Governor Newsom Signs State Bar of California Annual Fee Bill

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By Kirstin Jensvold-Rumage

AB 3362 (Committee on Judiciary), as amended August 7, 2020, is the State Bar of California’s annual “fee bill.” This bill amends sections 6140 and 6141 of the Business and Professions Code to authorize the Bar to assess base annual licensing fees in 2021 for attorneys who actively practice law in California at $395, and $97.40 for inactive members, respectively. These amounts reflect a decrease from the dues paid in 2020 as a result of the expiration of several onetime fees approved in 2019 to stabilize the State Bar’s finances in accordance with the recommendations of the Legislative Analyst’s Office and the State Auditor. [25:1 CRLR 129–131, 140–143] According to the bill analyses, the Bar requested the same funding levels as 2020 but the legislature declined, citing the impact of the COVID-19 pandemic on attorneys and law firms.  All told, fees for 2021 will be decreased by $34 over 2020 fees.

In addition to setting the fees for 2021, the bill makes the following changes:

  • Cost Recovery – Client Security Fund – Section 1 of the bill contains a statement of findings and declarations recognizing that the State Bar’s Client Security Fund (CSF) serves a critical role in its public protection mission by reimbursing victims of attorney misconduct for financial losses, and that “[t]here is a dramatic imbalance between payouts from the Client Security Fund to clients victimized by attorneys and reimbursement to the State Bar from dishonest attorneys on whose behalf payments were made.” It also includes a statement that “[t]here is a significant state interest in enhancing the State Bar of California’s collection of overdue Client Security Fund reimbursement in order to enhance revenue necessary to reimburse victims of attorney misconduct.” Accordingly, the bill amends section 6140.5 of the Business and Professions Code to require licensees whose actions have caused the payment of funds to an applicant from the CSF to owe those funds to the State Bar and reimburse the CSF for all moneys paid out as a result of the licensee’s conduct, with interest, and permits the Bar to collect from an attorney any funds paid to an applicant from the CSF related to conduct by that attorney through any means authorized by law. This portion of the bill will apply retroactively. According to the bill analysis, the State Bar reports that unreimbursed payments to the CSF account for the overwhelming majority of the $177 million in debts that are owed to the State Bar. In amending section 6140.5, this bill seeks to bolster the State Bar’s ability to recover funds paid out from the CSF due to the misconduct of attorneys.
  • Bagley-Keene Open Meeting Act – The bill also amends Business and Professions Code section 6026.7 to clarify that the Bar may hold closed session to discuss the “preparation of examination materials, the approval, the grading, or the security of test administration” of examinations, and to add subsection (d), which mandates that the State Bar accept public comment in open session on all matters on the agenda for discussion or decision by the Board of Trustees, whether in an open or a closed session. According to the bill analyses, these changes to the Bar’s obligation to comply with the Bagley-Keene Open Meeting Act arose after the Board of Trustees continually held closed sessions to discuss potential changes to the exam in light of the pandemic, and limited public comment on these items despite large numbers of law students, professors, and members of the public who wished to comment.
  • Increased Optional Legal Services Fee – The bill also amends section 6140.03 to temporarily increase the optional fees to support legal services from $40 to $45. New subsection (b) allocates $5 of these fees to be used by qualified legal services projects and support centers in order to hire law school graduates with temporary provisional licenses pursuant to the Supreme Court’s July 16, 2020 letter directing the Bar to establish such a program to mitigate the impact of the pandemic on applicants to the Bar. This provision will last until 2023.
  • Complaint Avoidance Agreements: The bill also amends section 6090.5 to expand the situations in which an attorney can be punished for seeking to avoid a complaint being filed against them or hindering a State Bar investigation by agreement with a client by clarifying that no attorney, or person acting on the attorney’s behalf, can solicit or seek an agreement where a client agrees not to file, or subsequently agrees to withdraw, a disciplinary complaint against the attorney. The prior version of this section limited these restrictions to civil complaints.

Governor Newsom signed AB 3362 on September 30, 2020 (Chapter 360, Statutes of 2020).

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