California Bar Journal
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Board sets bar dues at $390
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full staffing after the 1998 layoffs.

A $1 million loss of rental income in the bar's downtown San Francisco headquarters building.

A $1 million loss of interest in-come from the bar's investments, the result of plummeting interest rates.

A legislatively mandated diversion program for alcoholic lawyers for which $10 of each active member's dues must be set aside.

Improvements in staff salaries and benefits.

"$390 has been established as the cost of operating the bar at full staffing," Johnson said, pointing out that retired appellate Justice Elwood Lui, appointed by the Supreme Court to examine the bar's budget after the 1997 veto of its fee bill, set that amount as an appropriate dues level. "He said it is fully justified, it is the cost of running the bar," Johnson said.

The legislature this year passed a multi-year fee bill authorizing the bar to collect $390 for 2002 and 2003.

Although the bar reduced its dues last year by $50 to $345, it was a one-time savings that was based primarily on a 25-30 percent staff vacancy rate which produced a $14 million surplus. As the bar re-established its programs, it could not fill many jobs: unemployment was low in the red- hot economy, tech jobs in particular went begging, and prospective workers remained leery of the bar's uncertain financial status. In addition, some laid-off employees did not return and their replacements were hired at a lower salary.

The board opted to draw down the surplus through a one-time dues reduction in 2001, primarily as a statement to bar members that it operates in a fiscally prudent manner. Johnson said she agreed with the move, noting that it was made without compromising program integrity.

Although Johnson said she had hoped next year's fee could be set at $380, the bar took several unexpected hits in the past year. With the collapse of the industry in San Francisco, the bottom fell out of the rental market and a glut in available office space was created. The bar lost several tenants at its 180 Howard St. building and a tentative lease of its top two floors fell through.

Because its anticipated rental income did not materialize, the bar was forced to transfer $1 million in building expenses to the general fund.

In addition, since the bar receives the bulk of its revenue at one time (through dues), it invests those funds and spends them down throughout the year. Like almost every other investor, the value of the bar's portfolio is down.

The alcohol diversion program passed by the legislature this year will take $10 from most bar members' fees, a hit to the general fund of about $1.4 million. Although it is unlikely the money will be spent in 2002 because the program is just getting underway, it was created as a set-aside and the money may not be used for any other purpose without a dollar-for-dollar replacement from another program.

Other expenses approved by the board include $250,000 for a new member call-in center, a $1 million technology improvement reserve fund and a public protection reserve fund of $1 million. It also agreed to set aside $1 million next year toward an anticipated $2.5 million tab for a seismic retrofit of the San Francisco building. Valued at $30-40 million, the building is the bar's biggest asset.

Although the new dues will be required of most active bar members, scaling remains an option for some lawyers: those who earn less than $25,000 can get a 50 percent break on dues and those who make under $40,000 may pay 25 percent less.

"We've done a remarkable job of surviving the unanticipated," said Johnson, who has made fiscal responsibility a cornerstone of her administration. "Despite one new program and some serious losses in bad economic times, we have maintained our reserves and are maintaining the integrity of all our programs."