The bars surplus is largely the result of
salary savings which accrued as the bar began the process of re-building following Gov.
Pete Wilsons 1997 veto of its dues authorization and the subsequent layoff of more
than 500 employees. Johnson said that many laid-off emp-loyees did not return to their old
jobs, so the bar filled many positions at entry-level salaries. In addition, an extremely
tight labor market and the bars financial instability discouraged potential
employees. About 30 percent of the authorized positions remain unfilled.
New board member Anthony Capozzi of Fresno pointed out the
efficiencies of the new budget. In 1997, he said, when the dues bill was vetoed, 681
employees were running the bar with a general fund of $69.7 million. Now, the bar has 524
employees and a general fund of $49.4 million.
Also contributing to the surplus was the generosity of attorneys who
paid the full authorized amount of dues during the bars financial crisis and did not
seek a refund or credit. The bar also budgeted a bigger loss than actually occurred from
the fee scaling option offered to lower-earning lawyers.
Ron Albers of San Francisco, chair of the board administration and
finance committee, noted that the bar, following its years of financial woes, has established
a long-term financial plan. We have numbers that are clear. This is an ethical and prudent
Added Jim Otto of Los Angeles, immediately after the vote to lower
dues: Its all downhill from here.
Johnson said the bars executive team, which is half the size it
was in 1997, now exercises tight control over staffing. Those of us who are still
here who survived the ark have learned the hard lessons of fiscal prudence,
At the same time the bar lowers its dues, it will spend about $8
million in the coming year to build out offices it can rent at its 180 Howard St. building
in San Francisco. It also will consolidate its Los Angeles staff and sublet unneeded space
in the Transamer-ica building there.
By using the surplus to pay for construction, the bar avoids
taking out a loan and thus can pay off the mortgage on the Howard Street building in three
to four years.
Both Madden and Johnson recalled that the bar came under heavy
criticism when it bought the so-called marble palace in San Francisco, a
building Madden said contains no marble, and entered into a 25-year lease with favorable
rates in the Transamerica building, located in an underdeveloped part of downtown Los
Angeles. That neighborhood is now home to the Staples Pavilion and the Los Angeles
Convention Center, and the bar leases its parking lot for events such as last summers
The San Francisco headquarters, acquired in 1995, is now worth
significantly more than the original purchase price of $22.5 million. Johnson noted the
value of the real property as a potential source of revenue to assist in keeping dues
As part of the 2001 budget, Johnson also proposed the creation of a 2
percent contingency reserve of $1.5 million. The bar sometimes faces legislative mandates
which are not accompanied by state funds, and it needs to set aside money to meet the
requirements. For example, new legislation orders the bar to conduct a study to determine
if the discipline system disproportionately affects sole practitioners.
We must come up with a plan and recommendations, she
said. But we dont know the problems or the solutions, so we cant budget
Johnson also wants to spend about $1 million to bring the bars
inadequate technology up to speed. She said she hopes to place fee statements on the web
and allow bar members to pay their dues online, as well as effect other efficiencies which
will permit the bar to keep staff numbers at a minimum.
The 2001 budget, which totals $49.4 million, authorizes staffing in
the discipline system at the same levels approved by special master Elwood Lui, appointed
in 1998 by the Supreme Court to oversee the bars discipline budget. Johnson said she
will try in the coming year to fill the 30 percent of jobs which are vacant.
The budget, she said, insures the programmatic integrity of bar
services. The staff has been reduced significantly, but with the reforms we implemented,
the bar can effectively address complaints about unethical attorneys and perform its other
Although most active lawyers will pay $345 in dues, lawyers who earn
less than $25,000 from the practice of law this year are entitled to a 50 percent
reduction in dues and those who make under $40,000 can receive a 25 percent break.
Inactive lawyers must pay $50 in annual fees.
The board also reduced the 50 percent penalty it has traditionally
levied against lawyers who pay their dues after the Feb. 1 deadline.
Now, lawyers who pay after March 15 will be assessed a 10 percent
penalty, and those who pay after April 15 will be hit with a 25 percent penalty.
The new policy should result in more money for the bar, better cash
flow and happier members, said Otto, who has pushed for the change for more than a year.
This is a step in the right direction, he said. Can
you imagine how youd feel if you had a credit card bill of $5,000 and you got hit
with a late fee of $2,500? Well,thats how our members felt.