Category Archives: Business

Lawyers vs. legislators

By Steve Brawner
© 2017 by Steve Brawner Communications, Inc.

It could be argued that two of the three most important votes this year in Arkansas state politics occurred Feb. 16 and Feb. 27, and the third will occur this Friday.

The first two votes are when the Arkansas Senate and Arkansas House advanced a proposed constitutional amendment limiting lawsuit awards. We voters will decide its fate in the November 2018 elections.

The third will be in Hot Springs June 16, when the Arkansas Bar Association’s House of Delegates votes on whether to pursue a dueling proposal barring such lawsuit limits that also would appear on the November 2018 ballot.

The one proposed by legislators would limit punitive damages in civil lawsuits to the greater of $500,000 or three times the compensatory damages awarded in the case, except when the harm was caused intentionally. Noneconomic damages, sort of a vague term, would be limited to $500,000. The Legislature would be empowered to increase both of those amounts with a two-thirds vote. Lawyers’ contingency fees would be limited to one-third the judgment.

The amendment is supported by powerful groups, including the Arkansas State Chamber of Commerce and those representing health care providers. They want to reduce the risk of jackpot jury verdicts that produce a climate of uncertainty, raise insurance rates, and require costly cover-your-rear actions ultimately paid by consumers and resulting in lost jobs. If your local hospital no longer delivers babies, it’s because the insurance is too high and the fear of a lawsuit is too great.

Opponents, including the Arkansas Bar Association, which represents attorneys, of course don’t see it that way. They say juries should be trusted, not limited, and that the awards prescribed by the amendment are so low that big, bad actors won’t be deterred from harmful activities. They say the upfront costs of lawsuits can be daunting with no guarantee of a payout, so capping attorneys’ fees will make it harder for Arkansans to find a lawyer willing to represent their case.

This already was going to be a heavyweight brawl between two groups with access to money and reasons to spend it. Aside from the legitimate philosophical differences, we’re talking about rich people’s livelihoods – those of business executives and medical providers who say enough is enough, and those of attorneys whose bottom lines would be significantly shortened. So Arkansas voters next year presumably will see plenty of 30-second ads defining the bad guys (evil corporations or unscrupulous lawyers, depending on who is funding the spot) and the heroes/victims (average Arkansans, either way).

But then the Arkansas Bar Association came up with another idea – pass its own, equally far-reaching amendment. It would do away with all the caps included in the Legislature’s measure while also taking more than a few shots at the legislators themselves – increasing transparency for campaign contributions, prohibiting legislators from directing how state funds are spent locally, reducing their authority over state agency decisions, and increasing the number of votes needed to override a governor’s veto from the current simple majority to two-thirds.

An added twist occurred last week, when the State Chamber’s President and CEO, Randy Zook, sent a letter to its members asking them to encourage their hired law firms to vote against the measure.

On Friday, the ABA’s House of Delegates will vote on whether to pursue the amendment, which its Legislation Committee unanimously endorsed.

The pluses? As a political strategy, the amendment would enable the ABA to play offense rather than just defense. Also, instead of the campaign being mostly lawyers vs. business owners and doctors, it also would be a more winnable lawyers vs. legislators.

But unlike the Legislature’s amendment, getting the proposal on the ballot would require supporters to collect 84,859 signatures, which would cost millions of dollars and inevitably lead to a lawsuit by opponents hoping to block the measure.

Things will get really interesting if they’re both on the ballot. One limits jury awards. The other says jury awards can’t be limited. One or the other could pass. If they both pass, the one with the most votes wins. If neither passes, things stay the same – meaning no lawsuit limits.

That means the Bar Association would have more paths to victory than the Chamber-supported amendment. Not necessarily better, but more.

Castro’s death moves Cuba farther into the market for Arkansas rice, ideas

By Steve Brawner
© 2016 by Steve Brawner Communications, Inc.

Fidel Castro is dead. How does that affect people in Arkansas? Maybe a lot, especially if they work in the rice industry or are elected to represent people who do.

Cuba’s 11 million people import 400,000 tons of rice each year, mostly from Vietnam, which means the rice arrives after a long boat ride from a country on the other side of the globe. Rep. Rick Crawford’s eastern Arkansas 1st District includes half of America’s rice acreage, so it’s understandable that his reaction to Castro’s death focused on the future, not the past.

“Fidel Castro’s death is an opportunity for America to end its ineffective policies so we can influence the future direction of that nation,” he tweeted, then added, “Through my own visits to Cuba I’ve seen people ready for change. With Fidel dead, America needs to help lead Cuba toward a better future.”

Crawford for some time has been an outspoken supporter of prying open Cuba’s markets, which have been largely closed since Oct. 19, 1960, because of the American trade embargo. He’s pushed legislation to allow Cubans to purchase agricultural products on credit rather than the currently required cash, of which Cubans don’t have much, so they could replace that Vietnamese rice with fresher, cheaper rice grown here.

Two other Arkansas officials who represent those same eastern Arkansas agricultural producers (and voters) took a similar forward-looking approach. Sen. John Boozman tweeted, “I hope the death of Fidel Castro marks a new beginning for an American-Cuban partnership and brings light to democracy in #Cuba.” Speaking to reporters, Gov. Asa Hutchinson called Castro’s death a “moment that I believe needs to be seized.”

President-elect Donald Trump said he would terminate the current opening with Cuba initiated by President Obama unless Cuba makes a better deal for its own people, for Cuban-Americans, and for the United States. That threat may have just been the country’s new dealmaker-in-chief doing what he does, which is start the negotiating process by taking a hard line and then moving away from it.

In response, the governor said Trump’s stance is “understandable,” but while change must be accompanied by enhanced freedom for Cubans, “I hope that we do not go back to the simple, straightforward, rigid embargo that we have tried for 50-plus years.”

Hutchinson and Boozman represent the state while Crawford represents his district, so their remarks were meant for those audiences. Sen. Tom Cotton has an additional audience – a national one. It includes many people who, like him, have argued that this thawing of relations between America and Cuba will only help the Castro regime. Cotton released a two-sentence comment focused on the past, except for one assertion of Castro’s future: “Fidel Castro created hell on earth for the Cuban people. He will now become intimately familiar with what he wrought.”

Count me with Crawford, Boozman and Hutchinson on this one. The American people are supposed to be practical-minded problem-solvers who, when something doesn’t work, try something else. We’re the country where Thomas Edison invented the light bulb through experimentation, failure and more experimentation. And yet when it comes to its Cuba policy, we’ve stubbornly tried the same thing for 56 years that clearly didn’t work. Only old age and death, not the American trade embargo, removed Castro from power. Now his brother, Raul, remains in charge. He’s 85, by the way.

Pry open the doors to Cuba, let in a little freedom, and see what happens. Arkansas rice will be more than just an item on the dinner table. It will be a taste of what a free market economy offers. As Cuba opens itself to visitors from Arkansas and elsewhere, it will not be able to choke off ideas that are contrary to its glorious revolution. Fifty-five years after the failed Bay of Pigs invasion, an army of businessmen, tourists and missionaries will descend on an island 90 miles from Florida, accomplishing what the embargo never could.

Somebody’s going to sell rice to the Cubans, and when they do they’ll also export their ideas and way of life. Currently, that exporter is Vietnam, another repressive communist regime. I think Arkansas offers a better deal.

In West Memphis, it’s all connected

Junior Jeremy Paige is learning to become an aircraft mechanic, while senior Summer Abram plans to use the skills she learned in high school as a diesel mechanic to pay her way through school as she becomes a psychologist.
Junior Jeremy Paige is learning to become an aircraft mechanic, while senior Summer Abram plans to use the skills she learned in high school as a diesel mechanic to pay her way through school as she becomes a psychologist.
By Steve Brawner
© 2016 by Steve Brawner Communications, Inc.

The late Lt. Governor Win Rockefeller used to say that the education system is like a string of water pipes laid end to end but not connected. In West Memphis, they’re connected.

The high school, known as the Academies at West Memphis, has a conversion charter, which is an arrangement with the Arkansas Department of Education where some of the usual rules don’t apply and the school can experiment and innovate.

Students there choose pathways that prepare them for a career and then can spend up to six of their eight high school periods a day at Arkansas State University Mid-South, the local community college 1.3 miles down the road. In fact, it’s possible for a 10th-grader, on the first day of school, to get on the bus and sit in a college class before ever sitting through a high school one.

High school students can take tuition-free, for-credit college classes at ASU Mid-South thanks to the Thomas Goldsby Scholarship, funded by a local oilman. If they’re dedicated enough, they can receive a college associate’s degree on the same stage where their receive their high school diploma. Then, because of ASU Mid-South’s connection with the ASU system and with various other four-year schools, they can further their education and receive a bachelor’s degree, even a master’s, on that same college campus.

In effect, West Memphis has become a college town without the state having to build a huge campus with dorms and a football stadium.

Most students who make the eight-minute bus ride from the high school to the community college aren’t seeking a college degree. Instead, they’re taking career-oriented classes in a variety of fields. For example, five high school students earned welding certifications last year and then after graduating went to work at TrinityRail Maintenance Services in Jonesboro earning about $18 an hour.

Perhaps the most interesting connection in West Memphis is the aircraft mechanics program shared by the high school, the college and FedEx, the Memphis-based package deliverer founded by Arkansas native Fred Smith. The company has invested $250,000 at ASU Mid-South to build a new FedEx Aviation Technology Center, which when completed this year will include aircraft hangar space and classrooms. It even donated a Boeing 727 plane whose shell is sitting on the college campus after being disassembled and transported by a Stuttgart company.

This means that, as part of his high school education, junior Jeremy Paige is learning to maintain a jet airplane. This time next year, he’ll be crawling around the plane as he earns his certification in airframe mechanics – the aircraft’s structure. After he graduates high school, he’ll further his education at ASU Mid-South and earn his certification in powerplant mechanics – the engine. With those two certifications, he can go to work for FedEx and make a six-figure income.

Meanwhile, senior Summer Abram is learning to be a FedEx diesel mechanic. She won’t make the same kind of money as Paige, but she has different long-term goals: Work while taking college courses and playing basketball at ASU Mid-South and studying to become a psychologist. If it all works out, she’ll be making a living at FedEx while in school instead of piling up student debt.

Is there a downside? Long term, perhaps there’s a danger that the pipeline will become too connected – that the system could just funnel students straight from school to their corporate sponsors’ workforce.

Of course, those sponsors are offering up to six-figure opportunities. Moreover, under this model, students have many choices other than a simple high school diploma, which is worth less than it used to be. As Dr. Glen Fenter, who was ASU Mid-South’s chancellor when all these deals were made, said, “The most powerful model for combatting the lingering vestiges of poverty in this country is to speed up the educational process, particularly for poor students.” Get them ready to earn a paycheck in a good job, he said, and then they can always travel different pathways from there.

How to do that? In West Memphis, they’re connecting high school to college and career opportunities, using a 1.3-mile pipeline and, for some, a jet airplane.

For more stories about how Arkansas schools are using innovative techniques to teach students, check out:

Goals, not grades, are the focus at Warren.

A marvelous day in a Marvell school.

No Child in Flippin left behind.

Arkansans of the year

arkansasFlagBy Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

Time magazine names a “Person of the Year.” Sports Illustrated has a “Sportsperson of the Year.” Who are the Arkansans of the year?

In politics, it’s not even close. On issue after issue, Gov. Asa Hutchinson either achieved his objectives or appointed a study commission to buy time to achieve his objectives. He wants to continue but change the private option, the controversial program that uses Medicaid dollars to buy insurance for lower-income Arkansans, so he asked the Legislature to fund it two years while a replacement can be found. That’s what’s happened – so far. He and the State Board of Education butted heads over the Common Core-related PARCC exam. He wanted to replace it; the Board wanted to keep it. It’s gone. In the debate over the Religious Freedom Restoration Act, Hutchinson was perhaps the only elected official who pleased (too strong a word?) both sides. His signature education issue, requiring high schools to teach computer coding, has resulted in 4,000 students taking a class. The only downside to Hutchinson’s year is that next year can’t be this good.

Honorable mention: Baker Kurrus, superintendent, Little Rock School District. A non-educator in one of the state’s most high-profile education jobs, he’s trying to smooth ruffled feathers while telling hard truths. Does the Little Rock school superintendent belong in the “politics” category? He certainly does at the moment.

In business, I’m going with Donnie Smith, president and CEO of Tyson Foods. He and his company were questioned last year when Tyson bought Hillshire Brands for $7.7 billion. That was a lot of money, but buying the makers of Jimmy Dean Sausage and Ball Park Franks expanded Tyson’s already considerable reach. Tyson’s operating income rose 37 percent this year to $2.25 billion, and its sales of $40.6 billion are an increase of 9 percent over last year. That’s not chicken feed.

Honorable mention: George Gleason, CEO of Bank of the Ozarks. The $800 million purchase of Georgia-based Community & Southern Bank was the largest bank buy in Arkansas history and made Bank of the Ozarks an instant major player in Georgia. Full disclosure: I own a journalist-sized amount of stock in the company – meaning, not much.

In health care, I’m making New Hampshirite John Stephen an honorary Arkansan. Hired by the Health Reform Legislative Task Force to consult on reforming Medicaid, he and his firm, The Stephen Group, have offered information, insight and solutions, and as a result have much influence over Arkansas policymakers. They’ve argued the state shouldn’t completely ditch the private option while also shining a light on Medicaid’s problems. When he speaks, lawmakers listen, and he’s been speaking a lot.

Honorable mention: Hospital CEOs Troy Wells (Baptist Health), Dan Rahn (UAMS) and Chad Aduddell (CHI St. Vincent) are leading three of the state’s big institutions in a consolidating industry. You know how other areas of the economy such as banking and retail are increasingly dominated by a few players? It’s happening in health care, too.

In sports, it’s Brandon Allen, Arkansas Razorbacks quarterback. Has an athlete ever made such a quick turnaround from supposed “choker” to “clutch”? After missing late-game passes early in the season, he’s become one of the SEC’s most reliable quarterbacks and was one of the main reasons the Razorbacks won five of their last six games.

Honorable mention: Bret Bielema, Razorbacks football coach. He stuck with Allen and never lost faith in the team even when some were losing faith in his coaching ability. The Hogs have improved every year since he was hired.

In charities and nonprofits, The CALL and Project Zero are finding foster and adoptive homes for kids who really need them. The issue attracted attention this year when a report detailed problems with the state’s foster care system, and when Hutchinson spotlighted those children’s needs at his faith-based summit. Since 2007, The Call has brought 758 foster and adoptive families into the system, its website says, with more on the way. Project Zero, meanwhile, raises awareness through its Heart Gallery photos of waiting children.

Honorable mention: Too many great ones to name.

So who is the Arkansan of the year? There’s no way for me to know. What seems noteworthy today will be forgotten tomorrow, while seemingly minor events will have lasting consequences. (“Baby born in manger” probably didn’t make many headlines.) Maybe the names I’ve listed were important, or maybe they were just important to me.

At any rate, that’s my list. What’s yours?