State Bar, Lui wrote. It creates an unhealthy
obsession with annual budgeting, precludes long-range planning and causes inefficiencies,
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 cant 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
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.
also said the State Bars 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 bars 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
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 bars 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
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 banks
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 bars
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
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