Response from the State Bar of California on Signing of Assembly Bill 3279, the Attorney Licensing Fee Bill

Response from the State Bar of California on Signing of Assembly Bill 3279, the Attorney Licensing Fee Bill

On September 12, 2024, Governor Gavin Newsom signed Assembly Bill 3279, the State Bar licensing fee bill.

Response Statement from Brandon Stallings, Chair, Board of Trustees

"Approval of AB 3279 is a testament to the shared commitment of all three branches of government to the State Bar's mission of public protection. This bill not only ensures that we have the necessary resources to continue our journey toward greater effectiveness, efficiency, self-sustainability, and accountability, but also challenges us to achieve those goals with a leaner team. While the fee increase is significant, it is only the second in a quarter century for an agency that in recent years has consistently pursued transformative reforms. We are grateful to our legislative partners, the governor, and our stakeholders for their collaborative efforts in getting the bill to the finish line."

Background on the licensing fee increase and other bill highlights

Most of the State Bar's funding comes from attorney licensing fees. The bill increases 2025 annual licensing fees for active attorneys by $88 and for inactive attorneys by $22.60. The increase will enable the State Bar to meet obligations to staff and pay for critical operational expenses that have risen in recent years. It will also enable the State Bar to invest in two new public protection and effectiveness initiatives:

• Expansion of the Client Trust Account Protection Program, including authorization to conduct audits of client trust accounts.

• A multi-pronged diversion program that will see investment in mandatory fee arbitration and the Office of the Public Trust Liaison as front-end diversion efforts and expanded diversionary options within the Office of Chief Trial Counsel itself.

The fee bill protects current workers but also requires the State Bar to use staff attrition to drive operating costs downwards going forward. The State Bar must meet a staff attrition target by April 1, 2027, of nearly double its current vacancy rate, amounting to a reduction of 45-50 positions.

The bill includes numerous amendments sought by the State Bar. For example, it enables appointing authorities to remove State Bar Board members for cause. This proposal stems from a recommendation of the State Bar Board's Ad Hoc Committee on Oversight & Accountability Reforms. It adopts the same standard as in statute for Department of Consumer Affairs boards, allowing the appointing authority to remove a member for continued neglect of duties, incompetence, or unprofessional or dishonest conduct.

The fee bill also includes measures to support the State Bar's role in furthering access to legal services. It increases the earmark for legal services summer fellowships from $5 to $10 of the $45 legal services opt-out contribution and extends the program for another five years. Since the Legal Aid Leaders Fellowship program launched in 2023, it has funded more than 150 law school fellows. The bill also enables the State Bar to establish a new partnership program between certified Lawyer Referral Service organizations and nonprofits, with the intent to broaden access to legal services for underserved Californians. These efforts will complement the efforts of the Legal Services Trust Fund Commission, whose recently published five-year strategic plan outlines strategies and implementation steps to help close the justice gap.

Amendments also included several measures that will equip the State Bar to move toward improved financial sustainability without further pressure on licensing fees, including:

• Allowing the State Bar to access approximately $2 million in Client Security Fund (CSF) reserves, reimbursing funds moved into CSF in 2017. The State Bar plans to use these funds to bolster investment in critical information technology infrastructure needed to improve self-service and efficiency as it plans for a future with fewer staff.

• Creating the flexibility to enable the State Bar to direct half of the revenue from debt collection efforts in 2025 into its General Fund. The State Bar is planning an offer and compromise program to incentivize the payment of uncollected debt. With approximately $164 million in uncollected debt, incentivizing debt payments creates the potential for significant collections in 2025.

• Permitting funds collected through the Franchise Tax Board's Tax Intercept Collections Program to be deposited into the State Bar General Fund in 2025.

• In addition, the bill enables the State Bar to change the billing cycle timeline, which is being planned, and requires the agency to provide installment payment options for attorneys eligible for fee-scaling.

Other pending legislation

While not in the licensing fee bill, other legislation awaiting the governor's signature will also help the State Bar further its mission:

• Senate Bill 1476, sponsored by the State Bar, would ensure accountability by clarifying that violations of the State Bar's conflict of interest codes are violations of law enforceable by the Fair Political Practices Commission under the Political Reform Act.

• Senate Bill 940 would expand the State Bar's public protection role by directing the State Bar to establish a voluntary certification program for alternative dispute resolution providers, practitioners, and firms.

• Assembly Bill 2505 would require active licensees to report to the State Bar the number of hours of pro bono legal services performed in the previous year and reduced-fee legal services provided during the prior five years for low-income individuals, nonprofit organizations, or public law libraries. If signed into law, the State Bar expects to implement this reporting requirement for the 2026 billing cycle.

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The State Bar of California's mission is to protect the public and includes the primary functions of licensing, regulation and discipline of attorneys; the advancement of the ethical and competent practice of law; and support of efforts for greater access to, and inclusion in, the legal system.