BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 2764 (Committee on Judiciary)
As Amended August 20, 2010
Hearing Date: August 25, 2010
Fiscal: No
Urgency: No
SK:jd
PURSUANT TO SENATE RULE 29.10
SUBJECT
State Bar Act
DESCRIPTION
This bill would authorize the State Bar of California (State
Bar) to collect active membership dues of up to $410 for the
year 2011, which would continue the current active dues amount
of $410. Consistent with existing law, those dues would fund
only mandatory programs of the State Bar, and members can deduct
$5 if they did not wish to support lobbying and other
legislative activities. Members can also deduct an additional
$5 if they did not wish to fund access and elimination of bias
programs. This bill would also extend the sunset on the $10
special assessment to fund information technology upgrades to
January 1, 2014.
This bill would create the Governance in the Public Interest
Task Force in the State Bar and require that task force to
submit a report to the Supreme Court, the Governor, and the
Senate and Assembly Judiciary Committees containing
recommendations for enhancing the protection of the public, as
specified. This bill would also require the State Bar, upon
request, to make available specified salary information
regarding employees. This bill would also create the Temporary
Emergency Legal Services Voluntary Assistance Option, directing,
until January 1, 2014, $10 of membership dues to legal services
purposes unless a member elects not to support those activities.
BACKGROUND
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The State Bar of California is a public corporation. 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. (Cal. Const. art. VI, Sec. 9.) As of August 2010,
the State Bar had 169,282 active members and total Bar
membership was 227,931. The State Bar of California is the
largest state bar in the country. The Bar's programs are
financed mostly by annual membership dues paid by attorneys as
well as other fees paid by applicants seeking to practice law.
The Bar's 2010 general fund budget totals $66.2 million,
approximately 79 percent of which funds the Bar's attorney
disciplinary activities.
This bill was amended on August 20, 2010 to include provisions
relating to the Governance in the Public Interest Task Force,
public disclosure of employee salary information, and the
Temporary Emergency Legal Services Voluntary Assistance Option.
The remaining provisions of this bill regarding 2011 membership
dues and the $10 fee for information technology upgrades were
heard and approved by this Committee on June 29, 2010.
CHANGES TO EXISTING LAW
Existing law 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, the annual mandatory membership
fee set by the State Bar's Board of Governors to pay for
discipline and other functions must be ratified by the
Legislature. (Bus. & Prof. Code Sec. 6000 et seq.)
Existing law provides that the State Bar shall be governed by a
23-member Board of Governors (the Board), comprised of 16
lawyers elected by members of the Bar from nine specified
districts for three-year staggered terms, and six public
non-lawyer members, four of whom are appointed by the governor,
one who is appointed by the Senate Rules Committee, and one who
is appointed by the Speaker of the Assembly. The 23rd member of
the Bar Board is its president, who is elected by the other
board members to serve a fourth single year. (Bus. & Prof. Code
Sec. 6010 et seq.)
Existing law authorizes the State Bar to collect $315 in annual
membership fees from active members for a total annual dues bill
of $410 for the year 2010. (Bus. & Prof. Code Sec. 6140.) The
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other $95 is pursuant to statutory authorization to assess
annually the following fees: $40 for the Client Security Fund
(Bus. & Prof. Code Sec. 6140.55); $25 for disciplinary
activities (Bus. & Prof. Code Sec. 6140.6); $10 to fund the
Lawyer Assistance Program (Bus. & Prof. Code Sec. 6140.9); $10
special assessment to fund information technology upgrades
(expires January 1, 2011) (Bus. & Prof. Code Sec. 6140.35); and
$10 for the Building Fund (expires January 1, 2014) (Bus. &
Prof. Code Sec. 6140.3).
Existing law authorizes the State Bar to collect $75 in annual
membership fees from inactive members for a total annual dues
bill of $125 for the year 2010. (Bus. & Prof. Code Sec. 6141.)
The other $50 is pursuant to statutory authorization to assess
annually the following fees: $10 for the Client Security Fund
(Bus. & Prof. Code Sec. 6140.55); $25 for disciplinary
activities (Bus. & Prof. Code Sec. 6140.6); $5 to fund the
Lawyer Assistance Program (Bus. & Prof. Code Sec. 6140.9); and
$10 for the Building Fund (expires January 1, 2014) (Bus. &
Prof. Code Sec. 6140.3).
Existing case law , Keller v. State Bar of California (1990) 496
U.S. 1, prohibits the use by the State Bar of mandatory dues to
fund political and ideological activities, as a violation of a
member's First Amendment freedom of speech rights, where such
expenditures were not necessarily or reasonably incurred for the
purpose of regulating the legal profession or improving the
quality of the legal services available to the people of the
state. Existing law allows members to deduct up to $10 from the
mandatory dues if the member does not wish to fund legislative
activities and non-Keller lobbying and activities with his or
her dues. (Bus. & Prof. Code Sec. 6140.05, Keller v. State Bar
of California (1990) 496 U.S. 1.)
This bill would authorize the State Bar to collect active
membership dues of up to $410 for the year 2011.
This bill would extend the sunset on the $10 special assessment
to fund information technology upgrades to January 1, 2014.
This bill would create within the State Bar the Governance in
the Public Interest Task Force to be made up of 11 members
appointed by the President of the State Bar. Seven of the
members shall be attorney members of the board and three shall
be public members. This bill would require the president to
also be a member of the Task Force and to preside over its
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meetings.
This bill would require the Task Force, on or before May 15,
2011, and every three years thereafter, to submit a report to
the Supreme Court, the Governor, and the Senate and Assembly
Judiciary Committees containing recommendations for enhancing
the protection of the public and ensuring that protection of the
public is the highest priority in the licensing, regulation, and
discipline of attorneys. This report is to be reviewed by the
Senate and Assembly Judiciary Committees in their regular
consideration of the annual bar dues bill. If the task force
does not reach a consensus on all recommendations, this bill
would provide that the dissenting members may prepare and submit
a dissenting report.
This bill would require the State Bar, on or before February 1,
2011, to make available upon request the classification and
total annual compensation paid to employees as well as any
rules, policies, or agreements regarding compensation and
benefits of State Bar employees.
This bill would create the Temporary Emergency Legal Services
Voluntary Assistance Option, directing, until January 1, 2014,
$10 of membership dues to legal services purposes, as specified,
unless a member elects not to support those activities. This
bill would require that the annual statement sent to each member
of the State Bar provide the member with the option of deducting
$10 from his or her membership dues if he or she elects not to
have this amount allocated to legal services purposes.
COMMENT
1.Stated need for the bill
In support of the bill, the author writes:
This non-controversial annual Judiciary Committee bill was
recently amended, through close collaboration between both
houses of the Legislature, to reinforce the State Bar's
commitment to ensure that our legal profession, first and
foremost, always focuses its efforts on protecting the public.
As newly amended, the bill authorizes the Bar - with the
Bar's support - to maintain flat membership dues this coming
year at the same levels that have been in place for several
years. Importantly and urgently, the measure will now help to
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address the unprecedented funding crisis that has hit
California's legal services programs and threatens their very
existence and ability to help thousands of low-income
Californians seek access to justice. To help address this
"Justice Gap" crisis, the bill will allow-but not require-Bar
members to set aside just 2 percent of their dues ($10 out of
the current $410 for active members) to help save legal
services programs across the state. And this temporary option
is sunsetted in three years.
The bill also contains a helpful new Task Force within the
Bar, again with the Bar's support, to take helpful stock about
what if any structural and other potential improvements might
make the Bar's public protection efforts as vigorous as
possible. And finally, the newly amended bill contains a
provision to make as transparent as possible the compensation
of Bar employees, consistent with the Legislature's ongoing
transparency efforts -again with the Bar's full support.
Together I, and I know my partner in this effort Chairwoman
Corbett, believe these improvements will help strengthen the
Bar while urgently addressing our current crisis in legal
services funding.
2.Governance in the Public Interest Task Force
This bill would create the Governance in the Public Interest
Task Force in the State Bar. The task force would be made up of
11 members appointed by the President of the State Bar; seven of
whom would be attorney members of the board and three of whom
would be public members. On or before May 15, 2011, and every
three years thereafter, the task force would be required to
submit a report to the Supreme Court, the Governor, and the
Senate and Assembly Judiciary Committees containing
recommendations for enhancing the protection of the public and
ensuring that protection of the public is the highest priority
in the licensing, regulation, and discipline of attorneys.
These provisions were included in this bill in response to
concerns that recent actions by the State Bar Board of Governors
have not sufficiently taken into account the protection of the
public. For example, in June 2009, the Bar Board approved a
scaled-back online "Find a Lawyer" program that critics argued
left out important helpful consumer information in response to
opposition from local bar associations. According to the
California Bar Journal, the associations "feared [the Find a
Lawyer program] would compete with their lawyer referral
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services," noting that the chair of the Bar's Family Law Section
stated that the associations were simply trying to protect their
own financial interests. ("Board reaches compromise on lawyer
search," California Bar Journal, June 2009.) In another
instance, last year the Bar Board nearly voted to oppose two
legislative efforts (SB 94 (Calderon, Ch. 630, Stats. 2009) and
AB 764 (Nava, 2009)) which addressed attorney participation in
foreclosure-related scams. These important consumer protection
measures were intended to assist delinquent homeowners who had
fallen victim to abusive loan modification practices.
In addition, in June 2009 the Board decision not to reappoint
Scott Drexel as Chief Trial Counsel was described as a
"personnel and management decision." Legal press at the time,
however, described allegations that Drexel aggressively pursued
attorney misconduct. "Drexel made waves by introducing a
controversial rule to allow for permanent disbarment in the most
egregious discipline cases and made it tougher for attorneys to
resign with charges pending against them. At Drexel's urging
and despite an uproar among attorneys, the State Bar now posts
notices of disciplinary charges online." ("State Bar governors
oust chief trial counsel," Daily Journal, June 8, 2009.)
Finally, the effort to require attorneys to disclose to clients
whether they carry malpractice insurance was viewed by
proponents as a "public protection measure and a way to provide
important information about attorneys to prospective clients."
("Insurance disclosure rule approved," California Bar Journal,
October 2009.) Many felt that the insurance disclosure
requirements eventually approved, however, were considerably
scaled back after a three-year process.
At the same time, the Bar has taken action against attorneys
involved in loan modification scams. In particular, as of July
2010, the Bar reports that 13 attorneys involved in loan
modification misconduct have resigned, five loan modification
trials are pending, and 2,000 related investigations are in
progress. Recently, the Bar secured orders of involuntary
inactive enrollment for three attorneys.
In addition, recently the Center for Public Interest Law called
for a number of reforms "necessary to assure the responsible
functioning of [the Bar]." Those suggestions included: (1)
changing the appointment method and composition of the Bar's
Board of Governors; (2) providing that the board nominate the
Bar's Chief Trial Counsel, subject to final selection by the
California Supreme Court and confirmation by the California
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State Senate; (3) subjecting the State Bar's board to the
Bagley-Keene Open Meeting Act; and (4) reviewing the Bar's
Lawyer Assistance Program by an independent audit or abolishing
it entirely.
It is hoped that through the Governance in the Public Interest
Task Force the Supreme Court, Governor, and Legislature will
receive helpful suggestions for ways in which public protection
may be enhanced with respect to the licensing, regulation, and
discipline of California attorneys. As a result, this bill
would provide that the task force report is to be reviewed by
the Senate and Assembly Judiciary Committees in their regular
consideration of the annual bar dues bill. In addition, if the
task force does not reach a consensus on all recommendations,
this bill would provide that the dissenting members may prepare
and submit a dissenting report.
3.Temporary Emergency Legal Services Voluntary Assistance Option
This bill would create the Temporary Emergency Legal Services
Voluntary Assistance Option, directing $10 of membership dues to
legal services purposes, unless a member elects not to support
those activities. This direction of dues is optional and would
expire on January 1, 2014. The bill would require that the
annual membership dues statement sent to each member provide him
or her with the option of deducting $10 from his or her
membership dues if he or she elects not to have this amount
allocated to legal services purposes.
Recent numbers indicate that the Bar has nearly $12 million in
reserves. For example, the Bar has $6.4 million in the "Public
Protection Reserve Fund" which is designed as its "rainy-day"
fund to allow the Bar to continue operations should its dues
authority not be continued. The amount in the fund represents
10 percent of 2009 General Fund operating expenses, six percent
of total agency-wide operating expenses, and five percent of
total agency-wide operating revenues. At the same time, figures
from the Bar indicate that currently it also has $5.5 million in
its General Fund reserves projected to grow to $6.1 million in
2013. A proposal to tap into these funds was scheduled to be
heard at the Bar's July 2010 Board meeting but was pulled after
requests that it be further vetted. That proposal would have
created a "Voluntary Separation Incentive Program," offering
employees who agreed to leave one month's salary for each year
of service, capped at six months. According to documents
prepared for the July meeting, the "estimated cost of the cash
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outs is $1.3 million."
At the same time, however, funding for legal services has been
drastically reduced. California has traditionally relied on the
Interest On Lawyer Trust Accounts (IOLTA) program to fund legal
aid programs. Under that program, attorneys must deposit all
client deposits or funds that are nominal in amount or are on
deposit or invested for a short period of time into an IOLTA
account. These funds may be deposited or invested in a single
unsegregated account, and the interest and dividends earned are
required to be paid to the State Bar to be used for programs
that provide civil legal services to indigent persons. Over the
last two years, however, revenues from the IOLTA program have
decreased 75 percent from $20.1 million in 2007-2008 to an
estimated $5 million in the current year 2010-2011. In
addition, donations to the Justice Gap Fund have declined by 40
percent over the last three years. As a result, funding for
legal assistance programs has been adversely impacted at the
same time that demand for those services has increased: more and
more families have been affected by job loss and foreclosures,
driving them closer and closer to the poverty line (and
therefore eligible for legal aid services).
This bill would reduce member bar dues for the next three years
by $10 and direct those funds to the State Bar's Legal Services
Trust Fund Program for distribution to nonprofit organizations
that provide free civil legal services to low-income
Californians unless a member does not wish to fund those
activities. This approach mirrors the Keller deduction
described earlier which allows members to deduct up to $10 from
the mandatory dues if the member does not wish to fund
legislative activities and non-Keller lobbying and activities
with his or her dues.
4.Transparency of salaries
In order to provide more transparency, this bill would require
the State Bar, on or before February 1, 2011, to make available
upon request the classification and total annual compensation
paid to employees as well as any rules, policies, or agreements
regarding compensation and benefits of State Bar employees.
This provision is consistent with the Legislature's efforts to
ensure transparency generally and with the Public Records Act
requirements imposed on state employees.
5.Arguments in support
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A number of legal services providers strongly support this
measure, writing "[t]he current economic crisis has resulted in
significant reductions in almost all sources of funding for
legal services nonprofits over the last two years. . . .
Alarmingly, the State Bar of California is projecting potential
50% cuts in IOLTA grants for FY 2011-12. At the same time,
legal services nonprofits report steadily increasing demand for
their services, as Californians continue to face legal crises
relating to the economic downturn, including foreclosure relief
scams, elder abuse, and domestic violence. Reductions in
funding are forcing legal services programs to decrease staffing
and services at the exact time that Californians need their
assistance more than ever." In addition, the California Rural
Legal Assistance Foundation writes that "it is important to note
that AB 2764 does not supplant the existing Justice Gap Fund."
The State Bar of California also writes in support that it
appreciates "the consideration and trust given the Bar in the
legislative process and the opportunity to self examine the
Board's public protection responsibilities and to report its
findings to the legislature. We also agree on transparency of
staff salaries and benefits, and welcome the proposal to provide
greater financial support to legal services for all
Californians."
Support : State Bar of California; Alliance for Children's
Rights; Bet Tzedek Legal Services; California Affordable Housing
Law Project; California Rural Legal Assistance Foundation;
California Women's Law Center; Central California Legal
Services; Community Legal Services in East Palo Alto; Disability
Rights California; Disability Rights Legal Center; Harriett
Buhai Center for Family Law; HIV and AIDS Legal Services
Alliance; Inland Counties Legal Services; Inner City Law Center;
Law Foundation of Silicon Valley; Legal Aid Association of
California; Legal Aid Foundation of Los Angeles; Legal Aid
Foundation of Santa Barbara County; Legal Aid of Marin; Legal
Aid of Napa Valley; Legal Aid Society of Orange County; Legal
Aid Society of San Diego; Legal Aid Society of San Mateo County;
Legal Services of Northern California; Los Angeles Center for
Law and Justice; National Health Law Program; National Housing
Law Project; Neighborhood Legal Services of Los Angeles County;
Pro Bono Project Silicon Valley; Public Interest Clearinghouse;
Public Law Center; Public Interest Law Project; San Diego
Volunteer Lawyer Program; Senior Citizens Legal Services; Senior
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Law Project; Watsonville Law Center
Opposition : None Known
HISTORY
Source : Author
Related Pending Legislation : None Known
Prior Legislation :
SB 55 (Corbett, Chapter 2, Statutes of 2010)
SB 641 (Corbett, 2009) vetoed
AB 3049 (Judiciary, Chapter 165, Statutes of 2008)
SB 686 (Corbett, Chapter 474, Statutes of 2007)
AB 1529 (Jones, Chapter 341, Statutes of 2005)
SB 1490 (Judiciary, Chapter 384, Statutes of 2004)
AB 1708 (Judiciary, Chapter 334, Statutes of 2003)
SB 352 (Kuehl, Chapter 24, Statutes of 2001)
SB 1367 (Schiff, Chapter 118, Statutes of 2000)
SB 144 (Schiff, Chapter 342, Statutes of 1999)
Prior Vote :
Senate Judiciary Committee (Ayes 4, Noes 0)
Assembly Floor (Ayes 71, Noes 1)
Assembly Judiciary Committee (Ayes 10, Noes 0)
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