By Jamie Russo
On September 12, 2024, Governor Newsom signed AB 3279 (Committee on Judiciary) (Chapter 227, Statutes of 2024) into law. This bill amends various sections of the Business and Professions Code, granting the State Bar of California authority to increase annual licensing fees for attorneys, remove members of the Board of Trustees for cause, and conduct audits of client trust accounts.
Earlier this year, the State Bar of California published a report titled Justification for a Licensing Fee Increase, emphasizing its need for funding to maintain and increase public protection, especially in the wake of the Girardi scandal. In particular, the State Bar seeks to permanently address the underlying conditions that enabled Girardi to remain an active licensee for decades after many viable complaints were filed against him. In its report, the State Bar urged the legislature to authorize a 2025 fee increase of $125 per active licensee and $31 per inactive licensee. However, AB 3279 delineates a smaller fee increase for individual attorneys than the State Bar sought. Under AB 3279, active attorneys will pay an additional $88, and inactive attorneys will pay an additional $22.60 in 2025.
California Business and Professions Code section 6140 fixes the annual license fee for attorneys. AB 3279 amends section 6140 to cap the baseline annual license fee at $400 for active licensees (an increase of $10). AB 3279 also amends section 6141 to cap the baseline annual license fee for inactive licensees at $100 (an increase of $2.60).
AB 3279 adds four new sections to the Business and Professions Code that allow the State Bar to collect additional fees from licensees. Notably, AB 3279 dictates how the State Bar must utilize revenue from these extra licensing fees.
Section 6140.10 allows the State Bar to collect no more than $15 annually from each active licensee (and no more than $3.50 from each individual inactive licensee) to pay for lease costs associated with leasing the State Bar’s main office space in San Francisco. Section 6140.11 enables the State Bar to collect no more than $52 annually from each individual active licensee (and no more than $14 from each individual inactive licensee) to fund the salaries and benefits of employees of the State Bar.
Section 6140.13 authorizes the State Bar to collect no more than $5.50 annually from each individual active licensee (and no more than $1.25 from each individual inactive licensee) to cover the actual cost of administering compliance reviews and audits of client trust accounts. Section 6140.14 allows the State Bar to collect no more than $5.50 annually from each individual active licensee (and no more than $1.25 from each individual inactive licensee) to cover the actual cost of pilot programs to fund disciplinary diversion programs.
Under existing law, sections 6013.1–6013.5 provide the Supreme Court of California, the Senate Committee on Rules, the Speaker of the Assembly, and the Governor the authority to appoint members to the Board of Trustees of the State Bar. AB 3279 adds section 6016.2, granting those appointing authorities the power to remove a Board member for continued neglect of duties or for incompetence or unprofessional or dishonorable conduct.
Furthermore, AB 3279 added sections 6091.3 and 6091.4 to the Business and Professions Code to enable the State Bar to formalize oversight of client trust accounts. Under these subsections, financial institutions must collect an attorney’s license number when creating a new client trust account. Before July 1, 2026, licensed attorneys maintaining client trust accounts must provide their Bar license number to the financial institutions where client trust accounts are held. Annually, financial institutions must provide certain information regarding client trust accounts to the State Bar. In turn, the State Bar must submit an annual report of the client trust accounts to the Assembly and Senate Judiciary Committees. This report must detail the number of findings, mandatory corrective actions, and referrals for possible discipline that the State Bar made in the prior fiscal year pertaining to client trust accounts.
Section 6140.5 provides that the State Bar will establish and administer a Client Security Fund to reimburse consumers for losses caused by the actions of dishonest licensed attorneys. AB 3279 amends section 6140.55(b) to authorize the State Bar to use $2,000,000 from the Client Security Fund to reimburse the State Bar’s general fund due to a reallocation of funds in 2017. As amended, section 6140.5(k)(2) allows the State Bar to deposit half of its debt collection revenue in 2025 to its general fund and the other half to the Client Security Fund.