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Auditor Calls for $24 Increase in Active Bar Members’ Dues
Under Parks’s Proposal, Base Dues Amount Would Increase to $414 in 2024—but That Figure Assumes State Bar
Takes Steps to Boost Fees for Special Services; Auditor Notes Agency Is Dipping Heavily Into Its Reserves
By a MetNews Staff Writer
The State Bar of California has been engaging in deficit spending, State Auditor Grant Parks said in a report to the governor and Legislature released yesterday, advising that a hike in members’ dues for next year is required, but commenting that the increase need be no greater than $24—bringing the base fee for active licensees from $390 to $414—if there is a boost in fees for particular services.
Lawyers on inactive status currently pay an annual fee of $97.40. It would be raised by $6, for a total of $103.40, under Parks’s proposal.
In addition to the $390 base fee for active members, there are these assessments: $40 going to the client security fund, $25 to fund discipline, and $10 for lawyer assistance, bringing the actual fee to $465. However, deductions may be made in the amounts of $45 for legal services assistance, $2 for elimination of bias, and $5 for legislative activities which, if all deductions are made, lowers the actual fee to $413.
Only the base amount would be affected under Parks’s plan.
Resistance to Dues-Boost
A plea last year for a dues increase was denied by the Legislature and, the auditor related, the State Bar has been reluctant this year to make another such request. He told of State Bar Executive Director Leah T. Wilson’s explanation that this is the product of conversations with legislators and their staff members which reveal that the Legislature would still not be receptive to a plea for higher dues.
Parks said that “the executive director explained that…effective collaboration and partnership with the Legislature is critical to the State Bar’s ability to carry out its mission” and that, in light of the “feedback” from legislators and staff members, “the executive director believes it is not in the best interests of the State Bar to destabilize these relationships by continuing to request fee increases.”
The auditor warned, however:
“If the State Bar continues to operate its general fund at a deficit, it risks depleting its reserve and not being able to pay for its programs and administrative offices.”
He noted that the State Bar in 2022 collected $96 million in dues payments, yet spent $97.6 million, and that its reserve of $23 million in 2018 is expected to fall to $8.1 million at the end of this year.
State Bar’s Response
The State Bar’s response to the audit did not reflect the reluctance to seek a dues increase that the Auditor’s Office had discerned on Wilson’s part. Ruben Duran, chair of the State Bar Board of Trustees, said in a press statement yesterday:
“We agree with all of the recommendations in the 2023 State Auditor’s report. We especially appreciate the audit’s recognition that a licensing fee increase is needed to sustain State Bar operations, particularly if we are unable to sell our San Francisco headquarters building, or to use the proceeds from sale of the building to support our operations. This conclusion from the audit reinforces a message that the Board of Trustees and State Bar leadership have relayed in recent months.”
In its formal response, the State Bar indicated that the increases in dues Parks proposes might be, by a slight amount, too little. The response says:
“The State Bar does wish to clarify that the recommended increases of $24 (active) and $6 (inactive) assume a continuation of the 15 percent personnel vacancy rate currently reflected in the organization’s 2023 and projected 2024 budgets as austerity measures. Given the report’s observations about the relationship between staffing levels and the ability to meet performance metrics, this may be unwise. A more modest vacancy rate of 5 percent, aligned with that assumed by many government agencies, might be a more appropriate target. The additional amount needed to achieve this staffing level totals $35 (active) and $9 (inactive).”
Commenting on the State Bar’s response, Parks noted that the State Bar had not shared that perception with his office prior to submitting its formal response, but noted that the 15 percent vacancy rate squares with that of other state agencies and he said he stands by the recommendation.
Parks’s Summary
Parks provided this summary of his findings:
“The State Bar is currently in a difficult financial position. In recent years, it has often spent more from its general fund than it has received in revenue. As a result, its general fund reserve has fallen below the minimum amount established in its policy. The State Bar’s deficit spending has largely been the result of its rising personnel costs, which will continue to increase as it implements planned cost-of-living and merit salary adjustments for its staff in the coming years. Further, none of the State Bar’s administrative offices are fully meeting their performance measures, likely in part because some have high staff vacancy rates. To address its growing costs and rebuild its general fund reserve, the State Bar will need a mandatory licensing fee increase in 2024. However, it can minimize this increase and other future increases by raising other fees it charges for certain services to fully cover its associated costs and updating other out-of-date fees.”
Parks enumerated service fees and the amounts currently being charged:
Minimum Continuing Legal Education (“MCLE”) provider certification, $90–$360; MCLE compliance, $25–$200; conducting mandatory fee arbitrations where disputes arise between lawyers and clients, $50–$5,000; certifying lawyer referral services, $1,000–$10,000; proving certificates of an attorney’s standing, $25; certifying professional law corporations, $75–$200; certifying professional partnerships that limit partners’ liability, $75–$2,500.
The auditor recommended that by next October, the State Bar identify all service fees “that do not fully cover the costs of providing the services” and increase those fees “unless it determines doing so would limit the public’s access to services or the Supreme Court does not provide any required approval for the increase.”
Other Findings
Parks also reported that where the State Bar farms out disciplinary investigations owing to a conflict, it fails to “effectively monitor external investigations” and “has not formalized its process to ensure that its external investigators are free from conflicts of interest.”
He recommended that it go over the billings it has received for such services to make sure the amounts are reasonable.
The auditor also declared that the State Bar “is not proactively planning for its financial future through long-term financial forecasting” which “would enable it to better identify and address future sources of financial stress.”
Copyright 2023, Metropolitan News Company