IT HAS BEEN smooth sailing so far for the revised Article 9 of the New Hampshire Uniform Commercial Code (UCC), enacted on July 1, 2001 as part of a national effort to substantially update the legislation for the first time since 1972. According to Assistant Secretary of State Anthony Stevens, other states' UCC overhauls haven't gone quite as smoothly.

Stevens notes that other states have had to deal with problems stemming from "significant oversights" in their legislation, such as omitting mechanisms to file federal tax liens. He says that much of the credit for drafting New Hampshire's legislation should go to attorney James O. Barney of Sulloway & Hollis, Concord.

Barney estimates that he donated roughly 400 hours of time over a year and a half to help develop and draft the legislation that ultimately passed. "I was able to do it because I had a slower period in my practice and I could put in some extra hours," he explains.

As an attorney concentrating in real estate acquisitions, development and financing, Barney has a strong interest in the use of Article 9 in transactions. Article 9 governs the way in which lenders obtain, perfect and enforce security interests in personal property. From 1993 until 1998, the National Conference of Commissioners on Uniform State Laws and the American Law Institute worked to draft amendments that would modernize and simplify the existing legislation.

The recommended amendments to Article 9 had a nationwide uniform effective date of July 1, 2001. It was left up to each state how it would alter existing rules and implement changes.

In New Hampshire, UCC financing statements had traditionally been filed with both the Secretary of State's Office and town or city clerks. As one of the few states in the country with a duplicate filing system, New Hampshire had a particularly daunting task to comply with a new national requirement for streamlined filings.

The dual filing system had been a concern for quite some time. In 1997, Marcus Hurn and William Murphy, both professors of intellectual property law at Franklin Pierce Law Center, encouraged the New Hampshire Senate to address the issue. Under the leadership of Senator Edward "Ned" Gordon, an attorney from Bristol, SB472 was enacted in 1998. The bill established that the proper place to file in order to perfect a security interest would be the clerk of any city or town participating in a centralized electronic filing system administered by the secretary of state.

Barney's involvement began when he substituted for his partner, Fred Potter, as a Bar Association representative on the UCC User Advisory Committee. The Advisory Committee was formed by the New Hampshire Secretary of State's Office in 1999 to figure out how New Hampshire could comply with the nationwide uniform effective date for a revised Article 9.

Barney served on the Advisory Committee with fellow Bar Association representative Frank Mesmer, Jr., as well as state Representative Tara Reardon, an attorney in private practice in Concord, and Susan Duncan, an aide to Sen. Gordon. The Advisory Committee evolved into a stakeholder study group, which also included representatives from the Secretary of State's Office, bankers, municipal clerks, legislators and other stakeholders. The group met throughout the summer and fall of 2000. The Committee's work culminated in a detailed report in November 2000.

"Our main focus was to meet the July 1, 2001 uniform implementation date for revised Article 9. Otherwise, we would have a big problem coordinating with other states," comments Barney. The Committee concluded that the scenario set forth in SB472 to eliminate dual filing was not feasible. Participants agreed that cities and towns would not be able to purchase equipment and software or complete training to comply with the July 1 implementation for electronic filing. It recommended, instead, that all financing statements covering personal property be filed only with the Secretary of State's Office.

Barney says that municipalities were concerned about the loss of revenue from filings. "In looking at that concern and aiding in transition, we developed another goal to continue municipal involvement," he says. Under the new system, municipal clerks would still be responsible for filing federal and state tax liens against individuals and perform ancillary filing services.

Barney volunteered to draft revisions in Article 9 to bring it in line with the national changes and accommodate recommendations from the User Advisory Committee for implementation in New Hampshire. A comprehensive first draft, prepared by Bruce Harwood and Brad Cook of Sheehan Phinney Bass + Green, adapted the uniform law developed by the NCCUSL to New Hampshire law. Using the draft, Barney began a two- to three-month process of fine-tuning and augmenting the legislation.

The legislation was first introduced to the House Commerce Committee on Feb. 15, 2001. The Commerce Committee endorsed the bill as written with only minor changes. The legislation passed the Senate on June 12, 2001 and was signed into law June 26, 2001 - just a few days shy of the July 1 national deadline.

"I think everybody assumed and hoped that we would be successful, but with such major legislation, you're never sure that something won't derail you," comments Barney. He gives credit to Anthony Stevens, assistant secretary of state, and Brad Cook for "keeping everything on track."

"Brad Cook was key in passage and implementation," says Stevens.

The remarkably fast passage of the 130-page UCC bill was testimony to the stakeholder involvement in the planning effort and the importance of the legislation. In New Hampshire alone, collateralized loans associated with UCC filings can be measured in billions of dollars. In addition, Article 9 of the UCC is considered to be part of the foundation for any new intellectual property law. Stevens says that the 50-state adoption of the Revised Article 9 is a "huge achievement for the nation."

"It is a big step, and a necessary one to advance intellectual and property law nationally. There will be more to come," adds Stevens.

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