GROUP HOMES FOR DISABLED CHILD

104th Regular Session Introduced by Terra Costa Howard

Act 843 allows for-profit corporations in Arkansas to hire in-house attorneys for themselves and affiliates, enhancing legal access and reducing costs while protecting nonprofits.

Rule 19(a) / Re-referred to Rules Committee

Purpose and Intent

House Bill 1895, now known as Act 843, was introduced to amend existing laws regarding the practice of law by corporations and voluntary associations in Arkansas. The primary intent of the bill is to allow these entities to employ in-house attorneys to represent their affiliates in legal matters, thereby expanding the scope of legal representation available to affiliated organizations.

Key Provisions

The bill amends Arkansas Code § 16-22-211(d) to include specific exceptions to the prohibition against corporations and voluntary associations practicing law. The key provisions are as follows:

Employment of In-House Attorneys:

For-profit corporations and voluntary associations can employ attorneys to handle their own legal affairs as well as those of their affiliates.
An "affiliate" is defined broadly to include any corporation, limited liability company, partnership, or other voluntary association related by shareholdings, membership interests, or other means of control.

Existing Exceptions:

The bill retains existing provisions that allow nonprofit corporations and associations to represent indigent clients or assist government entities in legal matters, provided that such services are rendered by licensed attorneys.

Who is Affected?

For-Profit Corporations and Voluntary Associations: These entities will benefit directly from the ability to hire in-house legal counsel for their affiliates, potentially reducing legal costs and improving legal responsiveness.

Affiliated Entities: Corporations and associations that are related to the employing entity will gain access to legal representation without needing to hire external counsel.

Nonprofit Organizations: While the bill primarily focuses on for-profit entities, it maintains the existing legal framework for nonprofit organizations, ensuring they can continue to provide legal assistance to disadvantaged individuals and government entities.

Procedural Timeline

Introduced: March 31, 2025

Passed by House: April 7, 2025

Passed by Senate: April 14, 2025

Enrolled and Transmitted to Governor: April 15, 2025

Notification of Act: April 17, 2025

The bill underwent several readings and committee reviews before being passed by both the House and Senate, indicating a smooth legislative process.

Conclusion

House Bill 1895 (Act 843) represents a significant change in the legal landscape for corporations and voluntary associations in Arkansas, allowing them to employ in-house attorneys for their affiliates. This change is expected to enhance legal representation and efficiency for these entities while maintaining protections for nonprofit organizations serving vulnerable populations.

Bill