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LACBA Is in Financial Straits, Owes Seven Months’ Rent
However, Association Is Largely Holding Onto Members Despite Halt to In-Person Meetings
By a MetNews Staff Writer
Expenses of the Los Angeles County Bar Association, hard-hit by the COVID-19 pandemic, exceeded its revenues by more than $800,000 for the period from the start of the year through Aug. 31, and it has not paid rent on its downtown Los Angeles office space since March, according to a financial report that will be discussed by the organization’s Board of Trustees tomorrow, via a Zoom meeting.
The report was distributed by email on Sunday to 105 LACBA leaders by the Council of Sections, an unofficial bar watchdog group.
A financial summary attached to the agenda for tomorrow’s meeting shows revenues for the first three quarters of 2020 to be $6,303,654, expenses to be $7,106,632, with a $802,978 shortfall. That loss is partially offset, however, by allocating to that period $104,183 of a 2017 cy pres award—with $156,275 budgeted for the full year—resulting in a $698,795 deficit through the end of August.
The “good news” for LACBA, however, is that this year’s decline in membership has been less than the norm, despite the relegation of meetings to ones conducted via Zoom and other remote electronic means.
The report says that LACBA is behind its budget for the year by $748,000, and explains:
“The effects of the pandemic specifically in Section programming, the absence of an Installation Gala and the subsequent sponsorship income as well as a decline in print advertising revenue all contribute to the largest swings thus far.”
Cost of Rent
A crippling expense for LACBA has been the rent. The association’s executive director, Stanley Bissey, yesterday told the METNEWS that “the long term lease for downtown Los Angeles office space that we do not need and can no longer afford” has been the “biggest financial challenge, even before the pandemic.”
LACBA leases two floors in the high-rise office building at the northeast corner of Seventh Street and Bixel Avenue, but it needed—even before the pandemic hit, with some employees now working from home—only a single floor.
The financial report says:
“Unpaid rent continues to accrue ($840,000) April through October and is reflected on the financials as an expense.”
The amount budgeted for rent this year is $1,423,353.
Subtenant Sought
In light of the health emergency, the courts are not handling unlawful detainer cases. However, there is no indication that the owners of the building have any desire to eject LACBA rather than holding it to the lease, which expires March 31, 2026.
That the space is not easily rentable is evidenced by the fact that LACBA, which leases the 26th and 27th floors, has been seeking, without success, to sublease the 26th floor, comprised of 20,023 square feet.
On Nov. 7, 2016, LACBA’s then-President-Elect (later President) Michael E. Meyer—who gained office as part of a reform movement spearheaded by the Council of Sections—said at a meeting of that group that the then-chief executive officer, Sally Suchil, had made a “horrible decision” in signing an amendment to the lease under which LACBA lost its annual prerogative of withdrawing early from the lease. She did so in return for some concessions.
Membership Losses
While membership in LACBA continues to decline, as it has over the past several years, the drop is not as substantial as had been prognosticated even before the pandemic hit, notwithstanding that live meetings have been halted. The report notes:
“Dues Revenue continue ahead of budget by $90,000, however we continue to lose members as the budget for 2020 planned for a 9 percent loss and what we have is less than that. While that reflects positively for budget purposes it remains an area of concern as a membership organization.”
Dues revenues through Aug. 31 amounted to $1,846,394, while $1,756.620 had been anticipated at that point, meaning that $89,674 more has been paid in dues than was expected before the elimination of in-person events.
Bissey Comments
Bissey yesterday explained LACBA’s success in holding onto members during the pandemic, saying:
“We have partnered with the courts to help the Los Angeles legal community to weather the current pandemic. We have increased LACBA’s outreach to attorneys and other bars throughout Los Angeles County and beyond. We have also embraced the necessity of remote programming, initially offered at no charge, our members responded and almost uniformly approve of and appreciate the shift.
He continued:
“Because of our close working relationship with the court, LACBA became the conduit for information. Members and non-members, affiliated and identity bars saw LACBA leading the way through an uncertain year. That resource and the continued flow of information from the court, justice partners, the Judicial Council and others was invaluable—as was the free programming LACBA and our sections provided, virtually throughout the year.”
Although LACBA’s membership was once in excess of 24,000, it has dipped in recent years to less than 10,000.
Bissey related:
“As we move into the dues renewal season approximately 8,500 attorneys are dues paying members with an equal number of members receiving free membership as new and second year attorneys. My expectation is that we will continue to see the support and perhaps even growth resulting from the role LACBA has played as the voice of lawyers in Los Angeles during the pandemic and more so as we emerge towards better days.”
Financial Plight
Addressing the current financial situation, the executive director remarked:
“We have worked hard to cut costs and increase efficiency. In recent years we have reduced staff by 20 percent and almost $1 million since 2017. We have imposed a moratorium on hiring, salary increases, 401K contributions and increased staff responsibility for a percentage of their healthcare coverage. The budget for 2020 was a balanced budget. At the beginning of the year we fully expected to stabilize membership attrition and we are still making progress in that regard despite the economic turmoil of the pandemic.”
He declared:
“As LACBA begins work on the 2021 annual budget, the elected leadership and staff are exploring all options for the financial stability and sustainability of the bar.”
Copyright 2020, Metropolitan News Company