Should the State Bar be abolished?
by PETER APPLETON
For lawyers in California, the time is here to decide between the status quo or taking risks to do better
by JOHN McGUCKIN
It is important to demystify the State Bar dues process and focus on some hard choices posed by SB 60
We should make our decision about the State Bar's future on the basis of facts, not bar junkie endorsements. Given the facts, do we want to keep the status quo or are we willing to take some risk in order to do better? Consider the following:
The State Bar is not a lawyers' organization. It is a public regulatory agency created by the legislature to assist in matters of admission and discipline of attorneys. Lawyers are "members" only because the Business & Professions Code so dictates and "membership" cannot compel lawyers to do anything other than pay money, complete MCLE and obey the Rules of Professional Conduct.
Although it is natural for us to assume that people we elect will serve our interests, that is not the case with the Board of Governors. They do not represent lawyers and they do not take positions on behalf of lawyers.
A yes vote on the plebiscite will not abolish the bar. The plebiscite offers the ultimate in self-regulation, the opportunity to send the message that the State Bar, as currently structured and operated, is unacceptable. Restructuring legislation would come later and we could offer our input.
The State Bar argues that if it were abolished, our profession would be controlled by a political board. That is not what the plebiscite says and there is no reason why the "new state agency" described in SB 60 could not be a lawyer-governed downsized version of the current State Bar (if that is what we want), coupled with a voluntary lawyers' organization in which we would be able to govern ourselves free from the influence of public members appointed by politicians and free of political restrictions. To move governance of the legal profession outside of the judicial branch probably would be unconstitutional. Hustedt v. Workers' Compensation Appeals Board, 30 Cal.3d 329, 335-346 (1981); Merco Constr. Engineers, Inc. v. Municipal Court, 21 Cal.3d 724, 729-30 (1978).
Furthermore, elimination of the mandatory bar could save us money. We now pay $478 per year, compared with $298 paid by California doctors. Illinois lawyers pay a mandatory fee of $140 and $220 to the voluntary bar association if they choose to belong. Lawyers in New York pay $150 per year, in New Jersey $175 and in Michigan $230.
Although the State Bar tells us that more than 70 percent of our dues is spent on discipline, according to its most recent Statement of Chargeable and Nonchargeable Expenses (year ended 1994), 55 percent ($28,575,799) was spent on discipline and 31.7 percent ($16,481,532) was spent on administrative overhead. The only way the State Bar is able to allocate 70 percent to discipline is to add in 80 percent of its administrative overhead.
The legislature, not the bar, determines what we pay in dues. Although the State Bar president has attempted to take credit for keeping dues flat, he is wrong. Dues are flat because the legislature rebuffed the board's request for a $20 increase. Lack of financial accountability is a primary reason why we have the most expensive bar dues in the country.
The primary example of the State Bar's lack of accountability to lawyers is our "Cadillac" discipline system. Why must we pay for the hotline the bar continues to urge clients to use against lawyers? Why must our State Bar Court prepare a written appellate opinion in each discipline case? A 4,000 complaint backlog in the mid-1980s resulted in a legislatively driven and law professor-designed discipline system that last year generated 128,063 calls to the hotline, of which only 6,119 resulted in investigations and only 2,358 (1.8 percent) in any form of discipline. Cost of the system was not a consideration because neither the legislature nor the law professor pays for it.
The State Bar does not speak for lawyers because it is afraid to do so for fear of legislative retaliation. Many statutorily compelled members do not consider the State Bar their representative at all. Even to the extent it attempts to represent all lawyers, the unified bar cannot do so because the interests of the lawyers who are compelled to belong to it are simply too diverse.
Those of us who now voluntarily contribute our time to our profession would continue to do so in a voluntary lawyers' association where we, as lawyers, would be free to do and say what we want, without the paranoid fear of offending someone in Sacramento.
Nor would legal services to the poor be reduced if the bar were abolished. For the year ended December 1994, the mandatory bar spent nothing on legal services and only 3.17 percent of its legal expenditures went to legal services delivery. IOLTA is mandated by statute. A true lawyers' professional organization should be more willing and more able to further the concept of equal justice than the current politically driven State Bar, an entity that must respond to politicians in Sacramento who have little interest in providing legal services to the poor.
Although nobody cites the State Bar as the model of efficiency or accountability, many lawyers appear to be afraid to do away with it because they do not know exactly what the alternative will be.
A yes vote will not eliminate regulation of the legal profession. We will always have a public regulatory agency paid for by all lawyers. That agency will propose rules to the Supreme Court and the Supreme Court will, through discipline, enforce those rules. The question is, should the public regulatory agency be cloaked with non-regulatory functions?
A yes vote will be the first step toward creation of a voluntary statewide lawyers' association free from the restrictions imposed by Keller and the stranglehold the legislature has on the State Bar by virtue of its control of the dues bill. For practical and legal reasons, the mandatory bar cannot allow lawyers to speak out on all issues of interest to them because compulsory membership precludes taking certain positions for fear of offending Keller or the legislature. A voluntary organization of lawyers could speak freely and advocate any causes of interest to its members even if that offended politicians. We must decide whether the ability to extract money from those who choose not to participate overrides the restrictions that the power to tax imposes on our ability to speak out and advocate causes of interest to us.
The plebiscite is not something for lawyers to fear. On the contrary, it is an opportunity for us to retake control of our profession. Almost everyone appears to acknowledge that the State Bar has serious problems. The question is whether a yes or no vote is the best way to force a resolution of those problems. If the yes votes win, we can take the next step. If the no's win, the pressure for change will stop and the State Bar will be able to go back to business as usual.
Peter M. Appleton
Peter M. Appleton, past president of the Beverly Hills Bar Association and former member of both the Board of Trustees of the Los Angeles County Bar Association and the executive committee of the State Bar Conference of Delegates, chaired the conference in 1989. He is a regional coordinator of the Lawyers' Committee for a "Yes" Vote.
Most lawyers only think about State Bar finances late in the year when the annual dues must be paid. As the general counsel of a bank with a 34-lawyer in-house department, I approve an avalanche of dues statements for my lawyers, all at the $478 level. I (or, more accurately, Union Bank of California, my employer) contribute more than $16,250 in dues to the State Bar annually. Each year, I budget for these payments, plus Section dues, ABA, American Corporate Counsel Association and local bar association dues, and I am more than a little conscious of the financial impact of these expenditures. Like so many other lawyers in California, especially those in sole or small firm practice, State Bar dues are a major portion of my annual expenses. For this reason alone, it is important to demystify the process and focus on some hard choices posed by the SB 60 plebiscite.
The annual dues are set within a range approved by the legislature. Each year, the State Bar presents is preliminary budget in Sacramento and subjects its dues request to the often skeptical review of California's lawmakers, the majority of whom are not lawyers themselves. It is unlikely that the legislature will completely surrender this power in a post-plebiscite world in which lawyers will continue to pay for the bar's regulatory functions.
When the Board of Governors finally sets the actual dues, it deals with three basic funds.
Ten dollars of the dues is segregated in the building fund, established by the legislature, which will cover the cost of the bar's San Francisco facilities at 180 Howard Street. While some have criticized the bar's relocation plan as unnecessary, its current Bay Area facilities are scattered in three locations, two of which are rental space. That's inefficient and costly.
Further, the building on Franklin Street is cramped and overcrowded. These fiscal issues will have to be addressed regardless of the plebiscite vote. In these circumstances, any business would weigh its options and, if it makes economic sense, look for other facilities. That's what the bar did. The Howard Street building was purchased and financed at no extra cost to bar members and will, over the next 10 years, result in a savings of approximately $10 million in facilities and other costs.
Forty dollars of dues is segregated in the Client Security Fund, also established by the legislature, to reimburse clients who have lost funds to dishonest attorneys. This fund has paid out more than $26 million since 1972 and is a major cornerstone of the bar's public protection program. It is unrealistic to think the legislature will agree to eliminate this charge on lawyers in a post-plebiscite world.
The $428 balance constitutes the bar's general fund and pays for all other activities except a few programs, such as admissions, which pay for themselves. In the 1996 budget, 70 percent of the general fund will be spent on discipline-related costs. Nearly $305 of the annual dues covers the attorney discipline process and, given the enormous volume which flows through the bar's discipline system, this heavy allocation of the general fund is hardly surprising.
Last year, for example, the bar received 137,000 calls from consumers throughout the state. While it is true that the majority of those calls were client relations problems, not ethics or malpractice issues, the bar still has to respond to these complaints and investigate many of them. This means we have to pay for staff, computers, voicemail, systems to track calls and responses, printing and postage, travel for investigators and other costs. None of this is unusual or unreasonable.
Like any business, the bar must continually reassess its policies and procedures to determine how it can do this job more efficiently and cost-effectively. This process has been underway for the discipline system since 1993. If continued, these financial and administrative initiatives will reduce each member's contribution to the discipline system. Already, largely as a result of ongoing re-engineering and staff reductions, we have saved $500,000 annually. More cost-cutting initiatives are in the planning stage.
It is not worth responding to the arguments that the State Bar should abandon or substantially reduce its discipline efforts or that California's attorneys will not have to pay for whatever system the legislature substitutes for the present system. Neither argument is realistic. Nor is it realistic to expect that creating a new bureaucracy in some other governmental agency will be any cheaper than the present system. It is realistic and imperative, however, that the bar police itself in a way that is perceived as efficient by both attorneys and the public and cost-effective by the bar at large. As this is achieved, dues will come down even further.
After discipline, the remaining 30 percent of the annual dues is divided among other bar programs and services. Some of these programs are required by legislation, regulation or court rule. Others are the result of decisions by the Board of Governors that a particular program or service is appropriate or necessary to protect the public or serve our members. This 30 percent is the real battlefield and these programs are potentially the greatest casualty of a yes vote in the plebiscite.
Be clear about the context of this part of the debate. Since 1991, there has not been a dues increase in California. Yet the State Bar has continued to provide and expand established programs and services, implemented new mandatory programs and services required by the legislature and introduced other programs and services without any additional dues levy on bar members. While bar members and the public have benefited from these programs, our members have not faced a dues increase because the bar, like any business which does not want to raise its prices, has funded all this activity through internal savings and cost reductions.
The issue before the bar now is, with dues coming down because internal re-engineering is beginning to yield substantial cost savings, can these voluntary programs be sustained? How will we pay for new or expanded programs, plus deal with the inevitable crises and calls for our assistance and input from judges, legislators and others? Put another way, which programs will a post-plebiscite voluntary bar fund and which will it have to eliminate? Will a voluntary bar be able to pay for:
All these programs and many more are sustained, in whole or in part, by the bar's general fund. While some California attorneys can say that they have never participated in any of these programs or benefited from any of these services, most of us have or know someone who has. The staff of the State Bar provides administrative support and, yes, critical overhead expenses for these programs and also permits us to respond to many crises faced by and demands made on the legal profession.
Will a new, unorganized and untested voluntary bar be able or willing to offer these programs? Will a voluntary bar dominated by those who can afford to pay both State Bar dues to support the discipline system and the start-up costs of a new voluntary bar feel the same way about the needs of the entire profession, especially its non-members? Will corporations, law firms and governmental agencies which now pay State Bar dues be willing to pay the extra cost of voluntary dues to sustain these programs and services? Who can say?
In the past, the Board of Governors has held dues at 1991 levels and funded new and expanded programs through internal cost savings. Since 1993, the board and the bar's staff have engaged in an aggressive review of the bar's budget to identify areas for increased efficiency and cost savings. Starting with the discipline system, we have re-engineered the way many parts of the bar do business. We intend to continue that process after the plebiscite.
The first major result of this process is that, in 1997, bar members will see a $20 dues decrease. Whether further cost-savings will produce further decreases will depend, in large part, on whether the board and the bar's members, like many businesses today, are prepared to make some extremely difficult and wrenching choices. Will we either do more with less funding or live with the reality of doing less, period? To both attorneys and the public, this is the critical choice posed by the plebiscite. It's a choice the Board of Governors is not afraid to make. Can the yes supporters say the same?
John H. McGuckin Jr.
John H. McGuckin Jr. is a vice president of the Board of Governors and chair of the Board Committee on Administration & Finance.