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Bar governance issues at the forefront

Editor’s note: On June 2, after this story was published, the state Assembly approved the State Bar’s fee bill with further amendments.

By Laura Ernde
Staff Writer

A State Bar task force will continue discussions about dividing the bar into separate regulatory and trade associations, even as the state Assembly turned down a proposed fee bill that would have eliminated six attorney-elected seats on the bar’s Board of Trustees.

Members of the assembly rejected AB 2878 on a 8-44 vote late last month. It called for the board to shrink from 19 members to 13 members by October 2019 as the elected trustees’ terms expire. Assembly members said they rejected the measure because they wanted to see more changes at the State Bar, but they were not specific.

AB 2878 did not include a proposal to split up the agency's regulatory functions from its trade association activities.

If passed, the bill would have called for the board to be made up of seven attorneys and six non-attorneys appointed by the governor, the Legislature and the Supreme Court. New appointees would be required to have expertise in government regulatory functions or fiscal management.

Other proposed changes would have required the State Bar to study a deficit in the Client Security Fund – which reimburses victims of attorney fraud – and repeal the authority of the State Bar to create nonprofit foundations. As it stands, the annual licensing fee for attorneys would remain the same as 2015.

The vote took place against a backdrop of a California State Auditor’s report and a series of legislative reports that suggested additional operational changes.

Some of the fee bill amendments arose from the California State Auditor’s report last month.

Although the audit took a critical tone, it also noted that the State Bar has undergone significant turnover of its management team. Elizabeth Rindskopf Parker, former dean of McGeorge School of Law, joined the bar in the fall, along with Chief Operating Officer Leah Wilson and General Counsel Vanessa Holton.

“Given the magnitude of those changes, we are optimistic that the State Bar may improve the clarity of its financial communications and that its financial decisions may reflect better judgment,” Auditor Elaine Howle said in the report.

The audit touched on a number of steps that the bar’s new leadership team has undertaken to address past lack of transparency and improve the organization going forward. The State Bar has:

  • Employed a better process for preparing its financial statements.
  • Implemented new reporting requirements of the Governmental Accounting Standards Board.
  • Addressed a backlog of judgment filings to attempt to recover money owed by disciplined attorneys.
  • Included state government executive branch salaries and benefits for comparison in a comprehensive salary and benefits study to be completed by October 2016.
  • Dismantled a nonprofit organization that had been created by previous leadership without Board of Trustees approval.
  • Adopted a reasonable reserve policy as recommended by the State Auditor in June 2015.

“As an agency committed to transparency, accountability, excellence and financial responsibility, we thank the State Auditor for its recommendations,” Parker said. “We believe a close look at the audit findings shows we have made significant progress.”

The four legislative reports the State Bar filed last month were required by last year’s annual fee bill as a result of the auditor’s 2015 findings. Parker said the reports provide a roadmap for ensuring that the bar effectively and efficiently uses its revenues and is committed to improvements.

A workforce planning report recommended operation changes to make the Office of Chief Trial Counsel work more efficiently, including the creation of combined intake and enforcement teams to investigate and prosecute attorney misconduct. The recommendations are to be implemented by the end of the year.

A compensation and benefits study for the trial counsel’s office found that attorney salaries were below the labor market median, and non-lawyer positions were above market median. Parker and Wilson said they want to avoid salary reductions for current employees. A bar-wide compensation and benefits study is underway and current labor agreements expire at the end of the year.

A backlog report outlined the resources needed to fulfill the bar’s statutory requirement to review all complaints against attorneys within 180 days, which has been the subject of previous audits. The report found that meeting the current standard would require 81 additional full-time positions.

Finally, a spending plan estimates that the cost of implementing the various recommendations in the reports ranges from $1.5 million to $10.4 million. It notes that more than 80 percent of membership fee revenue goes to the bar’s discipline functions.

The State Bar’s Governance in the Public Interest Task Force will complete its report in July. That report will provide additional guidance for the bar and its oversight bodies, Parker said.

The task force is scheduled to meet June 14. Two trustees on the task force have proposed separating the bar into two organizations – one to handle regulatory matters and one to house unspecified “trade association” functions.

Trustees Dennis Mangers and Joanna Mendoza want the bar’s regulatory functions – including attorney admissions and discipline – to be overseen by a 13-member board made up of seven non-lawyers and six lawyers. A private nonprofit would take on the bar’s unspecified “trade association” functions. The proposal called for the State Bar to work out the details and implement the de-unification plan by January 2019.

Chief Justice Tani Cantil-Sakauye has cautioned against any rushed decisions for the agency, which is an arm of the California Supreme Court.