Utah Bar Journal

Bar members, in general, have not been informed of the events surrounding the audit, and there has been no follow-up with those who were interviewed. A brief summary of the Grant Thornton audit was placed on the Bar’s website in April, almost two years after the Court requested an audit. In June, the audit (which was completed in January) was also placed on the Bar’s website. Unless Bar members are carefully reading the Bar’s website or Commission meeting minutes, they likely would have no knowledge that the audit was conducted.

In May, the Court met with members of the Commission to discuss the audit. Accounts of that meeting indicate a consensus among the Court and the Commission that the audit was not particularly helpful in providing guidance for how the Bar might be improved and not worth the $59,894 paid to Grant Thornton. Unfortunately, Bar members have no information about the Court’s meeting with the Commission (at the time this article was written). The Bar’s communication to members about these events provides an example of changes the Bar needs to make in the way it operates.

I believe the Bar can and should be improved without any need to increase Bar dues. Bar members deserve more for their dues, and more should to be done to fulfill the Bar’s mission to serve the public. My background working with the Bar gives me some unique insights into Bar operations over the past 16 years1 and leads me to the following ten recommendations.

Recommendation 1 – Recognize that the Bar is a Quasi-Governmental Entity and Operate with Greater Transparency
The Bar is a quasi-governmental entity. Membership in the Bar is not voluntary for those who wish to practice law in Utah. The annual fee that all members pay is like a tax or governmental licensing fee. Moreover, a significant portion of membership dues are paid with taxpayer dollars (approximately 20 percent of Bar members are government attorneys whose licensing fees are paid with public funds). Many practices that may be appropriate in a for-profit entity are not appropriate in a quasi-governmental, non-profit organization.

Public entities conduct their business in the open and strive to communicate with their constituents concerning all matters of importance. This provides the best model for management of the Bar. Following this model, the Bar can improve its representation of all members, properly manage its finances, and carry out its core functions of admissions, licensing, and discipline.

While Commissioners are bright and talented and have experience managing small to medium-sized for-profit law firms, they generally lack the experience and training to serve as a director of a quasi-governmental entity. Too often, the Bar fails to act in the open and properly communicate with its members. Furthermore, concerning Bar governance, too many Commissioners act as if there is an implicit understanding that Commissioners should not worry about details of Bar operations or question the decisions or practices of the Executive Director, Bar President, or the Commission Executive Committee.

When information is provided to the Bar’s general membership, it comes in a form that is not adequate to accurately reflect what the Bar is doing. For example, the financial statements prepared by the Bar are confusing and do not show clearly the amounts spent on individual projects. In addition, members have less than 30 days to review and comment on the Bar’s annual budget. Information about all Bar activities should be provided to Bar members in the same manner that governmental entities provide information to the public. The Bar should conduct its meetings consistent with the Utah Open Meetings Act and proactively seek input from Bar members as often as possible.

Recommendation 2 – Develop and Implement a Strategic Plan
The Commission needs to develop a meaningful strategic plan and establish a process to assure that it is followed and regularly updated. The creation of a strategic plan is one of the best ways to assure that an organization is fulfilling its mission and using its resources effectively. A strategic plan has a long-range perspective that keeps the interests of the organization from being subjugated to the interests of individuals. It also provides a foundation for developing successful initiatives. Any well run, responsible organization has a strong strategic plan.

Approximately ten years ago, the Commission prepared a strategic plan. That plan admonished Commissioners to update the plan every five years. This did not happen. In fact, such plans should be updated annually. Because the Bar does not have an active strategic plan, each new Bar president implements initiatives that too often fail to take into consideration the efforts of prior Bar presidents. By adhering to a strategic plan, extraordinary expenses, such as a celebration for the Bar’s Seventy-Fifth Anniversary or Dialogue on Freedom, can be budgeted and planned over the long term. The Bar now appears to be committed to work on a long-range plan, but the Commission must be committed to update its plan regularly to manage the Bar effectively.

Recommendation 3 – Improve Communications with Bar Members
The Bar’s communication with its members should be improved. The Bar needs to reach out to members more effectively and listen to their concerns. Efforts to communicate with Bar members on important matters are inadequate. The Bar does little to encourage input from members, and when input is given, there is no way to know whether the input is being considered. It has been approximately 10 years since the Bar last conducted a meaningful survey of its members. Inexpensive web-based survey tools provide an opportunity to survey Bar members efficiently.

The quality of information provided to members should also be improved. The Bar should consider whether it is providing too much unimportant information on its website, which may result in members ignoring valuable information. Because the Bar Journal is only published every other month, much Bar-related information is out of date by the time it reaches Bar members.

Better communication would also occur if the Bar made efforts to get more members involved. Over the past several years, there has been very little turnover in leadership positions with the Bar’s key committees and with the Commission. If such positions were only held for two or three-year terms, more Bar members would learn through involvement how the Bar operates and could contribute to improving the Bar.

Recommendation 4 – Change the Make-up of the Commission
The make-up of the elected voting members of the Commission does not reflect the membership of the Bar. The vast majority of voting Commissioners are men who work in private law firms. Unfortunately, this leads to priorities of the Bar that too often appear to be similar to an exclusive fraternity.

Normally, fraternal organizations are voluntary. If a member believes that dues are not being spent wisely, he or she can resign from the organization. Since membership in the Bar is mandatory, Bar members do not have this option. The Bar needs to recognize the consequences of its present make-up and move in directions that are more inclusive to more members.

To implement changes at the Commission, the Court should appoint two or more attorneys, who are not elected, to serve on the Commission. Such individuals would likely be knowledgeable about the history of the Bar and different aspects of the nature of the legal practice. The two public members that the Court currently appoints should not be replaced, but the Court should not expect that they will have the background in the Bar that appointed attorneys would have. The Court could also use these appointments to assist in obtaining more balanced information concerning the operations of the Bar and provide advocates for responsible board governance.

The Bar should also rethink the current geographical basis for appointing voting Commissioners. Consideration should be given to reducing the number of voting Commissioners based on geography and adding voting members appointed by various Bar Sections or other groups such as the minority bar association, women lawyers, government attorneys, corporate counsel and young lawyers. For example, Commissioners from the First Division (representing Northern Utah Counties) and the Second Division (representing Davis and Weber Counties) represent 124 and 557 members respectively. The interests of the members within these two Divisions should be similar. By contrast, the interests of women, minority, corporate, and government lawyers are very different and deserve better representation by the Commission.

Recommendation 5 – Curtail Commission Expenditures
Many Commission expenditures are made without adequate scrutiny by the entire Commission. Commissioners enjoy benefits that are not provided to directors of other quasi-governmental or non-profit organizations. Commissioners spend the Bar’s money (funded by members’ mandatory dues) with very little supervision. Some Commission expenditures are appropriate, while other expenditures are not justified.

I estimate that the Commission has incurred the following expenditures this past fiscal year (July 1, 2006 to June 30, 2007):

1. $20,000 - 30,000 – Commissioners’ (elected and ex-officio) attendance at Annual Convention in Newport Beach, CA;

2. $5,000 - 7,000 – Past Presidents’ dinner in Newport Beach, CA;

3. $4,000 - 6,000 – Attendance at ABA Annual Meeting in Honolulu, HI;

4. $16,946 – Bar’s Seventy-Fifth Anniversary Dinner (amount from April 2007 financial statements);

5. $2,000 - 4,000 – Attendance at mid-year ABA Meeting in Miami, FL;

6. $10,000 - 15,000 – Commissioners’ (elected and ex-officio) attendance at Spring Convention in St. George, UT;

7. $7,000 - 10,000 – Commissioners’ attendance at Western States Bar Conference at Big Island, HI;

8. $2,000 - 3,000 – Commissioners’ Meeting in Vernal, UT;

9. $7,000 - 10,000 – Commissioners’ (elected and ex-officio) annual retreat at Zermatt Resort, Midway, UT.

Estimated total: $73,946 - $106,946

These estimates are supported by the Bar’s own financial statements. The Bar’s April, 2007 Financial Statements reflect the following expenses: $17,179 for Commission food and beverage; $12,901 for President’s expenses; and $76,974 for Commission education (which was $43,644 over budget). These three items, plus the $16,946 for the Seventy-Fifth Anniversary Dinner, total $124,000, which likely does not include the expense for the Bar retreat that occurred in June.

The value of these expenses is brought into question when one reviews the Commission’s agenda for its July meeting held in Sun Valley, Idaho, the location of this year’s Annual Convention. The Commission meeting was scheduled to last 2.5 hours, but only one hour was allocated to discussion of substantive issues. The Commission materials for the meeting detail the expenses that are reimbursable for the 24 Commissioners – these include mileage or airfare, a per diem for three days of meals and incidentals, and three nights’ lodging. The July Commission meeting does not need to be held at the location of the Bar’s Annual Convention and the associated costs are not justified.

I doubt that very many Commissioners previously realized how much is spent each year on these types of activities. These costs represent a pattern of expenditures over the past several years. Each individual expenditure may appear to be justified; however, taken as a group, it is clear that far too much is being spent on out-of-town travel and social activities. Some justify the costs as necessary to help build collegiality among Commissioners and with leaders of other bars, but I believe that the cost exceeds the benefit that the Bar receives.

Others might argue that these expenses are necessary to obtain participation of volunteer board members. There is no evidence that this is true. Board members of other law-related entities do not receive these benefits. Furthermore, the board members of the Legal Aid Society, And Justice for All, and Legal Services all make significant financial contributions to these non-profit organizations. These boards also include individuals who have significant management experience and are some of the most respected lawyers and business leaders in Utah.

A reduction of Commission expenses could fund a full-time Bar employee to manage lawyer referral and pro bono programs. This would benefit hundreds of Bar members and members of the public. Even with such a reduction, there would still be adequate funds available for appropriate Commission activities.

I recognize that as a member of the Commission, I received these benefits and implicitly supported these expenditures. Commissioners receive little training on how to serve as responsible board members and lack any formal ethical guidelines to help them in fulfilling their roles as fiduciaries of the Bar. I now regret that I did not speak up against these practices more often when I was a Commissioner.

Recommendation 6 – Separate Commission Expenses from CLE Programs and Reduce the Cost of CLE Programs
In the past, costs of the Commission’s activities have indirectly been funded through over-priced CLE programs. To balance the budgets of the Spring and Annual Conventions, the registration fees have been inflated to pay for Commission-related expenses. This is particularly inappropriate because CLE is mandatory for Bar members. According to the Bar, this is no longer the case.

The Bar needs to look at the quality of its programs and consider why other groups can offer high quality programs at a much lower price. To compare the price of other CLE programs, each year the Utah Municipal Attorneys’ Association sponsors a CLE program, with 12 hours of CLE credit, held in Southern Utah in May. The registration fee for the three-day program was $100 for each city attorney and $50 for each additional attorney. By contrast, the Bar charged $225 for registration to attend the Spring Convention this year for a two-day program. While the Spring Convention registration fee is lower than other CLE programs and might be considered a good value, the Bar is missing out on an opportunity to provide a significant benefit to Bar members by offering a low-cost CLE program.

Recommendation 7 – Adopt a Code of Ethics for the Commission and Bar Staff
It appears from the Commission’s materials for the July Commission meeting that the Bar has instituted a new Conflict of Interest Policy. While this is a good start, a more expansive code of ethics is needed. A good beginning point is the standards of ethics adopted by the Utah Nonprofits Association. The standards require nonprofit boards to adopt rules that address integrity, loyalty, openness, accountability, stewardship, and excellence. While I do not know whether the Bar has any ethical guidelines for its staff, such guidelines would certainly be appropriate.

Recommendation 8 – Conduct a Preliminary Audit of Bar Operations
The Grant Thornton audit recommends that an operations audit be conducted. Instead of paying for another audit performed by an outside auditor (and waiting for several years), the Court should appoint a qualified individual to identify potential areas of concern by interviewing Bar staff members and reviewing the Bar’s checking and credit card records. The interviews and review of Bar expenditures could be done relatively quickly. By conducting this preliminary audit first, a decision could be made how best to pursue a formal independent audit.

Recommendation 9 – Revive Programs that Benefit Bar Members and the Public
Over the past several years, the Bar has encountered increasing difficulty in balancing its budget. Some sources of income have decreased and expenditures have grown. As a result, the Bar has cut back on several programs that have benefited Bar members and the public. For example, the number of Bar Journals published has been reduced by one-third. The Lawyer Referral Service has been outsourced, reducing member participation and decreasing its value to the public. The Bar’s office of Pro Bono Services has been largely eliminated. The Bar should consider reducing other expenditures as part of a strategic plan to provide services that fulfill its mission to serve the public.

Recommendation 10 – Bar Members Should Get Involved
The legal profession is one of only a few that require an oath of office. Even fewer boards require members to take an oath of office, such as that sworn by the elected Commissioners. Keeping the public trust is a key component of both oaths. Bar members should hold Bar leaders accountable for maintaining the public trust. More Bar members should be involved in deciding how the Commission will conduct its business in the future.

According to recent Commission meeting minutes and Gus Chin’s article in the last issue of the Bar Journal, the Bar is going to consider whether it should seek a dues increase. Meanwhile, the Bar has recently paid off the mortgage on the Law and Justice Center and holds $1 million in cash reserves. Bar members should scrutinize any request for a dues increase, demand that the Bar first look for savings to be realized through cutting expenses, and conduct the recommended operations audit before consideration is given to increasing dues.

There are many other ways the Bar could be improved. Bar members should express their concerns and ideas for improvement by contacting the Bar President, Commissioners, and the Bar’s Executive Director – their phone numbers and email addresses are all available on the Bar’s website. I hope you will contact them and make your suggestions for improving the Bar.

1. In 1991, Rusty was appointed to the Bar’s Character and Fitness Committee. A few years later, he was asked to serve as chair of the Bar Examiner and Bar Exam Review Committees, which also included service on the Bar’s Admissions Committee. After several more years, he became Co-Chair of the Character and Fitness Committee. In 2002, Rusty was elected to a seat on the Bar Commission and in 2004, served as a member of the Commission’s Executive Committee. In 2005, he served as a volunteer mentor for the Bar’s Office of Professional Responsibility.