PLEASE NOTE: Publication for public comment is not, and shall not be construed as, a recommendation or approval by the Board of Governors of the materials published.

SUBJECT

Amendments to Rule 2.16 of the State Bar Rules, regarding Fee Waivers

BACKGROUND

Under Business and Professions Code section 6141.1(a), the Board of Governors may provide for waiver of all or part of the payment of a member’s annual membership fee. In rule 2.16 of the State Bar Rules, the Board has provided for discretionary waiver of annual membership fees and related penalties provided that a member meets certain requirements. Subdivision (C)(3) of Rule 2.16 authorizes the Secretary of the State Bar to waive up to $1,000 in annual membership fees and penalties for the year in which they are due if a member can demonstrate that he or she meets any of the following reasons:

  1. The member is prevented from pursuing a living for a substantial part of the year because of a medical condition, natural disaster or family emergency,
  2. The member has a total annual income from all sources of $20,000 or less,
  3. The member serves full-time as a magistrate, commissioner or referee for a state or federal court of record,
  4. The member is a retired judge who accepts assignment from the Chief Justice of the California Supreme Court in a judicial capacity at least 90 percent of the year,
  5. The State Bar erroneously assessed the fees or penalties,
  6. For any other reason, on a one-time-only basis, if the member has no previous record of discipline, suspension or involuntary inactive enrollment.

In year 2010, three reasons (medical hardship, $20,000 income, and one-time-only) were grounds for the secretary to waive approximately $560,000 in membership fees or penalties, or both. The $20,000 income reason was grounds for waiving approximately $330,000. The medical hardship and one-time-only reasons were grounds for waiving approximately $230,000.

In light of the increasingly tight fiscal situation of the State Bar, eliminating these three reasons was proposed to the Board Committee on Member Oversight in early January 2011. Although the total amount of the waivers is not huge, requests for the medical waiver and one-time only waiver have grown significantly over the last 4 years, so the greatest fiscal advantage to eliminating these two waivers would occur in future years. Furthermore, eliminating the one-time only reason will bring the State Bar into closer alignment with the financial hardship purpose of section 6141.1, and with the fiscal policies and practices of other regulatory agencies in California and in most attorney regulatory agencies of other states, which are much more restrictive regarding membership fee waivers.

DISCUSSION/PROPOSAL

This proposal would delete these four reasons from subdivision (C)(3) of Rule 2.16: medical hardship; $20,000 income; one-time-only; and staff error.

Deleting these reasons from subdivision (C)(3) does not preclude waiver of annual membership fees under other statutory or rule provisions. Active members with financial hardship presumptively qualify for a waiver of 25 percent of the annual membership fee if they can demonstrate a total gross annual individual income from all sources of less than $40,000. (Bus. & Prof. Code sec. 6141.1(b), State Bar Rule 2.15.) Deletion of the staff error reason has no practical or fiscal consequence because staff errors will continue to be corrected.

ANY KNOWN FISCAL/PERSONNEL IMPACT
Elimination of the four reasons from Rule 2.16, subdivision (C)(3) is expected to generate an undetermined amount of revenue on an annual basis.
ATTACHMENTS

Attachment 1 - Proposed amendments to Rule 2.16 of the Rules of the State Bar

SOURCE

Board Committee on Member Oversight
Jan. 7, 2011

COMMENT DEADLINE

Feb. 28, 2011

DIRECT COMMENTS TO:

Dina DiLoreto
Office of Member Services
The State Bar of California
180 Howard Street
San Francisco, CA 94105
(415) 538-2121
(415) 538-2305 Fax
dina.diloreto@calbar.ca.gov