will implement a program designed to encourage volunteer attor

neys throughout the Atlanta area to provide legal services to runaways.

A project in Houston, sponsored by the Sand Dollar Inc., a private nonprofit social service organization, and the

Houston Young Lawyers Association.

This project will design a system of legal service and information for five Houston area agencies that provide emergency services for runaway and homeless

youths. A Cincinnati project, jointly spon

sored by ProKids, a nonprofit agency providing guardian ad litem services to abused, neglected and dependent chil dren, the Lighthouse Runaway Shelter and the Cincinnati Bar Association's Legal Aid Volunteer Lawyers Project. This program will provide legal assistance to runaways by using a pool of volunteer attorneys.

A project jointly sponsored by the Monroe County Bar Association, the Volunteer Legal Services Project and New York Statewide Youth Advocacy Inc. It will develop a model for a state wide system of volunteer legal services for children in New York state.

Further information may be obtained from Catherine Hargrove, American Bar Association, National Legal Resource Center for Child Advocacy and Protec tion, 1800 M St., N.W., 2-South, Wash

ington, D.C. 20036 (202/331-2250).

IBA to meet in Vienna The 20th Biennial Conference of the International Bar Association will be held in Vienna, Austria on Sept. 2-7, 1984. More than 2,000 lawyers are ex

pected to attend. The program will have two main top

ics: "Business Crimes?The Role of the Law in their Prevention, Detection and Cure" and "Professional Liability? Should the Lawyer Exclude, Limit or Insure." In addition, there will be more than 100 specialized meetings to discuss current problems and developments in most areas of the law, discussions on the work of OPEC, UNCITRAL and GATT, and open meetings of the IBA's Com mittee on Human Rights and the IBA Ombudsman Forum.

The conference will be opened by the president of Austria and receptions will be hosted by the minister of justice, the major of Vienna and the Austrian bar. There will be a special performance of the Vienna State Opera and a visit to the

Vienna International Center.

Detailed programs and registration forms may be obtained from ABA Meet ings Department, 1155 E. 60th St., Chi cago, 111. 60637 (312/947-4090). _hml

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