This document reports the proceedings of a 1985 conference on preventing the legal problems that could grow out of the implementation of career ladder and merit pay programs for teachers. The contents of the report include a welcome by Preston C. Kronkosky; an overview by Virginia Koehler of the goals, characteristics, and demands of career ladder and merit pay plans; reviews by state legislators or legislative staffers of the state legislation regarding such plans in Arkansas, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas; and a brief discussion of some of the points covered in the legislative review. The report then presents addresses on "The Teachers' Perspective on Career Ladders and Merit Pay," by Karen Lee Johnson; "The Administrators' View on Career Ladders and Merit Pay," by Joe E. Hairston; "Preventive Law: Its Application to Career Ladder Policies," by William C. Bednar, Jr.; and "Local Education Agency (LEA) Perspectives," by Kelly Frels. Questions and responses raised in discussion among these speakers are presented next. "National Perspective: Liability and Risk for LEAs," an address by G. Ross Smith, completes the report. Among the topics addressed at the conference are planning, the attitudes of those affected, needs for local level commitment, possible conflicts, teacher evaluation, the nature and potential of a preventive law approach, client-lawyer relationships, and legal liability. Appendixes present the conference agenda, biographical data on the presenters, and addresses of conference participants. (PGD)