Dues Increase FAQ

 

When  will the increase begin?                                       

The Court-approved increase will not begin until the 2015 dues cycle (which begins at the end of 2014. Although early budget estimates for 2014 showed a deficit, Bar staff has worked hard to achieve a projected balanced budget.

How much is the increase?

The Court-approved increase is $15 per year for four years for all active attorneys.  This will mean a total increase for active members of $60 by the year 2018.  In-house counsel would see their dues increase by $11 (by rule they pay 75% of active dues).  Judges will receive an increase of $15 per year during the same four-year period. There is no increase for inactive or retired members. Pro hac vice fees and late compliance fees also will be adjusted.

Can the Bar cut its spending?

The Bar will reduce its spending by at least $300,000 per year. This will be done through a combination of staff reductions and cost cutting.

When was the last dues increase?

The last dues increase came between 2002 and 2005. Dues were increased by $25 per year, which totaled $100 at the end of the four-year time period. If we compare dues by year, using the Consumer Price Index calculator, the $460 paid in 2005 would equal $550 in 2013 dollars. This means that the final year of the increase (2018) would not be an increase in the actual dollars from 2005.

The Bar ran a surplus in 2013, why does it need a dues increase?

The Bar expects to have a final surplus in 2013 of about $620,000. This does not mean the Bar had an additional $620,000 in the bank, it simply means staff spent that much less than was originally budgeted. The Bar does not carry a reserve cash fund. Our reserve is the equity in our buildings (Phoenix and Tucson). The Bar also does not carry a traditional mortgage. Because we have dues income we receive early in the year, we use an equity line of credit (based on the value of the Phoenix and Tucson buildings) to pay expenses late in the year. This reduces the amount of interest we pay. Fortunately, our need to use that line of credit has decreased since we first purchased the Phoenix building. So what becomes of the surplus? Part of it will be used to fund needed capital projects (rather than using debt financing) and part of it will be used to reduce what we owe on the line of credit secured by our building. As part of its order, the court has directed the Bar to create a reserve fund policy.

Each year about 8-900 attorneys join the Bar, shouldn’t the revenue from membership growth be enough?

While we have 8-900 attorneys who join the State Bar of Arizona, others retire, go inactive or leave the state. Our net gain each year is about 300 members, which may not be sustained. Also, new attorneys generally don'’t pay full dues until they have been a member for three years.

Why couldn’t the Bar cut programs to avoid a dues increase?

The Board of Governors created a Program Review Committee to look at the various programs offered by the Bar. It's important to understand that many of the functions performed by the Bar are not discretionary (such as Lawyer Regulation, MCLE compliance, conservatorships, etc.). We estimate that $350 of an active member's annual dues are used for mandatory functions. The remaining $110 is used for various discretionary programs (Fastcase, Member Directory, Ethics Hotline, etc.). The Program Review Committee used a point system to score and ultimately rank each program. The Board of Governors has not at this point determined that any discretionary programs should be cut, with the exception of the voluntary portion of the Member Assistance Program in 2015.

How do our dues compare to other states?

The American Bar Association (ABA) conducts a regular survey of states to determine what it calls the "cost to practice" which include all mandatory fees. Using that ranking, Arizona is tied for 10th. It is important to point out that the State of Arizona picks up none of the cost for regulating attorneys in our state. Bar dues pay all costs (including the salaries of five staff members at the Supreme Court who handle lawyer regulation cases).

Incidentally, three of the four states with the most expensive cost to practice are voluntary bar states (Connecticut, Tennessee and Pennsylvania).

Wasn’t the new discipline system introduced in 2011 supposed to reduce regulation costs?

The discipline system introduced in 2011 was designed to make the regulation process more efficient. Simple cases now move through the process much more quickly, which means there is more time devoted to complex cases. While the process is quicker, there is still a high volume of investigations. The Bar could reduce staff in this area, but it could mean a longer time for attorneys to learn the resolution of complaints they face.

The Bar owns its building. About half of the 2nd floor has been unrented for some time. Would it be wiser to sell the building and rent space elsewhere?

While problems in the commercial real estate market have made it difficult to rent the available space in our building, we are beginning to make progress. Two tenants are in the final stages of negotiation. There is also a short-term tenant occupying a portion of the second floor. However, even without tenants on the second floor, a preliminary analysis seems to indicate the effective cost to occupy our building is about $14 per square foot. Considering the current rental rate for a similar quality property is $17-19 per square foot, it appears we currently save money by owning the building. Because of tenant improvements and commission payments, the Bar will likely not begin to show a profit on rental space until 2015.

Why don't judges pay the same dues as active members?

The Commission on Judicial Conduct ensures that judges meet standards set by the rules of professional conduct. While judges are lawyers and can be disciplined by the Bar after they have left the bench, the CJC is the primary agency responsible for enforcement. Because more than 75% of bar dues are for mandated functions such as discipline, judges pay a reduced amount.

Why would in-house counsel receive only an $11 increase?

Attorneys who register as in-house counsel currently pay 75% of the active member dues. They pay a lower fee because the registration only grants them a limited legal license. They can only register if they are already actively licensed in another state. They can only provide legal services for their employer and the company (or subsidiary) must be based in Arizona. That company cannot be involved in the practice of law and cannot provide legal services.

Could we save money by sending the Arizona Attorney magazine electronically?

The award-winning Arizona Attorney magazine is considered by many members to be the number one benefit of Bar membership (based on the most recent member survey). The magazine is not only popular with members, but also with advertisers. The advertising revenue generated by the magazine allows it to make a small profit. While publishing it electronically would reduce the printing and mailing costs, it would also reduce the revenue by an even greater amount. Advertisers would not pay as much without the guaranteed subscription base.

Why can't I pay my dues over time instead of the full amount at the beginning of the year?

The Bar's member database software is 15 years old. In addition to reaching the end of its usable life, it is not very flexible. While modern software solutions would allow for automatic tracking of monthly or quarterly payments, our current database would not accept time payments without manually inputting and updating the system (which requires costly manpower). With the money received from a dues increase, the Bar intends to purchase licensing for a new member database. It is expected this will cost about $400,000.

Are Bar staff overpaid?

The Bar works with a consultant to make sure staff wages are in line with similar jobs in like organizations. Because the Bar is a non-profit, our salaries are compared to other non-profits (whenever possible) rather than the for-profit sector. Salaries are reviewed annually, and then presented to Board's HR committee to review salary ranges. As an example, CEO John Phelps' current salary is nearly identical to the median salary of the CEOs at similar sized bars around the country (as shown in the 2011 ABA survey salary). Because the Bar is not a state agency, employees are not a part of the state retirement plan.