Brown v. Kelton, 2011 Ark. 93

Appellants Mid-Central Plumbing Co., Inc. and John W. Rogers, along with Stephen Toof Brown, appeal an order disqualifying Brown from representing Mid-Central and Rogers in Kelton’s suit.
Kelton sues Mid-Central and Rogers for damages from a car collision; Mid-Central and Rogers were insured by TEI and TEI was reinsured by Farmer’s Insurance Exchange (FIE).
About three months after an answer was filed for Mid-Central and Rogers, their counsel moved to substitute Brown (FIE employee) as new counsel; circuit court granted substitution.
Kelton opposed the substitution; after a hearing, the opposition was treated as a motion to disqualify Brown.
Circuit court found Brown’s representation would have violated Ark. Code Ann. § 16-22-211 (unauthorized practice of law by a corporation), and that a conflict of interest existed with no effective waiver possible; Brown was disqualified.
This interlocutory appeal follows; the supreme court affirms the disqualification, addressing statutory interpretation, standing, and related arguments.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 16-22-211 prohibits in-house counsel for an insurer from defending insureds	Kelton argues the statute is properly applied to prohibit insurer in-house counsel from defending insureds.	Brown argues the statute either permits or does not apply to in-house insurer defense of insureds and challenges its constitutionality.	Statute prohibits corporation from practicing law; disqualification affirmed.
Constitutionality of § 16-22-211 relative to Amendment 28’s regulatory power over the practice of law	Kelton contends statute is an aid to regulating practice of law and consistent with Amendment 28.	Brown contends the statute intrudes on exclusive judicial regulation of the practice of law.	Statute constitutional; it does not derogate court power to regulate law.
Whether Kelton had standing to object to Brown’s representation	Kelton had standing to challenge opposing party’s authority to practice law.	Brown contends Kelton lacks standing to object.	Kelton had standing to challenge representation.
Effect of informed consent and conflict-of-interest arguments	Mid-Central and Rogers argue consent mitigates the conflict and allows Brown to represent them.	Any conflict could not be waived; representation prohibited by law.	As § 16-22-211 forbids the representation, further arguments become advisory.

Dachs v. Hendrix, 2009 Ark. 542 (Ark. 2009) (statutory interpretation guiding plain-language meaning)
Osborn v. Bryant, 2009 Ark. 358 (Ark. 2009) (de novo review of statutory interpretation)
City of Little Rock v. Rhee, 292 S.W.3d 292 (Ark. 2009) (plain-language interpretation principles)
McKenzie v. Burris, 255 Ark. 380, 500 S.W.2d 357 (Ark. 1973) (court authority to regulate practice of law; union with Amendment 28 precedents)
Arkansas Bar Ass’n v. Union Nat’l Bank of Little Rock, 224 Ark. 48, 273 S.W.2d 408 (Ark. 1954) (courts’ power to regulate practice of law; statutes aiding but not detracting)
Union Nat’l Bank of Little Rock, 224 Ark. 58, 273 S.W.2d 411 (Ark. 1954) (corporations cannot practice law; conflicts of interest framework)
Ark. Bar Ass’n v. Block, 230 Ark. 430, 323 S.W.2d 912 (Ark. 1959) (corporate practice of law and professional duties; blocks broad scenarios)
Creekmore v. Izard, 236 Ark. 558, 367 S.W.2d 419 (Ark. 1963) (real estate broker filling in standardized forms; limits to simple transactions)