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In the last month most of us have experienced one of the more painful interactions we have with the Utah State Bar - the payment of the annual licensing fees. There was a time when as a
government employee or member of a large firm, I didn't really mind the fee, since I didn't pay it out of my pocket. But now as a sole practitioner, when I write the check, I feel the
pain.
Each April the Bar Commission adopts a tentative budget which is made available to Bar members, or anyone else who asks. The Commission adopts a final budget in July after considering any
comments or objections which may be made. Usually there are none.
Informally, however, several lawyers have asked me why the fees are so high and what the money goes for. These are certainly very legitimate questions.
In truth, our Bar fees are higher than average. At one time we were among the highest in the country. But as other states have increased their fees, and we haven't had a fee increase for
ten years now, we have fallen into the "high average" category. It's a little hard to know exactly where we are in comparison to other states, because different bars have
different structures and provide different services. For example, many states have voluntary bars but assess mandatory licensing fees to pay for admissions, registration and discipline.
These are included in our bar fees, and comprise the majority of our expenditures.
The Bar fees are actually set by the Supreme Court, not by the Bar Association. Of course, the Court does this in response to a petition from the Bar, rather than acting sua sponte. The
last fee increase occurred in 1990. In that year the Bar was in serious financial trouble. Although Bar dues had increased in small increments to offset inflation, expenditures had
increased even more and expenses relating to the construction of the Law & Justice Center made it impossible to meet our obligations. As a result, the Bar Commission petitioned the
Supreme Court to impose a far reaching set of management reforms and a substantial dues increase. The Bar Commission requested an increase from $225 to $350 per year to be implemented
over the course of three years. The Court went even beyond the Commission's request and approved the entire dues increase in one year. Since then we have experienced a surplus of revenues
over expenditures every year.
Licensing revenues amount to approximately $2,000,000 per year. These funds are not unrestricted. For example, the annual Bar Convention and the Midyear Meeting are required to be
self-sustaining from registration fees and contributions. CLE is self-sustaining or slightly profitable. The Bar Journal is sustained in part through advertising, but requires a
subsidy. Admissions is self-sustaining. Lawyer Referral is mostly self-sustaining, but requires a small subsidy. Most of the $2 million in registration fees goes to finance the Office of
Professional Conduct and for personnel costs to operate the functions of the Bar.
This year we will have a surplus of approximately $200,000. This is about $90,000 larger than was projected. I expect we will have a surplus again next year. In light of these budget
surpluses many Bar members believe we should petition the Court for a reduction in Bar fees. A reduction of $35 would allow the Bar to approximately break even. The Budget and Finance
Committee has considered this proposal several times and has recommended against it.
According to the projections of the CPAs on our Budget and Finance Committee, the surplus will decrease every year as inflation increases costs. In several years, the surplus will
disappear and we will begin to incur deficits. At that time we can use our accumulated reserves to forestall a dues increase for a few years, but eventually we will have to petition for a
fee increase. Of course, by not reducing Bar fees now, the time when we will need to ask for an increase can be pushed further into the future, and the amount of the fee increase can be
made smaller.
The proposal for a dues decrease has been made almost every year of the five years I have served on the Commission. So far, the Commission has agreed with the Budget and Finance Committee,
and has not petitioned the Court for a fee decrease. Simply stated, the Commission doesn't want to ask the Court to reduce fees and then have to go back in a year or two asking for an
increase.
As the years have gone by, however, the projected erosion of our surplus has not materialized. The first projections I saw indicated that we would be hitting break-even in the year 2000.
Now the projections indicate that the break-even point will come in 2003.
I believe this is due primarily to three factors. First is the excellent management of our Executive Director and his staff. Second is the Commission's fiscal restraint. Surplus money
creates a real temptation to fund many worthy projects. For the most part the Commission has resisted this temptation. Third is the dividend from the Bar's investment in technology. For
example the same two employees are doing the accounting and bookkeeping for the Bar with 7400 members as they did with a Bar of 4700 lawyers in 1990. So as our licensing revenues have
increased over 50% in ten years, our cost for accounting services have increased only slightly. The reason the same two people can do twice as much work: computers. There are similar
effects throughout the office. Last year our licensing revenues increased 3 1/2% but our personnel costs increased less than 1%. Whether we will be able to continue to hold down costs in
this way remains to be seen.
The argument in favor of reducing fees is that it is unfair to assess costs against the present Bar members in order to postpone a dues increase for future members. What about the lawyer
who is close to retirement or who may move from the jurisdiction. Is it fair to make her pay for the lawyer who will be admitted or move to Utah in a year or two?
The Bar Commission would like to hear your opinion on these or other budgetary matters. You can contact any Bar Commissioner or the Bar President. My E-mail address is:
President@utahbar.org.
A copy of the budget is available from Bar staff. Let us know what you think.
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