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Except for a few minor complaints about its discipline system, the State Bar on Thursday got a glowing review — and indirect support for an eventual dues increase — from the state auditor’s office. While never coming right out and recommending the Bar push for higher annual fees from its members, the 43-page report by the Bureau of State Audits points out that the association could face a budget deficit of $1.3 million by the end of 2005 if dues remain fixed at $390 a year. “To ensure that mandatory fees are set at a reasonable level to meet its operational needs,” the report states, “the State Bar should continue to monitor for the necessity of a fee increase.” State Bar Executive Director Judy Johnson, while not advocating a particular fee amount, noted in a response within the report that the association anticipates proposing a multi-year fee bill in 2004 with a tiered increase that would support ongoing operations without relying on reserves. She also pointed out that the American Bar Association recommended in 2001 that the California Supreme Court set fees. The biennial report was received warmly within the Bar, which chose not to dispute any of the findings, but rather vowed to address the auditor’s recommendations. “These numbers tell it all,” State Bar President James Herman said in a prepared statement. “The Bar is doing a great job as stewards of the members’ dues and as protectors of the public interest.” Indeed, State Auditor Elaine Howle praised the Bar for continuing “to diligently monitor its financial accounting for activities supported by the required membership fees and by the fees that members pay voluntarily.” She also lauded the Bar for reducing a backlog of disciplinary cases from 2,217 in 1998, a year after then-Gov. Pete Wilson all but shut down the group by vetoing its fee bill, to 401 by the end of last year. The Bar’s goal, Johnson said in the report, is to get the backlog down to 250 by Dec. 31. Howle’s few criticisms had to do with allegedly poor record-keeping in the Bar’s discipline system and its less-than-stellar record of collecting money that lawyers, by state law, must pay for the cost of their own prosecution. On the former, Howle suggested that Bar officials more closely monitor discipline cases, even to the point of setting up a checklist of important procedural steps and potential documents for each file. On the latter, she proposed more aggressive steps in collecting the overdue millions of dollars. “Because [the State Bar's] cost recoveries remain low,” the report states, “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.” The report shows that the Bar’s recovery rates for collecting from resigned or disbarred attorneys stand at 5.3 percent and 2.5 percent, respectively. One remedy, the audit stated, would be for the Bar to seek a legislative amendment that would allow the recovery of disciplinary costs to be enforced by the courts. “This language,” the report stated, “would provide the State Bar independent authority to pursue legal action for these costs. The time is right to bring forth this idea.” The audit, which focused on the Bar’s discipline system, fee management and procurement and contracting process during 2002, was authorized by 1999 legislation aimed at getting the Bar back into business after Wilson’s veto. It was the second audit since the legislation went into effect.

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