BILL ANALYSIS Ó
SB 163
Page 1
SENATE THIRD READING
SB 163 (Evans)
As Amended September 2, 2011
Majority vote
SENATE VOTE :39-0
JUDICIARY 8-1 JUDICIARY 8-1
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|Ayes:|Feuer, Wagner, Atkins, |Ayes:|Feuer, Wagner, Atkins, |
| |Dickinson, Beth Gaines, | |Dickinson, Beth Gaines, |
| |Huber, Monning, | |Huber, Monning, |
| |Wieckowski | |Wieckowski |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Jones |Nays:|Jones |
| | | | |
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SUMMARY : Implements major changes to the governance structure of
the State Bar (Bar) to maximize the Bar's prioritization of public
protection in all of its activities and makes other reforms to the
Bar's governance structure. In addition, the measure provides a $10
reduction in dues for all Bar members in 2012 and increases the
amount Bar members may voluntarily choose to contribute to help
address the ongoing crisis in legal services for the next two years
only. Specifically, this bill , among other things:
1)Provides a $10 reduction in dues for all Bar members in 2012 only.
2)Provides that protection of the public shall be the highest
priority of the Bar.
3)Revises the composition and size of the board of trustees.
4)Phases in the transition to the smaller board.
5)Requires the board to ensure that its open meeting requirements
are consistent with, and conform to, the Bagley-Keene Open Meeting
Act.
6)Requires the board to complete and implement a five-year strategic
plan.
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7)Increases from the current $10 to $20 for the next two years the
amount that Bar members may voluntarily (but need not) choose to
allocate to address the ongoing crisis in legal services for
Californians of lesser means, unless any Bar member chooses not to
support those activities, in which case the member shall receive a
commensurate reduction of that amount in their membership dues.
8)Acknowledges that the Bar has also voluntarily committed to
transferring $2 million in 2012 and $2 million in 2013 (unless the
bar finds in 2013 that its general fund faces overriding
extraordinary circumstances) from non-mandatory dues monies to
nonprofit legal services organizations regulated by the Bar to
similarly help ensure that all Californians have equal access to
justice.
9)Places a one-year "pause" on the Governance in the Public Interest
Task Force next year to await the new trustee appointments to be
made the following year.
10)Clarifies that specified conflict of interest provisions apply to
new public members appointed to the board after the enactment of
this measure.
FISCAL EFFECT : None
COMMENTS : According to the current president of the State Bar, who
supports this bill, this measure implements the most sweeping
changes to the governance structure of the State Bar in decades.
Among other reforms, the bill revises the composition and reduces
the size of the Bar's governance board, adding for the first time a
substantial component of attorney members selected by the Supreme
Court. The bill reduces the size of the board from 23 to 19 members
over a three-year period. The bill also, consistent with other
professional statutes, specifies for the first time that the
protection of the public is the highest priority for the Bar and its
board of trustees (the new name for the members of the board).
Last year, AB 2764 (Assembly Judiciary Committee), Chapter 476,
Statutes of 2010, created within the Bar the Governance in the
Public Interest Task Force (Task Force). The Task Force was created
in response to concerns that actions by the State Bar Board of
Governors did not sufficiently take into account the protection of
the public. On May 11, 2011, the Task Force presented its work
product to the Supreme Court, Governor, and Legislature in the form
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of both a majority report, largely supported by the attorney members
of the Task Force, and a minority report, largely supported by the
public members of the Task Force. This bill reflects provisions
discussed in those reports to improve the Board's governance and
other Bar programs.
At the end of 2010, the State Bar had a surplus in its General Fund
of almost $12 million ($11.9 million). That figure is understood to
have grown since then. In addition to this substantial surplus in
its General Fund, the Bar also has another $6.4 million in a "Public
Protection Reserve Fund" it created which is designed to use as a
"rainy-day" fund to allow the Bar to continue operations should its
dues authority not be continued for a period of time. The Bar's
Public Protection Reserve Fund of $6.4 million represents almost 11%
(10.7%) of 2010 General Fund operating expenses, 6.4% of total
agency-wide operating expenses, and 4.9% of total agency-wide
operating revenues.
While the Bar's representatives have stated that these percentages
are consistent with the recommendations of the Government Finance
Officers Association, they have acknowledged such surpluses are
extraordinary compared to other government agencies at this time in
state history, and they have worked with the chairs of the Judiciary
Committees to start to address this continuing surplus in the
General Fund through the approaches in this measure, including the
$10 rebate for Bar members next year, the increases from the current
$10 to $20 for the next two years that Bar members may voluntarily
(but need not) choose to dedicate to the ongoing crisis in legal
services, and the Bar's voluntary decision to transfer $2 million in
2012 and $2 million in 2013 from non-mandatory dues monies to the
Bar's "IOLTA" (Interest On Lawyer Trust Accounts) fund to similarly
help address the state's decimated legal services programs.
Even with the bill's proposed changes, the Bar continues to project
substantial surpluses through at least 2015 (a $12.4 million surplus
this year, an $8.6 million surplus in 2012, a $7.2 million surplus
in 2013, a $9.2 million surplus in 2014, and an $11.4 million
surplus in 2015.) The Bar states that these surpluses do not
reflect some anticipated expenditures pertaining to deferred
maintenance, personnel costs, and other items. Nor do they reflect
the $6 million plus of additional monies kept by the Bar for its
"rainy day" fund.
Over the past several years, the Bar has generally taken in
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substantially more money from its members than it has spent. The
Bar indicates it is working to ensure that this tradition of
substantial variance between its projected expenses and actual
expenses - leading to potentially higher annual dues assessments
than have been needed - is halted. The Bar notes that provisions in
this legislation which provide Bar members with a reduction in their
membership dues will help reduce the continuing surpluses that the
Bar has traditionally been running.
As the Assembly Judiciary Committee knows well, funding for
nonprofit legal aid organizations that assist indigent Californians
with basic legal needs has never been adequate to the task,
generally addressing only about 20% of legal needs. Sadly this gap
is increasing because of the hardships suffered by many poor people
in the current economic downturn combined with budget cuts from both
government and private sources. California commits proportionally
less public support for legal aid than many other states, and this
support has diminished as the result of state budget cuts. Federal
funding through the Legal Services Corporation is also down
significantly, and private giving has decreased as well.
California has traditionally relied principally on the Interest On
Lawyer Trust Accounts program to fund legal aid programs. Over the
last three years, however, revenues from the trust fund program have
decreased 75% from $20.1 million in 2007-2008 to approximately $5
million in the current year.
These revenues are expected to remain at this historic low because
interest rates are not predicted to increase for some time.
Virtually every state has faced the same emergency. One of the most
common and successful approaches has been to raise attorney license
fees specifically for the purpose of funding legal aid programs.
Ten states now have such fees, ranging from a low of $20 to a high
of $75, with an average of $43. In many states these fees are
actually mandatory, without an opportunity to opt-out, reflecting
the special obligation members of the profession have to ensure that
fundamental access to the legal process and the rule of law does not
depend on income. However the approach taken in this measure is
purely voluntary, giving each Bar member the option of deciding
whether they wish to have $20 allocated in the next two years to
help address California's struggling legal service programs,
consistently with established practice, the professional obligations
of lawyers, the broad mission for which the Bar has been
established, and the careful guidance of pertinent case law. (See
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Keller v. State Bar, 496 U.S. 1 (1990); Chicago Teachers Union v.
Hudson, 475 U.S 292 (1986); Abood v. Detroit Bd. of Ed., 431 U.S.
209 (1977).) In the event that any Bar member chooses not to
support those activities, the member shall receive a commensurate
reduction of that amount in their membership dues.
On April 30, 2011, the Bar released its annual discipline report for
the year ending December 31, 2010. The audit noted that the overall
backlog at the end of 2010 is 4,193 cases, an increase of over 60%
from the numbers for the previous year, under the adjusted
methodology used in the report. The Bar indicates it is working
hard to take critically-needed steps to improve this unacceptable
professional discipline record.
On June 18, 2011, at a special session, the current Bar board voted
to support the measure. And on Friday, June 24, 2011, the Bar's
Board Operations Committee, representing the full board at those
times when the full board is not in session, voted unanimously to
support this bill.
Analysis Prepared by : Drew Liebert / JUD. / (916) 319-2334 FN:
0002731