Bailout Etiquette Divides California State Bar

(CN) — The California State Bar's board of trustees debated Monday how best to ask for a bailout after the Legislature's failure to pass its usual bill allowing the bar to collect membership dues left a funding void.

In a letter last week, the California Supreme Court had asked the bar to come up with an amount necessary to fund its discipline system. It will be up to the court to decide what, if any, fees the bar can demand from its members.

The strategy session followed heated conflict in the state Legislature, where reform-minded Assembly members fought with the Senate Judiciary Committee and Chief Justice Tani Cantil-Sakauye over what changes to expect from the bar's leadership in the wake of several scathing audits, financial scandals, and a troubling backlog of unresolved attorney discipline cases.

A sticking point for the chief justice and the Senate was the Assembly's push to split the bar's trade association and attorney discipline functions. While members of the Assembly's judiciary committee finally agreed to nix the idea in favor of a clear definition of public protection in the bar's dues bill, both sides still couldn't come to agreement before the Sept. 1 legislative deadline.

State bar trustee Michael Colantuono told his colleagues that he worried about being accused of taking sides in a political turf war should they ask for full funding from the state's high court.

"I fear that if we make a proposal that asks for full funding of the status quo, that will be understood as an effort to oust the Legislature from their role in governing the bar, leading to a place where legislation is not at all required, that only a court rule is required and we sort of abandon our legislative overseer and chosen sides. I don't think that's fair, but I think it's the likely characterization of events," he said.

"I wonder, is it possible for us to fund those things that are most closely related to our disciplinary mission from a fee request to the court, and fund the other things we do from our four months of reserves to buy a period of time in which the Legislature and the court can achieve a consensus?"

Colantuono's suggestion was similar to the court's decision to fund the bar's disciplinary system in 1998, after Gov. Pete Wilson vetoed its dues bill.

But that idea was fraught with complications. State Bar chief operating officer Leah Wilson said that much of the $20 million the bar currently has in reserves has already been set aside for its new case management software project.

"We would first have to start with the question of whether we want to continue with the CMS project," she said. "If we choose to use our entire fund for that purpose, we wouldn't be able to go forward with the CMS initiative."

The bar also faces default on the loan for two buildings, which would eat up $15 million of its reserves.

"It's not as simple an issue as using reserves for public-protection purposes and new fees for disciplinary purposes," outgoing State Bar President David Pasternak said.

Board member Miriam Krinsky proposed broadening the request to go beyond the funding the disciplinary system, and to add bias prevention and access to justice work.

"I wouldn't want to be limiting our request in a way that undermines the ability of this organization to continue to protect the interests of the public," she said. "At the end of the day, the only people who will lose are the members of the public that the organization is designed to protect. I think the right thing to do is to seek from the court money that is not limited to simply the functioning of the disciplinary system but also includes prevention and access to justice. It's not just about the work we do to punish bad lawyers."

Colantuono said he couldn't support the idea of asking for more than the bare minimum.

"It accepts that staff's proposal to fund everything we do. No cuts, no delays, nothing. Complete funding. And if I understand it correctly, I can't vote for this motion. This message will be received by at least 10 members of the Assembly judiciary committee as a single-digit salute." he said. "You are responding to at least three months of excoriation as 'Thank you sir, and I'll take another.' You want your whole budget and you're seriously entertaining the possibility of asking for more. I think they will think you just don't hear them and they will respond by sending the same message even more loudly."

Krinsky said she agreed with Colantuono.

"I don't envision a petition that says, 'Hey court, we're asking you to fund everything we do and millions more.' What I'm hearing is there will be alternatives laid out in the petition that will let the court make a decision," she said.

Ultimately, the trustees voted 12-1 to direct the bar's executives to develop an array of costs to for the court to consider — which will include the amounts necessary to fund its discipline, bias prevention and access to justice work — without asking for a specific amount.

The trustees will also consider proposals to ask the state attorney general to appoint someone to monitor its progress in reforming its disciplinary system, and the development of a Supreme Court-approved policy to prevent potential antitrust violations in its future operations, in November.

The lone dissenting vote belonged to Trustee Joanna Mendoza, who said, "When I read the letter from the Supreme Court it seems clear to me that we are being directed by the Supreme Court to only ask for funds for the discipline system, and I don't read it any other way. It's a directive from the Supreme Court. For me, that means nothing else."

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