Report 2022-031 Recommendation 4 Responses

Report 2022-031: The State Bar of California: It Will Need a Mandatory Licensing Fee Increase in 2024 to Support Its Operations (Release Date: April 2023)

Recommendation #4 To: Bar of California, State

By October 2023, the State Bar should identify any service fees that do not fully cover the costs of providing the services. The State Bar should increase the fees it has identified to the amount necessary to recoup its costs unless it determines that doing so would limit the public's access to the services. It should also identify any service fees that have not been updated in five years or more and assess whether they should be updated. The State Bar should then determine the effect that the increased service fees will have on the amount of mandatory licensing fee revenue that it needs.

6-Month Agency Response

After a fee assessment in March 2023 for all Admissions and General Fund service fees, the Board of Trustees approved the State Bar's final proposal for General Fund service fee increases in its May 2023 meeting (see the sixty-day update regarding agenda item 709). The Board approved the fee increases for different programs and directed staff to implement them as soon as practicable.

In August 2023, the State Bar completed its analysis of service fees and their expected effect on mandatory licensing fee revenue. The State Bar sent an update to the Legislature (please see the document "August 2023 State Bar Financial update"). The proposed mandatory licensing fee increase is needed to ensure the public's access to the State Bar's services.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

Although the State Bar completed an analysis of most of its service fees and their expected effect on mandatory licensing fee revenue, it indicated that for two of its fee-for-service programs, the Lawyer Referral Service and Mandatory Fee Arbitration Program, it was not considering raising the fees because both programs are currently undergoing operational review by the State Bar which could impact the fees for each program. We will continue to assess this recommendation as partially implemented until the State Bar completes its operational review and determines whether the fees for each program need to be adjusted.

60-Day Agency Response

The State Bar began a fee assessment in March 2022 for all Admissions and General Fund (GF) service fees. At the May 2023 Board of Trustees meeting, the final proposal for GF service fee increases was presented as agenda item 709. The Board approved the fee increases for different programs and directed staff to implement them as soon as practicable. Please refer to attachment B of the board agenda item 709 containing the State Bar's "General Fund Fee Adjustments."

The fee increases adopted in May 2023 did not include fees for the Lawyer Referral Services and the Mandatory Fee Arbitration. Staff believes it is appropriate to postpone consideration of fee adjustments for these programs as the programs are undergoing operational review and improvement that will meaningfully impact the fee-for-service assessment.

The next step is for the staff to conduct an analysis to determine the effect that the increased service fees will have on the amount of mandatory licensing fee revenue that it needs. It will be completed by October 2023.

California State Auditor's Assessment of 60-Day Status: Pending

In its update to this recommendation, the State Bar indicated that it postponed making a decision on fee adjustments for the Lawyer Referral Services or the Mandatory Fee Arbitration Programs because these programs are undergoing operational review. We have assessed this recommendation as pending until the State Bar completes its review and makes its determination about the appropriate fee level for these programs. After it does so, the State Bar still needs to identify the effect that any increase in service fees will have on the amount of the mandatory licensing fee revenue it needs.

All Recommendations in 2022-031

Agency responses received are posted verbatim.