State Bar wants 97% fee increase for some practice sectors

A change in how California attorney license fees are calculated, which could bring a 97% increase next year depending on practice sector, was recommended in a staff report approved by the State Bar Board of Trustees on Friday for submission to the Legislature.

The trustees also approved a request for a $125 flat increase of the mandatory license fee in next year's legislative bar bill and an automatic adjustment in future years, based on the California Consumer Price Index.

"The report recommends adoption of a new approach based on attorney practice sector. Under the proposed model, attorneys would experience increases in 2025 from 0 to 97 percent based on their reported practice sector," stated a bar news release.

"The State Bar General Fund, which funds the discipline system and most other operations, has been running a structural deficit," the news release stated. "Without a fee increase in 2025, the General Fund will become insolvent, as all remaining reserves will be depleted."

The report outlining the reasons for fee increases, stated: "Lastly of note, the report provides a recommended structure for assessing fees based on practice sector, and reflecting the following priorities identified by the Board:

• The model should be applied to the entire mandatory licensing fee;

• No sector should pay less in absolute value terms than they are paying today;

• No sector should realize a more than 100 percent increase in licensing fees; and

• The corporate sector should be further disaggregated to account for variances in business size."

Nearly a year ago, the State Auditor highlighted "the State Bar's unsustainable financial position and called for a fee increase," Board Chair Brandon Stallings said in the news release. "The need has only grown since then and will continue to grow. The State Bar has raised fees and used millions of dollars in building sale proceeds to delay the inevitable. We believe the reports approved today lay out the need in thorough, clear terms, and the Board is committed to working with our partners in the Legislature to ensure that the State Bar has the fiscal means to meet its public protection mission."

The State Auditor had called for a 2024 increase of $24 per license. The Legislature declined as it said the bar needed to continue improving accountability, transparency and clearance of disciplinary matter backlogs in the wake of the Thomas Girardi scandal. After Girardi was charged with defrauding his clients, his law firm collapse and multiple civil lawsuits were filed, the bar commissioned and published two reports showing that bar staff had taken no action on scores of complaints against him over 40 years.

The reports also detailed Girardi's close relationships with bar board members, bar prosecutors, executives and staff. In a separate report last week, bar staff said goals for the directors and executives to submit complete economic interest reports designed to catch conflicts had been achieved at less than 70% by the end of last year.

The fee and budget reports approved for submission to the Legislature on April 1 state that the requested fee increase is needed "to sustain current operations and meet existing obligations," which are: contracted merit pay and cost of living increases for bar staff, lease obligations from the sale of the San Francisco headquarters building last year; and information technology infrastructure.

Also, an increase is needed to reduce the backlog of discipline cases and identify client trust account mismanagement, one of the key accusations against Girardi.

The State Bar's annual attorney licensing fee has increased once since 1998.