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Bar board weighs eliminating some fee waivers

Faced with tightening financial circumstances, the State Bar Board of Governors is considering eliminating some waivers of bar dues that could  produce more than a half million dollars a year in additional revenue. Although the bar staff had asked that the changes be made on an emergency basis, the board postponed any action until next year after several governors said there was no urgency. The board sent the proposal out for public comment.

The bar is projecting a deficit of $3.4 million for 2011. Its revenues, primarily from attorney fees, are reduced each year by about $3.1 million as the result of several options for lawyers to pay less dues:

  • Fees are waived entirely for inactive lawyers over 70, at a cost of $1.2 million in 2010;
  • Lawyers who earn less than $40,000 annually from all sources are entitled to a 25 percent reduction in their fees, at a cost of $1.3 million; and
  • Discretionary waivers offered through board rules cost another $623,000.

The 2011 fee bill signed by the governor last year also earmarks $10 of every lawyer’s dues for diversion to legal services programs. Attorneys who do not wish to pay that amount can deduct it from their dues. Either option means a reduction in the bar’s general fund of $2 million. “I want to be able to stem the tide of revenue losses,” chief financial officer Peggy Van Horn told the board.

The discretionary waivers category has grown by 400 percent since 2006, from $125,000 to $623,000, presumably because of the recession. It could mean a revenue loss of $800,000 this year if the historical growth trend continues. Acknowledging that the bar needs to retain the flexibility to waive fees for lawyers who are in dire economic straits, Executive Director Joe Dunn nonetheless favors eliminating three of the grounds for waivers. “I’d very much like to see us tighten this up,” he said, adding that he is concerned about what he called “the serious uptick in board waivers.”

Bar financial officials proposed ending waivers for lawyers who earn less than $20,000 a year (claimed by 860 lawyers for a loss of $330,000 in 2010); for medical hardship (claimed by 240 lawyers for a loss of $106,000) and the one-time-only waiver for other reasons (claimed by 1065 lawyers for a loss of $123,000). Together, those waivers meant a revenue loss of approximately $560,000 in 2010. Waivers for military service and for certain judicial officers would remain unchanged.

A 2009 American Bar Association survey found that 26 of 33 unified bars that responded offer no dues reduction based on an attorney’s earnings. In addition, no other regulatory state agency was identified that offers dues scaling.

Several board members raised objections to eliminating the waivers during the current billing cycle (the dues deadline was Feb. 1) and Dunn acknowledged that such a mid-stream change “can create more of a member political storm than we want.”

Los Angeles governor Pat Kelly said he is sympathetic to lawyers who are struggling financially but “we have to make some hard choices . . . It really comes down to having the resources to fulfill our public protection mission. As painful as it is, we have to communicate that we mean business. We have to find ways to cut.”

But James Aguirre, also from Los Angeles, said he thinks it’s unfair to balance the budget on the backs of those who can least afford it. “Every time we reach a crisis of this type,” he said, “why is it that we look to the people who are hurting the most to balance the budget? I think it’s ridiculous we even think about implementing this kind of plan.”