Wilson vetoes fee bill;
bar moves to secure funding

by Kathleen O. Beitiks
Staff Writer

... CONTINUED FROM FRONTPAGE

[Gov. Pete Wilson]
Gov. Pete Wilson

The board of governors, hearing from senior staff that the bar can stay afloat only until the end of April without any additional funding, immediately authorized bar President Marc Adelman to call for voluntary dues payments.

A few days later, Pillsbury Madison & Sutro announced that it voluntarily will pay the full fees for each of its California attorneys. The board also was told that McCutchen Doyle Brown & Enersen and other large firms throughout the state most likely will follow suit.

Adelman also asked Wendy Borcherdt, Leon Goldin, Andrew Guilford, James Seff and Dorothy Tucker ó five board members with diverse political affiliations and viewpoints, most notably on the structure and operation of the bar ó to assist him in exploring a compromise acceptable to the board, the governor and the legislature.

Authority to collect $77

Under existing statutes, the bar can collect a mandatory $77 from each active member: $40 for the client security fund, $10 for the building fund and $27 for operation of the discipline system. The board is asking each active member in practice three years or more to contribute voluntarily an additional $381, bringing the total up to the current $458 fee to keep all the barís programs operating. (See Update.) The bar also can collect $50 from each inactive member.

The bill approved by the legislature would have set bar fees at $458 for 1998 and 1999, with a $10 rebate for each year built into the legislation. The rebate negotiated by former bar president Tom Stolpman would have been funded by the sale of the barís San Francisco headquarters building ó a sale now in jeopardy because of the governorís veto.

Borcherdt, public member of the board and a Wilson appointee, told her colleagues that the governor is serious about the message he issued with the veto. Wilson, who left for Europe two days after issuing the veto, had lunch in England with Borcherdtís daughter.

"Tell your mom," the governor relayed, "Iíll veto again unless there are some significant changes."

Other players

However, board vice president Goldin cautioned that "this is not a drama just between the bar and the governor." Other players include the unions, consumers, constituents and other legislators, said Goldin. "Wendyís message points to a solution," he said, "and I would submit if we seek only that solution ó to placate those sources ó we may end up doing ourselves in permanently."

Because the legislature is in recess and will not reconvene until Jan. 5, bar leaders must wait until the next session to introduce new legislation. Meanwhile, board members will meet every Wednesday at 5 p.m., via telephone conference, to resolve a situation which leaves the State Bar without funds for 1998.

As to their strategy in approaching the governor, Mel Assagai, the barís lobbyist in Sacramento, told board members: "My advice ó reach consensus."

Last yearís board of governors was particularly contentious, with bitter words exchanged over several issues, including the hiring of Assagai and his two-year, $900,000 lobbying contract. The governor cited that contract as one of his objections to signing the fee bill; he also objected to a two-year bill, the boardís endorsement of legislation to increase liability limits in certain medical malpractice cases and resistance to proposals to lower the fee bill.

In briefing the board on the demise of the fee bill, Assagai said that by late September it became apparent the bill was in trouble and a number of meetings took place to address the governorís concerns. Among others, the California Judicial Council, Chief Justice Ron George and Justice Ming Chin sent letters urging the governor to sign the bill, but to no avail.

Letter to the governor

Adelman, presiding over his first board meeting since being sworn in as president in September, said he also sent a letter encouraging Wilson, a fellow San Diegan, to support the bill. Adelman pointed out that California dues have not increased since 1991, while bar fees in 33 states or territories have risen during the same period.

"Some examples of fee increases from 1992-96 include the state of Texas," wrote Adelman, "which increased from $235 to $435; the District of Columbia, which increased from $83 to $355; and the state of Alaska, which went from $310 to $450."

Adelman added that from 1992-96, the cost to practice law was $400 or greater in eight states, an increase from five. In addition, Oregon bar members pay $2,406 a year, which includes mandatory malpractice insurance.

"Significantly, in California, the attorneys pay all costs of attorney regulation, including disciplinary hearings, through State Bar fees. California taxpayers do not subsidize any part of the bill," Adelman said in his letter to Wilson.

Adelman told the board he planned to meet with Wilson in early November.

Wilson, said Assagai, feels the bar should have cut an additional $25 from lawyersí annual dues, as advocated by three of his appointees to the board during hearings last summer, and "the two-year nature of the bill was also an issue."

The bill was amended several times before it hit the governorís desk. At one point, it became a one-year bill after some aggressive lobbying by lawyer groups upset with the boardís vote last spring to support a bill increasing certain medical malpractice awards.

In addition, in June, Assemblyman Bill Morrow, R-Oceanside, joined in a lawsuit alleging State Bar activities violated the constitutional rights of its members. The suit was dismissed in federal court in September.

Judy Johnson, the barís chief trial counsel, told board members the stateís lawyer discipline system would be severely affected if it had to rely solely on the $27 discipline fee the bar can now collect. The bar may be forced to stop receiving new complaints of attorney misconduct by Feb. 1, she said, and the system would have to undergo "a vicious triage."

"The system will come to a grinding halt," said Johnson. "Weíre going to have to dump all but the most serious cases and only try the equivalent of homicide."

Johnson said conviction referrals and serious cases such as embezzlements would receive top priority.

Johnson and Scott Drexel, the State Bar Courtís chief court counsel, expressed concern that a delay in funding would result in a backlog of discipline cases. When the discipline system was reformed in the late 1980s, said Drexel, it took nearly two years with pro tem judges just to catch up.

Johnson said she also would anticipate a drop in the number of attorneys who choose to settle their disciplinary cases because there would be no incentive to settle when they can continue to practice.

Afloat until April

T. William Melis, the barís chief financial officer, told board members that the State Bar could run out of operational funds by the end of April.

He said emergency cost controls were instituted immediately and, in addition to a hiring freeze, no new contracts will be signed with outside vendors, travel has been curtailed and no new training sessions will take place.

He also said that the bar may have to postpone its planned move into its new San Francisco headquarters at 180 Howard St., which places in jeopardy the sale of its current headquarters building, 555 Franklin St. That building has been sold to the cityís school district and currently is in escrow, but Melis said there is a possibility that a delay could be negotiated until the barís financial future is resolved.

Bar officials said they received $2 million more than originally anticipated in the sale price of the Franklin Street building, which would have funded the $10 rebate included in the bill Wilson vetoed.

Melis told the board that the general fund has a surplus because funds were set aside to handle the proposed $20 fee reduction, from $478 in 1996 to $458 in 1997, í98 and í99. However, those funds may now have to be tapped, he said.

Wilson also said in his veto message that he is concerned about political positions taken by the Conference of Delegates. The conference is composed of 1,000 delegates and alternates from 136 volunteer local and specialty bars throughout the state.

The bar provides the site for the conference to meet each year during the annual meeting.

[CALBAR JOURNAL]