Governor vetoes the State Bar fee bill

By Nancy McCarthy
Staff Writer

Reacting to Gov. Schwarzenegger’s veto of the State Bar dues bill last month, bar President Howard Miller said the governor’s concerns are “legitimate” and may force the bar to make some necessary changes. “Events such as the governor’s veto message can challenge the State Bar to renew itself as an institution and its service to the public and the legal profession,” Miller said. (Read Gov. Schwarzenegger's and State Bar President Howard Miller's messages.)

Although SB 641 — authorizing collection of $410 in 2010 dues from active members — won passage in both houses of the legislature by wide margins, Schwarzenegger said he would not sign the bill “because the State Bar cannot continue with business as usual.” In particular, he criticized the agency for a recent state audit that found inefficiencies in the discipline operation, the embezzlement of $675,000 by a former employee and the unauthorized disclosure of the rating of a candidate for the appellate bench.

“As the organization charged with regulating the professional conduct of its members, the conduct of the State Bar itself must be above reproach,” Schwarzenegger wrote in his veto message. “Regrettably, it is not.”

He encouraged the bar to “resolve these issues as soon as possible” so the legislature can reintroduce a dues bill early next year.

The bar faced a similar crisis in 1997 after Gov. Pete Wilson vetoed a two-year fee authorization, charging the organization had “done its best” by its actions not to deny but to verify the charges of disgruntled members who characterized it as “bloated, arrogant, oblivious and unresponsive.” Although Schwarzenegger’s criticism was not as harsh, he said Wilson’s concerns about inefficiencies remained “unaddressed” and the bar’s role in evaluating judicial candidates suggests its “political agenda continues.”

The bar is funded by its members and must win legislative authorization to collect fees from those members. In recent years, it has obtained one-year bills, despite efforts to win multi-year authorizations.

After the 1997 veto, the bar assessed each active member a $77 fee and asked lawyers to pay the full freight voluntarily. At the time, member dues were authorized at $458. The board of governors also required members of the MCLE group facing a compliance deadline to meet the requirement, but did not impose a penalty on those who did not.

Nearly 500 employees were laid off, operations were pared to a minimum and the discipline system was nearly defunct. Efforts to pass a new bill failed repeatedly and the Supreme Court ultimately ordered lawyers to pay a $173 assessment, in addition to the $77, to keep the discipline system afloat. By then, the backlog totaled almost 7,000 cases. It was not until September 1999 that Gov. Gray Davis signed a fee bill that capped active member dues at $395.

This is not, and should not be, 1997, said Miller. He added, “We are working with the governor’s office and legislature to meet and address as quickly as possible every issue raised by the governor and hope to have a dues bill in time to avoid sending a notice of any layoffs.”

Schwarzenegger based his veto on two issues:

• A state audit released in July criticized negotiated salary increases over the past five years, an increase of $12 million in the operation of the discipline system — roughly 5 percent per year — while the number of inquiries declined. The audit also criticized the embezzlement of nearly $676,000 by a former employee.
• The governor also was unhappy with the Commission on Judicial Nominees Evaluation (JNE), whose “not qualified” rating of former Sen. Charles “Chuck” Poochigian was leaked to a newspaper. All JNE deliberations are required to remain confidential and the leak led to an investigation by the board of governors to determine its source.

Schwarzenegger questioned JNE’s impartiality, pointing out that in Poochigian’s confirmation hearing before the Commission on Judicial Appointments, Chief Justice Ronald George said JNE did not follow statutory guidelines when considering judicial nominees.

JNE ranked Poochigian “not qualified” because he had not practiced law for 21 years, has no criminal law or jury trial experience and has never handled an appellate case. While he is “intelligent, diligent and articulate” and committed to public service, that isn’t enough to overcome his lack of legal experience, JNE chairman Jonathan Wolff wrote in a letter to the appointments commission.

But at the confirmation hearing in September, George said JNE ignored a 2007 state law requiring it to consider “legal experience broadly” when evaluating judicial candidates. The panel “did not follow its own standards or the statutory standards,” George said. He also said seven state senators moved from the legislature to the appeals court since the early 1960s.

“By failing to follow the law,” Schwarzenegger wrote in his veto message, “the JNE Commission has damaged its reputation for impartiality and, in turn, the State Bar’s.”

Poochigian

Poochigian, who also worked for Govs. George Deukmejian and Pete Wilson, was unanimously confirmed to the 5th District Court of Appeal.

State Bar Executive Director Judy Johnson said the bar “takes very, very seriously” the concerns raised by the state audit and has taken steps to fix the agency’s internal fiscal controls. “We thought we were well underway in addressing the concerns raised by the auditor,” she said.

Miller said “the embezzlement of $675,000 over an eight year period was beyond inexcusable and demonstrated a lack of internal controls.” He added that the internal control issue is being directly addressed by the board of governor’s audit committee, chaired by Laura Chick, a public board member appointed by the governor. Chick is a former controller of the City of Los Angeles and current Inspector General of California, a post to which she was named by the governor.

The leak of the Poochigian rating, a violation of law, is being investigated by a special board committee, chaired by William Gailey, a former police detective and public board member also appointed by Schwarzenegger. The committee has hired its own independent investigator and has subpoena powers and the authority to seek testimony under oath.

Miller was hopeful that candidly facing the issues raised by the governor, including the issues he raised about JNE, will permit the dues bill to be reintroduced and acted upon positively. “The board of governors will consider at its November meetings all these things, and a range of responses to the governor and the public.”

Miller said he was encouraged by Schwarzenegger’s statement that the bar “has an essential role in the state’s justice system and must continue to oversee the licensing, education and discipline of California’s lawyers.”

“We want to assure the governor and public,” Miller said, “that even in the midst of this crisis we are continuing to meet our responsibilities. The Office of Chief Trial Counsel, particularly, continues its enforcement efforts, including expanded efforts to deal with attorney conduct on loan modification fraud.

“Even as we focus on our problems, we’ve got to keep working on our important missions of licensing and public protection.”