Report 2002-030 Summary - April 2003
State Bar of California:
Although It Reasonably Sets and Manages Mandatory Fees, It Faces Potential Deficits in the Future and Needs to More Strictly Enforce Disciplinary Policies and Procedures
The State Bar of California (State Bar) continues to make some improvements since our audit in 2001. For example, it:
- Made further changes to reduce its backlog of disciplinary cases.
- Continued to ensure that mandatory fees are reasonable and do not support voluntary programs.
However, the State Bar needs to do the following:
- Ensure that policies and procedures for processing disciplinary cases are being followed.
- Monitor its need for an increase in membership fees to avoid a potential deficit in its General Fund in the future.
RESULTS IN BRIEF
The State Bar of California (State Bar), established by the California State Constitution, is a public corporation with a mission to preserve and improve the justice system. California's Business and Professions Code guides the State Bar in its efforts to fulfill this mission and to protect the public from the unethical or unauthorized practice of law. A 23-member board of governors establishes policy and guides the State Bar's functions, such as licensing attorneys and providing programs to promote the professional growth of its members.
In 1997, the governor vetoed legislation that would have authorized the State Bar to charge its base annual membership fees, which were used to support its disciplinary function, as well as other General Fund operations. Various sources, including our 1996 audit, indicated that the State Bar was not managing its resources effectively.1 The resulting drastic reduction in membership fees meant the State Bar had to curtail its activities significantly and find ways to cut costs. The significant curtailment of its activities led to a backlog of 2,217 disciplinary cases in 1998.
In our 2001 audit, we reported on the State Bar's efforts to address this backlog, which included implementing a priority system that focuses on the most serious complaints.2 The State Bar has since made further changes to address the backlog, such as establishing within its enforcement unit a team that focuses exclusively on these cases. At the end of 2002, the backlog of cases was 401. For 2003, it plans to continue its efforts to ensure the backlog does not exceed 400 cases. It also continues to conduct periodic reviews of random cases to ensure that staff actions are appropriate and consistent with case law and with the State Bar's policies, standards, and priorities. However, its 2002 review identified some of the same type of deficiencies it found in 2000. Although it has provided group and individual training and issued a training bulletin to address the problems, the State Bar could do more to better ensure that staff are following policies and procedures.
For example, one deficiency is poor record keeping and file maintenance. To address this concern, the State Bar issued a training bulletin listing potential documents to include in the case files. Although the bulletin is a good reminder of what documents they should be requesting or preparing, the State Bar lacks a process, such as a checklist in each file, to ensure that staff consistently follow policies and procedures.
The State Bar continues to have trouble collecting money related to disciplinary cases. Because its cost recoveries remain low, it uses a greater portion of membership fees to subsidize support for its Client Security Fund and for disciplinary costs than it might otherwise need to. Although the State Bar has considered other collection methods, the final decision was to not pursue those methods. However, the executive director believes that the time is right to seek a legislative amendment that would help strengthen its collection enforcement authority.
On the other hand, the State Bar continues to diligently monitor its financial accounting for activities supported by the required membership fees and by the fees that members pay voluntarily. Because legislation precludes it from using mandatory fees to support programs that the law does not require and that are optional for members, the State Bar uses separate funds to account for the receipt and expenditure of voluntary fees. It also continues to allocate administrative costs equitably among mandatory and voluntary programs. To ensure that members' fees are reasonable and that mandatory fees do not support voluntary programs, the State Bar determined the amount of money it needs to perform its required functions. However, based on its financial forecast of its General Fund, it predicts that expenses will exceed its revenues starting in 2003, which will eventually use up the surplus in its General Fund. The financial forecast indicates that if membership fees remain at $390, the State Bar has enough in its reserve to avoid a deficit until the end of 2005.
To strengthen its disciplinary process, the State Bar should take the following actions:
- Continue its efforts to reduce its current backlog of disciplinary cases.
- Require that staff maintain a checklist of important steps in the process and potential documents for each file, which should be reviewed by appropriate supervisors. In addition, the State Bar should conduct spot checks of current cases that are being closed. Responsible staff should be required to resolve any issues concerning files determined to be noncompliant.
- Seek a legislative amendment that will strengthen its enforcement ability to collect costs for discipline and client security.
To ensure that mandatory fees are set at a reasonable level to meet its operational needs, the State Bar should continue to monitor for the necessity of a fee increase.
The State Bar does not dispute any of the report's findings or conclusions. In addition, the State Bar agrees with the recommendations and plans to address them promptly.
1 State Bar of California: Opportunities Exist To Reduce Fees, Better Control Administration and Planning, and Strengthen an Improved Discipline Process (report 96021).
2 State Bar of California: It Has Improved Its Disciplinary Process, Stewardship of Members' Fees, and Administrative Practices, but Its Cost Recovery and Controls Over Expenses Need Strengthening (report 99030).