BILL ANALYSIS Ó
SB 387
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SENATE THIRD READING
SB
387 (Jackson)
As Amended September 4, 2015
Majority vote
SENATE VOTE: 38-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+-----------------------+---------------------|
|Judiciary |10-0 |Mark Stone, Weber, | |
| | |Wagner, Alejo, Chau, | |
| | |Chiu, Gallagher, | |
| | |Cristina Garcia, | |
| | |Maienschein, Thurmond | |
| | | | |
|----------------+-----+-----------------------+---------------------|
|Appropriations |17-0 |Gomez, Bigelow, Bloom, | |
| | |Bonta, Calderon, | |
| | |Chang, Nazarian, | |
| | |Eggman, Gallagher, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Holden, Jones, Quirk, | |
| | |Rendon, Wagner, Weber, | |
| | |Wood | |
SB 387
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SUMMARY: Reauthorizes attorney license fees at the same level
as the current year and improves transparency and accountability
of the State Bar and makes the State Bar subject to the Public
Records Act and the Bagley-Keene Open Meeting Act.
Specifically, this bill:
1)Reauthorizes the State Bar to collect up to $390 for active
membership dues for the year 2016.
2)Clarifies that information contained in the State Bar's Annual
Discipline Report must include all matters affecting public
protection, including specified discipline cases and both
average and median case processing times.
3)Requires the State Bar to develop and implement a workplace
plan for its discipline system and conduct a public sector
compensation and benefits study, including a recommendation
for an appropriate backlog goal and an assessment of staffing
needed to achieve that goal. Requires the State Bar to
conduct a thorough analysis of its operating costs and develop
a spending plan to determine a reasonable amount for its
annual dues. Requires that the workforce plan and the
spending plan be submitted to the Legislature by May 15, 2016,
and be implemented by December 31, 2016.
4)Requires the State Bar's Board of Trustees (Board) to contract
with the California State Auditor to conduct a financial audit
of the State Bar, including an audit of its financial
statement, internal controls and practices, and requires that
the audit be submitted to the Board, the Chief Justice of the
California Supreme Court, and the Assembly and Senate
Judiciary Committees by May 15, 2015. Requires the audit to
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examine revenues, expenditures, reserves and fund transfers.
5)Subjects the State Bar to the Public Records Act, with
specified exceptions. Provides that identifying information
submitted by applicants to the State Bar for admission to
practice law and State Bar admissions records, as specified,
are confidential and may not be disclosed pursuant to any
state law including the Public Records Act.
6)Effective April 1, 2016, subjects the State Bar to the
Bagley-Keene Open Meeting Act, as provided, with exemptions
for the Judicial Nominees Evaluation Commission and the
Committee of Bar Examiners.
7)Contains chaptering out language.
EXISTING LAW:
1)Requires all attorneys who practice law in California to be
members of the State Bar and establishes the State Bar for the
purpose of regulating the legal profession. Pursuant to the
State Bar Act, requires the annual mandatory membership fee
set by the State Bar's Board to pay for discipline and other
functions to be ratified by the Legislature.
2)Authorizes the State Bar to collect $315 in annual membership
fees from active members for a total annual dues bill of $390
for the year 2015. Provides that the other $75 is pursuant to
statutory authorization to assess annually the following fees:
$40 for the Client Security Fund; $25 for the disciplinary
system; and $10 for the Lawyer Assistance Program.
3)Authorizes the State Bar to collect $75 in annual membership
fees from inactive members for a total annual dues bill of
$115. Provides that the other $40 is pursuant to statutory
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authorization to assess annually the following fees: $10 for
the Client Security Fund; $25 for the disciplinary system; and
$5 for the Lawyer Assistance Program.
4)Directs $40 of membership dues to legal services purposes
unless a member elects not to support those activities.
5)Requires the State Bar to annually report on the performance
and condition of its discipline system, including the backlog
of discipline cases that are six months old and case
processing times, as provided.
6)Requires the State Bar to contract with an independent
national or regional public accounting firm to conduct an
annual financial audit of the State Bar, as provided, and
requires that a copy of the audit and the financial statement
be submitted, with 120 days of the close of the fiscal year,
to the Board, the Chief Justice of the California Supreme
Court and the Assembly and Senate Judiciary Committees.
7)Requires the State Auditor to conduct a performance audit of
the operations of the State Bar on a biannual basis and
requires a copy of the audit be submitted, with 120 days of
the close of the fiscal year, to the Board, the Chief Justice
of the California Supreme Court and the Assembly and Senate
Judiciary Committees.
8)Provides, under the California Public Records Act, that all
records maintained by local and state governmental agencies
are open to public inspection unless specifically exempt and
the exemptions include the Judicial Branch. Requires the
State Bar to provide to the public, if requested, specified
information on employee compensation and benefits.
9)Requires, under the Bagley-Keene Open Meeting Act, that all
meetings of a state body be open and public, but excludes the
Judicial Branch from the Act. Requires the Board to ensure
that its meetings are consistent with, and conform to, the
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Bagley-Keene Act.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, the State Auditor will incur one-time costs of around
$275,000 for the audit, to be reimbursed by the State Bar.
COMMENTS: Attorneys who wish to practice law in California
generally must be admitted and licensed in this state and must
be a member of the State Bar. California, like 30 other states
including Florida, Texas, and Washington, has a unified bar,
which means that the State Bar is both the regulatory arm of the
state, as well as an attorney trade association. Attorneys who
wish to practice law in this state must join the State Bar and
their dues cover both the regulatory arm and the trade
association. This bill authorizes the State Bar to collect
active membership dues of up to $390 for the year 2016. The
mandatory fee of $390 holds mandatory fees constant at the same
rate as this year.
As required by statute, the State Auditor completes a
performance audit of the State Bar every two years. This year,
the State Auditor chose to review the Bar's discipline process,
in particular its backlog of discipline cases, and the State
Bar's recent $75 million purchase and renovation of a building
in Los Angeles. The audit, released this past June, uncovered
significant, questionable decisions made by the Bar in the
handling of both matters.
Auditor Finds That the Bar Underreported its Backlog and, When
Seeking to Eliminate the Backlog, Made Choices That Did Not Put
Public Protection First. The State Bar operates a discipline
process to protect the public from unscrupulous attorneys, with
possible disciplinary actions ranging from letters of warning
and private reprovals to disbarment. To operate effectively and
maximize public protection, the State Bar must minimize its
backlog (cases not processed within six months), which otherwise
might allow wayward attorneys to continue to practice law,
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without review, for too long. Understanding of the importance
of the disciplinary function and the need to reduce its backlog,
the State Bar is required to report annually to the Legislature,
the Governor and the Chief Justice on the discipline process and
any backlog. Unfortunately, the State Auditor discovered that
the State Bar did not fully and consistently report the backlog
or its case processing times, and, when taking steps to reduce
the backlog, did not protect the public sufficiently.
First, the audit uncovered that the State Bar did not fully or
consistently report its discipline caseload backlog or its case
processing times. More importantly, the Auditor determined that
in order to reduce its backlog of discipline cases, the Bar made
questionable choices, causing "significant risk to the public."
(California State Auditor, State Bar of California: It Has Not
Consistently Protected the Public Through its Attorney
Discipline Process and Lacks Accountability 1 (June 2015).)
This bill addresses both those issues by requiring that the
State Bar fully reports its backlog and reports both its average
and its median case processing times. The bill also requires
the State Bar to engage in workforce planning for its discipline
system and to conduct a public sector compensation and benefits
study to reassess the staff required to oversee its discipline
program. This should help ensure that the State Bar has the
right quality and quantity of staff conducting its most
important mission - protecting the public from unscrupulous
attorneys.
In 2012, the State Bar purchased a building in Los Angeles;
however, according to the State Auditor, the State Bar did not
perform a cost-benefit analysis to determine if the purchase was
appropriate and warranted before receiving approval from its
Board to purchase the building, did not fully inform the
Legislature of its plans, and potentially risked public safety
by doing so and not prioritizing other areas, such as attorney
discipline. The State Bar spent $76.6 million on the purchase
and renovation of the building, which the Legislature had been
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told would cost just one-third of that price - $26 million. The
Auditor found that the decision to purchase the Los Angles
building jeopardized the State Bar's core function to protect
public safety: "Rather than using its financial resources to
improve its attorney discipline system, the State Bar dedicated
a significant portion of its funds to purchase and renovate a
building in Los Angeles in 2012." (Id. at 43)
Even more troubling, the State Bar chose to secure the
additional funding for the Los Angeles building, in part,
through a loan that required the State Bar to use $4.6 million
of its Public Protection Fund as collateral for the loan. The
sole purpose of the Public Protection Fund, which the State Bar
itself established in 2001, is to protect the public in the
event of a financial emergency - and that emergency is generally
regarded as a veto of the State Bar's annual dues bill, which
has happened twice in the last 20 years: once in 1997 and most
recently in 2009. [SB 1145 (Burton) of 1997; SB 641 (Corbett)
of 2009.] However, without any notification to its members or
the Legislature, the State Bar chose, unilaterally, to tie up
over 70% of its Public Protection Fund - $4.6 million of the
$6.5 million fund - for the 15-year life of the loan.
The use of the Public Protection Fund to secure the loan on the
Los Angeles building is, according to the State Auditor, part of
a larger pattern in which the State Bar has been transferring
money between its various funds and using the money on unrelated
items. The Auditor found that, from 2009 through 2012, the
State Bar made 50 transfers between funds involving a total of
$64.2 million. (Id. at 13.) While many of these may have been
justified and appropriate, the Legislature may want more
oversight, at least in the foreseeable future, to ensure that
the State Bar and its Board are making decisions that are truly
in the public's best interest.
Given the concerns raised by the Auditor about the State Bar's
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lack of transparency and accountability, and the given the
resulting potential risk to public protection, this bill rightly
requires the Auditor do an in-depth financial audit of the State
Bar, including a review of the State Bar's internal controls and
relevant practices. The in-depth audit is limited in time -
just one year - in the hope that during that time, the State
Bar's Board can improve its own oversight of the Bar and ensure
that, once again, public protection is the State Bar's paramount
priority.
Bill Requires Greater Transparency and Accountability for the
State Bar. Unlike other state licensing agencies that operate
under the executive branch of government, the State Bar is
located within the judicial branch. As a result, the State Bar
has not yet been subject to some of the state's important
consumer protection and openness laws which seek to ensure the
integrity, transparency, and accountability of state government
operations, such as the Public Records Act and the Public
Contract rules, and has not been required to fully and
completely comply with the Bagley-Keene Open Meeting Act. This
bill requires the State Bar to comply with both the Public
Records Act (PRA) and, effective April 1, 2016, the Bagley-Keene
Open Meeting Act (BKA), with appropriate exceptions to protect
privacy. In particular, the bill provides that identifying
information submitted by applicants to the State Bar for
admission to practice law and State Bar admissions records are
confidential and not subject to disclosure under the PRA. This
helps protect the legitimate privacy expectations of State Bar
applicants. This bill also exempts the Committee of Bar
Examiners and the Commission on Judicial Nominees Evaluation
from the requirements of the BKA.
Analysis Prepared by:
Leora Gershenzon / JUD. / (916) 319-2334 FN:
0002210
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