California Bar Journal
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Bar master recommends long-range vision
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State Bar,” Lui wrote. It creates an unhealthy obsession with annual budgeting, precludes long-range planning and causes inefficiencies, he said.

“Without knowledge of its future finances, the State Bar cannot plan for the future and is dramatically hindered by its inability to engage in such basic and essential financial planning,” Lui wrote. “Indeed, no public or private business can operate effectively and efficiently on such a precarious year-to-year basis.”

Judy Johnson, the incoming executive director, agreed that strategic planning is crucial for any business. “You can’t do it without some certainty as to your income stream,” she said. “Some certainty with regard to the fees is important for our programs and for being able to effectively manage our resources.”

Under the present system, the bar must seek a funding bill from the legislature every year. The process includes finding a sponsor as well as months of lobbying.

A three-year budget would enable the bar to make long-term strategic plans, redirect its resources towards implementing those plans instead of devoting its efforts to securing a fee bill, and raise employee morale, Lui said.

If an increase were needed, the bar could seek special legislation.

Justice Elwood LuiLui also said “the State Bar’s annual fees are not high” when compared with other professional and license fees. He pointed out that the bar bears the cost of review proceedings for disciplined lawyers, whereas other professionals seek review through administrative mandamus actions which are funded by trial courts. The vast majority of bar dues — almost 80 percent — support the discipline system.

Lui also criticized the board of governors for appearing “overly to concern itself with the details of the day-to-day management” of the bar. Instead, it should focus on policy issues and leave the nuts-and-bolts to bar executives, he said.

The length of time the board sometimes takes to make a decision results in both lack of guidance for the staff and inaction, he said. Lui blamed most of the bar’s technological deficiencies on board-commissioned studies and follow-up discussions over several years. Had it limited itself to the simple issue of whether better technology was needed, such technology likely could have been implemented, Lui said.

He also criticized the board for its involvement in the most recent fee statement sent to members, describing the bill as “unnecessarily complex” because it reflects the interests of competing groups.

Indeed, the bill was so complex that the bar’s bank has been unable to process many statements although it charges a fee each time it handles a statement. Instead, it has returned the statements to the bar, which has processed them manually before returning them to the bank, which charges the bar a second time for processing.

“Thus, by delving into the details of the fee statement, the board created an overly complex fee statement — typically a revenue-making matter — which has cost the State Bar in time and resources . . . and on the bank’s doubled transaction costs,” Lui wrote.

In another decision where Lui said the board overstepped management boundaries, it voted to offer credits to attorneys who paid voluntary fees during the bar’s financial crisis. That decision, Lui said, created an $11 million risk. Nonetheless, the board reserved only $2.45 million in the 2000 budget to cover potential credits.

Bar executives “avoided a potential material financial problem” by providing for a reserve to cover any shortfall. However, Lui said, “the board risked the financial stability of the State Bar on the basis of a questionable assumption — that most members eligible for the credit would donate their credit back to the bar.”

In other recommendations, Lui said:

A new executive director should have strong management capabilities and be given budgetary controls over every department.

As it continues to upgrade its technology systems, the bar should create an information systems and technology department and create a position for a department director.

It should expand its web site.

The discipline system should continue to streamline. Among other changes, the bar should develop a minor misconduct program and use volunteers to mediate low priority cases. State Bar Court opinions should be shortened.