Report 2018-030 Recommendation 15 Responses

Report 2018-030: State Bar of California: It Should Balance Fee Increases With Other Actions to Raise Revenue and Decrease Costs (Release Date: April 2019)

Recommendation #15 To: Bar of California, State

To better assess the security fund's revenue needs after 2020, State Bar should develop by August 2019 a methodology for estimating the payments that it is likely to make in a particular year. This methodology should consider the average length of time it will spend processing applications that are eligible for reimbursement and estimate the number of applications anticipated to become eligible for reimbursement during the course of that year.

6-Month Agency Response

Since 2014, the Client Security Fund (CSF) has paid out all funds available for reimbursement to clients who suffered a loss as a result of the dishonest conduct of the respondent attorneys. The length of time from when CSF gets jurisdiction over a matter and the matter is ultimately paid out is driven, in part, by the amount of funding available. As a result, the average time spent to resolve a case is not the best approach to determine the universe of cases the CSF would be able to process if there were sufficient funds, accompanied by the necessary funds to bring in extra staff to process the matters. The State Bar has adopted a methodology to arrive at an accurate estimate of required funding that takes into account the following factors: the number of cases in inventory at the end of the year over which the CSF has jurisdiction or will get jurisdiction during the course of the following year; the average payout for cases; and, the administrative costs for processing cases. The details of this methodology have been provided to the Auditor.

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

60-Day Agency Response

By August of 2019, the State Bar will develop a methodology for estimating payments for the upcoming budget year by reviewing CSF statistics for the previous 3- 5 years, analyzing current inventory, and assessing CSF's finances and staffing. The methodology will consider all of the elements identified by the State Auditors.

California State Auditor's Assessment of 60-Day Status: No Action Taken

State Bar has expressed it commitment to implementing this recommendation. The current response does not describe any action taken to that end, thus this recommendation's status is 'No Action Taken.'

All Recommendations in 2018-030

Agency responses received are posted verbatim.