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petition | by League of Women Voters of CaliforniaA petition was filed today asking the Arizona Supreme Court to amend Rule 32(c) and (d) so as to split the functions of the State Bar of Arizona into two distinct subsets, a mandatory membership organization (“Mandatory Bar”) and a purely voluntary membership organization (“Voluntary Bar”). The amendment to the Court Rules would maintain the current mandatory membership requirement for all lawyers but (1) eliminate mandatory membership dues for non-regulatory functions and (2) allow voluntary contributions for all non-regulatory functions. Read the petition here.

The petition was filed by Sherman & Howard attorney Gregory Falls on behalf of the Goldwater Institute. By way of explanation on its website, the Goldwater Institute reiterates its opposition to “conditioning the practice of law on bar membership in Arizona because coerced membership violates the rights to free speech and free association guaranteed by the United States and Arizona Constitutions.”

It is for this reason, the Institute says it is “sponsoring a rule change petition to allow attorneys to practice law without being forced to fund the lobbying and other non-regulatory functions of the State Bar of Arizona.”

Change Management | by Jurgen AppeloThe petition is reminiscent of HB2221, which the petition acknowledges, “called for a less nuanced version of what Petitioner proposes here.” HB2221 came within 5 votes of clearing the Arizona Legislature and landing on the governor’s desk during the 2016 legislative session. Like today’s petition, HB2221 was modeled on the Nebraska Supreme Court’s bifurcated approach to bar membership articulated in its December 6, 2013 decision Petition For Rule To Create Vol. State Bar Assn. 286 Neb. 108.

j0289753The Nebraska Supreme Court ordered that the requirement be left in place mandating membership in the Nebraska State Bar Association. But the Court also lifted the requirement that attorneys fund the Nebraska Bar’s non-regulatory functions. This meant Nebraska attorneys still paid regulatory and disciplinary costs but were no longer forced to subsidize the Nebraska Bar’s speech and its non-regulatory activities.

In its website statement, the Goldwater Institute acknowledges that “the Nebraska Model falls short of the fully voluntary model used in 18 other states.” It adds, however, that Nebraska’s bifurcated model “is a significant positive step toward associational freedom.”

Another front.

The petition filing opens up another front in the long-term campaign to reform lawyer regulation in Arizona. Along with continuing legislative efforts, the goal is to remediate a system not only rife with inequity but which represents a continuing threat to consumers. In addition to impinging constitutional rights on lawyers by preconditioning membership in a trade association to earn a living in their chosen profession, mandatory bar associations have an inherent conflict of interest because they act as both regulators of and trade associations for lawyers. And that conflict of interest is further exacerbated when lawyers elect a controlling number of other lawyers to represent them in their own regulatory board. By its very nature, then, this cartel-protection system threatens capture of the regulatory board by lawyers at the expense of the public.

Jen, kissing the First Amendment goodbye? | by jasoneppinkConditioning the practice of law on bar membership also violates lawyers’ constitutional rights. The U.S. Supreme Court has found that the only compelling state interest in coercive bar association membership is to improve the practice of law through lawyer regulation. But the fact is that lawyer regulation and improved legal practice can be attained through less restrictive means. 18 states — Arkansas, Colorado, Connecticut, Delaware, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Ohio, Pennsylvania, Tennessee, and Vermont — have already found ways to regulate attorneys without compelling membership

Arizona lawyers aren’t the only professionals concerned with a mandatory bar’s opacity, bureaucratic wastefulness, and divided loyalties to the public and lawyers. Indeed, attorney and public members of the California State Bar’s Board of Trustees are working again with California Legislators to bifurcate that Bar’s regulatory and trade association functions. See Calif. State Bar Blasted for Lack of Transparency  and Lawmakers Fight to Reform California Bar After Audits Skewer Agency for Mismanagement, Lack of Transparency, and Pricey Salaries.

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Credits: Petition, by League of Women Voters of California LWVC at Flickr Creative Commons Attribution license; Change Management by Jurgen Appelo at Flickr Creative Commons Attribution License; Jen, kissing the first amendment goodbye, by Jason Eppink at Flickr Creative Commons Attribution.

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Rich Life 3

  1. It fails to tell its members where their money goes. The Bar does not provide members a detailed accounting of its annual expenditures, let alone a yearly income statement and balance sheet. In addition, the Bar uses unexplained indirect cost allocations to account for overhead and administrative costs. Moreover, these partial allocations appear to be based on undocumented time estimates unrelated to measurable factors. Indeed, in the Bar’s “2015 Annual Report,” the Bar states that in 2015 it generated CLE revenues of $2,059,801 against expenses of $1,925,940. This translates into a mystifying expense-to-sales ratio of approximately 94%. Were these allocated expenses reasonably linked to a level of service or benefit received? Without transparency, it’s anybody’s guess whether the Bar’s indirect cost allocations are reasonable, equitable, real and current — or whether they even represent acceptable means for apportioning costs;

                        As clear as mud.

  1. It fails to disclose how much it spends on lawyer regulation and how much it spends on non-regulation. Of the approximate one-third of its annual budget spent on lawyer regulation and discipline, the Bar provides no expense detail, particularly about the number of discipline-related professional staff or how much they are paid;

People 1055

  1. It fails to disclose how much it spends annually on political and ideological activities, including bar relations related to promoting the interests of special interest lawyers; support services for voluntary, politically active bar associations; public relations and advocacy activities in support of merit selection; administrative and financial support of social programs having ideological content as well as political advocacy Bar leadership training; lobbying and expenses paid of the Board of Governors and other administrative expenses for carrying out the Bar’s political and ideological activities as well as all expense reimbursements and funds paid to outside contracted lobbyists. Also undisclosed are the actual work hours expended lobbying and giving lawmaking advice to the Legislature by its two executive employees who are also state-registered lobbyists: the Bar’s CEO/Executive Director and the Bar’s Chief Communications Officer;

Mirrors 84

  1. It fails to timely and completely disclose the annual compensation paid to all management, including all top executives – – not just “key employees” as defined and required under IRS Form 990 “reportable compensation” mandates;
  1. It fails to widely, and prospectively disclose periodic Supreme Court Rules Petitions it files and which often increase member disciplinary exposure or otherwise adversely affect their interests, including, for example, recent ethical rule requirements for succession planning and more recently, a Petition to Amend the Oath of Admission to the Bar & Lawyer’s Creed of Professionalism;

People 4609

  1. It fails to disclose to lawyer participants beforehand, its ‘unwritten’ voluntary Fee Arbitration Program “50% rule.” The Fee Arbitration Program is designed to resolve fee disputes between Arizona attorneys and their clients. But under the “50% rule,” if the fee arbitrator awards more than 50% of the fees returned to the client, the award is automatically referred to the Lawyer Regulation Office for lawyer disciplinary investigation. This rule is not found anywhere in the Rules of Arbitration of Fee Disputes or is it publicly divulged to members. The rule is instead invoked in practice and as an unwelcome ‘surprise’ if the parties do not settle;

Gas Station 14

  1. It fails to detail its longstanding nonperformance in committing, measuring, recruiting, training, and managing organizational workplace race, ethnicity, gender and disabilities diversity within its own employee organization, especially the historic lack of race and ethnic diversity among top management;
  1. It fails to disclose the number of outside consultants and contractors it hires; how they are hired; and how much each is paid. The Bar does not make those consulting and independent contractor agreements available for public inspection;

Babies 255

  1. It fails to adequately explain and disclose its internal process and ‘carefully tailored’ procedures to determine itself “Keller-pure,” including activities it engages in unrelated to its core functions of regulating the legal profession to improve the quality of legal services;
  1. It fails to disclose in any detail its formula for benchmarking executive compensation and organizational size, operations and service. Not long ago, Arizona was No. 1 among mandatory bars with a member-to-professional staff ratio of 158 to 1;
  1. It fails to disclose and identify the financial contributions, including gifts-in-kind, made with mandatory member assessments and which are annually disbursed to various special interest voluntary bar associations;

Children 1402

  1. It fails to make open and available its member-funded channels of communication to give fair and equal time to opposing arguments and viewpoints on controversial issues and concerns like the merits of a voluntary state bar. Instead it repeatedly mischaracterizes and misrepresents the views of voluntary bar proponents.

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* Obviously, there are more than 12 including the Bar’s machinations to pass its last mandatory dues increase and its continued conflation without empirical proofs of enhanced lawyer competencies through its Bar-sponsored continuing legal education programs — but for now, these are a modest start.

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