Fees Versus Dues:
A Distinction Without a Difference?
By Tom Kranovich
Earlier this year I wrote about the “Four F’s of Governance”. Let us now turn our attention to the ultimate “F word” in governance, the elephant in the room, fees.
I will soon celebrate 32 years of being a member of, and paying annual fees to, the Oregon State Bar. During that time span I have belonged, and paid dues, to various voluntary bar organizations and specialty groups including, but not limited to: the Clackamas County Bar Association, the Multnomah County Bar Association, the Oregon Trial Lawyers Association, the Association of Oregon Defense Counsel, the Oregon Minority Lawyers Association and the American Bar Association. Among others, I have supported and participated in events sponsored by the Oregon Asian and Pan Pacific Attorney Bar Association, the Hispanic Bar Association and the Oregon Gay and Lesbian Lawyers Association. The point is not my level of activity but the fact that of all these groups, the Oregon State Bar is the only one that is not an association.
By and large, associations are formed by a like-minded group of individuals with a particular interest, focus or purpose that is set forth in some form of binding organizational or governing document established by the membership. To enjoy the benefits of the association, members join and pay dues. Membership is voluntary. While there may be standards for eligibility, there is no test for, or ongoing requirement of, competency.
The Oregon State Bar is not an association; it is a statutorily created entity to which any person practicing law in Oregon must belong. It is not a like-minded group of individuals; it is every person licensed to practice law in Oregon. The Oregon State Bar, as charged by the legislature and overseen by the court, is responsible for regulating our profession in such a manner that the public is protected from lawyer incompetence and malfeasance. The task of regulating the profession manifests itself in three important areas: 1) admission to the bar, 2) statutorily mandated functions, such as discipline of lawyers and enjoining the unauthorized practice of law; and 3) advancing the science of jurisprudence and improving the administration of justice. For the privilege of practicing in Oregon every lawyer must be a member of the bar and pay an annual licensing fee — not dues, but a licensing fee.
Admission to the bar is funded by separate fees collected from bar applicants. Member fees are not applied to screening, testing and grading bar applicants. Though there have been times when surplus from application fees has gone into the bar’s coffers, the admission program is generally revenue neutral.
Protecting the public by holding lawyers to a minimum standard of professional conduct is the essence of what every mandatory bar does. In states where there is no mandatory bar, discipline is handled as a function of the court. Discipline (and reinstatement) of lawyers is the major, nondiscretionary and statutorily required, regulatory function of the Oregon State Bar, and its cost is an expense that every lawyer licensed to practice in Oregon must bear.
Keeping in mind that disciplinary matters are separate from the negligence claims handled by the Professional Liability Fund, it may come as a surprise that two-thirds of your annual bar membership fee goes for mandatory regulatory functions: attorney discipline and reinstatement; Interest on Lawyer Trust Accounts and MCLE compliance; unauthorized practice of law enforcement; and the New Lawyer Mentoring Program. Of our statutorily mandated functions, discipline is by far the bar’s greatest expense. Accordingly, if for no other reason than efficiency and cost effectiveness, the Board of Governors has begun a study of our disciplinary process beginning with a review, in the near future, by the ABA.
“Advancing the Science of Jurisprudence and Improving the Administration of Justice” is a discretionary statutory mandate that broadly focuses on serving the public. It accounts for the remaining third of your bar fees. Some of our programs under this category are for access to justice and court funding efforts. Some, such as the Lawyer Referral Service, provide a direct service to the public and contribute revenue to the members and the bar, but the greatest part is for educational products and/or services that help our lawyers better serve the public. The many programs funded by discretionary expenditures include: CLE seminars, Bar Books, Fastcase, support to sections and the OSB Bulletin.
Discretionary programs such as OSB CLE seminars generate revenue but due to past Board of Governors’ policy considerations, our CLE Seminars Department is not, and has never been, on a break-even basis. (This is something currently under discussion by the board and will be the topic of my next article.) CLE seminar shortfalls are covered by the discretionary expenditure portion of our fees. Without doubt, our discretionary expenditures provide the greatest number of direct services to widest segment of our membership but, because they are discretionary, they are the most susceptible to budget cut considerations. I am confident that the most utilized and popular of our services and products, Fastcase and BarBooks, are a bargain compared to what they would cost, if available, on the open market. If for no other reasons than cost and ease of access by members statewide, I am loath to see any of our programs go by the wayside. But, while they are incredibly beneficial, discretionary programs are potentially the most vulnerable.
Regulation, whether in medicine, law or real estate is an unavoidable consequence of being licensed to provide professional services to the public. In 1935, our legislature, working with lawyers and in conjunction with the court, established the Bar Act (ORS 9.005 to 9.755) granting us the ability to be both self-regulating and self-governing. (Note, this is probably why we have a board of governors and not a board of directors.) It is incumbent on any self-regulating bar to provide the level of funding necessary to protect the public through the enforcement of its disciplinary rules and the education of its membership. It is only through regulatory enforcement and member education that we can maintain the public’s confidence in the rule of law and our professional role as officers of the court.
The next time you wonder what you are getting for your annual fee (not dues), the short and simple answer is: you are being granted a license to practice law in Oregon as a member of a self-regulating profession dedicated to serving the public and promoting the rule of law. Think it; say it; be proud of it. It is who we are — the Oregon State Bar.
ABOUT THE AUTHOR
OSB President Tom Kranovich practices law in Lake Oswego. Reach him at email@example.com.