After holding steady for two years, the fees New Jersey lawyers pay annually for their licenses are likely to be increased by 9.6 percent, to $148 from the current $135.
The Disciplinary Oversight Committee, in its budget proposal for 2014. says the bump is needed “[t]o continue to meet disciplinary system program needs and the progress made in reducing case backlog, and to improve the time to complete cases.”
It will also help the agencies that keep track of practicing lawyers and their behavior — the Office of Attorney Ethics and the Disciplinary Review Board — deal with rising employee-benefit costs, the DOC says.
If other annual fees remain unchanged from recent years, most attorneys would pay an assessment of $212 next year, including $50 for the Lawyers’ Fund for Client Protection, $10 for the Lawyers Assistance Program, and $4 for mandatory continuing legal education.
The comment period for the proposed budget ends on Nov. 21, after which the Supreme Court will decide whether to approve it.
According to DOC chairman Michael Furey, the decision should be easy. “As is the case every year, New Jersey’s annual assessment is reasonable in relation to other states,” he said in the proposal, noting that among the 18 states that don’t mandate bar association admission, New Jersey ranks 10th in disciplinary fees.
The DOC also has a good track record of keeping fees down. The last hike was in 2009, when the annual assessment went to $140 from $126. But then, the DOC’s reserve fund mushroomed, hitting a high of $4.35 million, or 40.2 percent of its budget, in 2011.
That led the DOC to lower the fee to $135 in 2012 and 2013, thereby running an operating deficit to bring the reserve down to its target range of 10 percent. That target is expected to be hit in 2014, despite the proposed fee increase.
The $148 disciplinary levy — to be collected from about 67,500 attorneys who’ve been practicing for between three and 49 years — is projected to generate $9.99 million in revenue for 2014. That’s the same number of estimated paying lawyers as 2013.
Another $68,750 is projected from lawyers in their second year of practice, who pay a reduced fee of $25.
Newly admitted lawyers and those practicing 50 years or more are exempt.
When added to pro hac vice fees ($932,400), in-house counsel fees ($173,900), costs recovered during disciplinary proceedings ($274,000) and other anticipated income, 2014 total revenue should be $12.2 million, about 10 percent higher than 2013′s projection.
Still, with $13.16 million in projected expenses (2.8 higher than the 2013 budget), there would be a 2014 operating deficit of $959,722.
Employee salaries ($7.08 million) and benefits ($3.5 million are expected to account for about 80 percent of expenses. “The cost of benefits per employee has continued to accelerate, placing a strain on the budget,” Furey wrote.
The standard 2 percent vacancy rate, which accounts for unexpected resignations and retirements, is included.
Information technology and data processing also are significant expenses. A long-vacant IT manager position was filled earlier this year. Software upgrades are scheduled for 2014.
After a projected 40 percent increase for 2013 ($517,619), a 27 percent decrease (to $369,200) is forecast for 2014. That’s because some planned projects have been deferred until 2015 in order to keep costs down.
The committee also attempted to find savings in the Random Audit Program, which examines private practitioners’ trust and business accounts for unusual activity. Even though two new auditor positions were approved in a bid to expand the program, no new hires are planned for 2014, resulting in a projected savings of $165,000.
Furey, reached by phone, calls the proposal “a very prudent budget.”
He says the committee anticipated assessment fees might have to come up after the reserve was reduced to its target level. “The deficits we were running to cut down the reserve cannot continue indefinitely,” says Furey, of Riker, Danzig, Scherer, Hyland & Perretti in Morristown.
“While the committee did not want to increase the registration fee any more than necessary … it’s the only way the necessary services could be paid for.”
Furey declines to predict whether another increase will be necessary in next year’s budget process. But, he says, “we would be concerned about running another deficit in 2015 because reserves by that time will be down to as low a level as we think is prudent.”