Dollars and sense (in bar terms)

By John Van de Kamp
President, The State Bar of California

John Van de Kamp 2004-05 President

When I went to Dartmouth College and Stanford Law School in the ’50s, the total cost for tuition, board and room ran under $3,000 per year. Today, graduates are coming out of law school with an accumulation of debt that in some cases has reached $120,000 to $140,000. That’s a crushing burden, particularly if you want to buy a home and/or have growing family responsibilities.

Those burdens also militate against going into DA, public defender, legal service and other public sector offices.

Some help is on the way. Through a program made available by the Foundation of the State Bar of California, the loans that graduating students, bar members and their families carry from their student days can be consolidated into one loan. The result: only one monthly payment and, more significantly, the opportunity to lock in lower interest rates for the life of the loan and to choose among a variety of flexible repayment plans.

The Student Consolidation Program is run by Collegiate Funding Services, a federally backed financial service. The program is available to graduating law students, bar members and their families with more than one loan, and is probably more advantageous to those about to graduate or new graduates.

The amount of savings will differ based on the circumstances of the borrower. Graduating students and recent grads who apply and consolidate their loans while still in their “grace period” (usually six months from law school graduation) and before they begin repayment, can reduce their loans by up to 1.85 percent with SCLP. Those “out of grace” can save up to 1.25 percent. SCLP’s illustrations show dramatic savings.

For more information about the program, visit the Foundation's Web site or call 1-800-958-6085.

Other member benefits

The student loan program is but one of what I hope will be many significant economic member benefits made available through the State Bar. Life and A&D insurance programs are in the process of being offered by the Marsh Affinity Group, while home and auto insurance will be offered soon by Liberty Mutual. Both programs are expected to be offered at cost saving rates.

At the same time, the long awaited State Bar member call center is expected to be operational in late June. The call center is being organized as a one-stop calling center to provide members any information in the bar’s hands that could be of help. I’ll have the call number available in the July issue.

Dues bill update

Since we’re talking “dollars and sense” here, I want to bring you up to date on the status of our fee bill. Since last month’s writing, the Assembly Judiciary Committee has approved on a bipartisan 7-2 vote a dues bill that would set total dues for active members at $395 in 2006 and $400 in 2007. Inactive dues would be set at $115 in 2006 and $125 in 2007.

This would place our inactive dues at the national average, which currently is $113 among bars that provide an inactive membership (many states do not permit non-practicing members to go inactive at a reduced fee). Inactive dues are waived for those over 70 and, in the event of real hardship, individual dues waivers can be approved by the Board of Governors.

The proposed fee bill, AB 1529, also simplifies the current scaling provisions so that any active members making less than $40,000 from any source may reduce their dues by 25 percent. The full Assembly was expected to act on the dues bill by the end of May.

Clean audit reports

As one of your fiduciaries, I am also pleased to report that on April 22 we received a “clean” audit report from our auditors Deloitte & Touche. As stewards of the bar’s finances, we submit our operations annually to an audit to ensure that we are spending bar funds appropriately. In addition to the finding that bar money is being spent carefully, the audit also noted that “absent a fee increase, the General Fund is projected to incur an operating deficit of approximately $2.7 million by the end of 2006.” This is one reason we have studied carefully the options we have to increase revenues.

We also recently received the State Auditor General’s report, which is conducted every two years. It, too, pointed to looming deficits and quoted the State Bar’s prediction that the combined balance in the General Fund and Public Protection Reserve “will sink to a deficit of $13.8 million by the end of 2008, unless membership fees increase and the fee waiver criteria change.” The key assumptions for the prediction were current levels of staffing (250 below that of 1997) and normal salary and benefits increases. The Auditor General made a number of technical recommendations to help process discipline cases and to maximize the benefits of our new collection authority.

And good discipline numbers, too

While I’m dealing with numbers (something I perversely enjoy), I recently received the 2004 Report on the Discipline System. Some good news for which retiring Chief Trial Counsel Mike Nisperos can take some credit:

• New cases filed in State Bar Court — up 34 percent over 2003;
• Stipulated disciplinary recommendations — up 41 percent over 2003;
• Backlog: 402 at end of 2004 — a 26 percent reduction over 2003.

On top of that, the discipline system expanded its complaint hotline from four to eight hours a day. An audit and review unit was created to handle requests for review or “second look” requests by complainants, and the mediation program for low level offenses expanded with the addition of Sacramento, Solano, San Mateo, San Diego and Orange counties. In 2004, more than 200 cases were sent to mediation, with a settlement rate of 80 percent.

With Scott Drexel now at the helm as chief trial counsel, I’m counting on continuing improvements in the discipline system.

That’s all the numbers for now. Enough!