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California State Bar leaders on Saturday endorsed proposed rules that would open the practice of law to out-of-state attorneys, but only over the protests of a vocal minority who say the changes do not adequately protect the public. The Bar also adopted a $54 million budget that keeps annual dues at $390, but braced for tougher times ahead if alternative revenue sources don’t work out. The debate over allowing multijurisdictional practice �- letting certain categories of lawyers practice law in the state without a California Bar license — was one of the most contentious of any recent Bar meeting. The rule changes were proposed by a state Supreme Court committee in May, and would open California’s courts to all licensed public interest lawyers, in-house counsel and attorneys practicing temporarily in the state on either litigation or non-litigation matters. But a handful of Bar governors, including two of the non-lawyer public members, argued that the ideas were being pushed too fast and that State Bar staff anticipate that 3,000 out-of-state lawyers might swarm into California. “This seems like it’s a rush — a rush to judgment,” Bar Governor James Heiting, a partner in Riverside’s Heiting & Irwin, said Friday during a committee meeting, where much of the opposition was mounted. The California Supreme Court, which will make the final decision, had asked for input by Jan. 1. “I do not believe these rules protect the public,” he added Saturday during the Bar board’s full meeting. Among concerns were that the proposed rules do not require out-of-state lawyers to register when they arrive, nor are they required to contribute to the state’s Client Security Fund, which repays people who have been bilked or badly represented by California lawyers. “We wouldn’t even know where they live under the current rules,” Bar Governor Robert Persons, a partner in Chico’s Persons & Miller, said during Friday’s meeting of the board’s regulation, admissions and discipline oversight committee. On Saturday, Governor Roderick McLeod, a partner in the San Francisco office of Morgan, Lewis & Bockius, chimed in by saying he does not want to see the Client Security Fund “be debited for wrongs by an out-of-state lawyer” who has not paid into it. Friday’s committee recommended that the full board — to make a point — reject the proposed changes “philosophically,” but approve them as long as out-of-state lawyers were required to register and pay into the Client Security Fund. The philosophical objection was deleted by the full board on Saturday, however, after State Bar President James Herman, a partner in Santa Barbara’s Reicker, Pfau, Pyle, McRoy & Herman, objected. “The court is definitely moving in this direction,” he argued. “That [recommendation] sends a signal to the court that we’re not on the same page.” On Saturday, 13 governors endorsed the proposed rule changes, along with a request that they be given until April 1 — July 1, if possible — to respond to the court further. Four others voted no and one abstained. The Bar’s budget for 2003-04 was a delicate balance to reach, requiring extreme tap dancing by staffers in trimming a projected $4.6 million deficit to what President-elect Anthony Capozzi, a Fresno solo practitioner, called a slim $7,700 surplus. As a result, annual fees will remain at $390 for active members and $50 for inactive members. “We are starting from bare bones,” Herman said after a Friday committee meeting. “We are through the fat. We are through muscle.” Bar leaders are placing a lot of hope on the passage of Assembly Bill 1708. Introduced by the entire Assembly Judiciary Committee, the legislation would let the State Bar revise its fee-scaling policy to pull in more revenue in the future. Currently, the State Bar grants a 25 percent reduction in dues for anyone earning less than $40,000 annually from the practice of law and 50 percent for anyone earning less than $25,000. The new legislation would allow cutting fees in half if that person’s total income — not limited to practicing law — was less than $30,000. At the same time, the bill would allow a 25 percent reduction in fees for anyone earning less than $40,000 while practicing any form of dispute resolution, including arbitration and mediation. What has been happening, State Bar Executive Director Judy Johnson explained, were inequities, where, for example, a public interest lawyer earning $41,000 for practicing law was paying full freight, while an arbitrator making nearly $500,000 — albeit most not from law practice — was getting a discount. “It captures those people who make a significant amount of money,” Herman said. If the bill passes, he said, Bar staff conservatively estimate an additional revenue flow of $1.3 million annually. The budget passed 17-1.

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