MEETING
OF THE
BOARD OF GOVERNORS
OF THE
STATE BAR OF ARIZONA
December 17, 2004
Board
Room
Arizona Bar Center
BOARD MEMBERS PRESENT: Charles W. Wirken, President, Phoenix; Helen Perry Grimwood, President-Elect, Phoenix; Jim D. Smith, First Vice President, Yuma; Daniel J. McAuliffe, Second Vice President, Phoenix; Edward F. Novak, Secretary-Treasurer, Phoenix; Alan P. Bayham, Jr., Phoenix; Bryan B. Chambers, Globe; Roger H. Contreras, Bisbee; Amelia Craig Cramer, Tucson; Whitney Cunningham, Flagstaff; Michael K. Dana, Young Lawyers Division, Phoenix; Stephen M. Dichter, Phoenix; Diane L. Drain, Phoenix; Raymond A. Hanna, Prescott; Joseph A. Kanefield, Phoenix; Richard Platt, Florence; Foster Robberson, Phoenix; Steven P. Sherick, Tucson; Jeffrey Willis, Tucson; Ex Officio Member: Dean Toni Massaro (via phone); Public Members: Bennie R. Click, Munds Park; Fernando Gonzales, Tucson; Emily R. Johnston, Tucson and James B. Matthews, Phoenix; and At-Large Members Paul W. Ahler Phoenix; David K. Byers, Phoenix and Donald W. Carson, Tucson.
BOARD MEMBERS WITH EXCUSED ABSENCES: Amelia Craig Cramer, Tucson; Ex –Officio Member: Dean Patricia White; Immediate Past President, Pamela Treadwell-Rubin, Tucson.
OTHERS PRESENT: Teresa Schmid, Executive Director; Robert B.Van Wyck, Chief Bar Counsel; Carrie Sherman, Director of Executive Projects; Nina Benham, Assistant to the Executive Director; Colleen McManus, Director of Human Resources; Matthew Silverman, Director of Communications; Larry McVey, Chief Financial Officer; John Furlong, General Counsel; Justice Andrew Hurwitz, Phoenix; Attorney Peter Neisser, representing the Probate and Trust Law Sections; and Christine Thompson, Director of Government Relations.
President Charles W. Wirken called the meeting to order at 8:40 a.m. and went into Executive Session 8:40 – 8:50 a.m. Open Session began at 8:50 a.m.
PRESIDENT'S REPORT
President Wirken reported on the event co-sponsored by the Bar commemorating the anniversary of Brown v. Board of Education.
President Wirken summarized his attendance at the Arizona Judicial Council Quarterly Meeting where they debated random drug testing for public employees. President Wirken reported that the Courts strategic agenda effects the Bar as one of their existing goals would encompass judiciary determining how the public could be better served; and improving the profession.
President Wirken further reported that he and Christine Thompson, Government Relations Director, had attended a meeting with members of the criminal defense bar regarding future partnering in upcoming legislative topics such as merit selection or election of judges and to work closer for better bench/bar relations.
EXECUTIVE DIRECTOR'S REPORT
Teresa Schmid, Executive Director, reported that negotiations continue on the lease and management agreement with the Arizona Foundation for Legal Services & Education and had both documents had been provisionally approved by both boards with certain stipulations.
Ms. Schmid reported that the State Bar is currently in holdover status on its lease and that it is increasingly important to be out of its current building by the end of March. The Relocation Committee has adopted an aggressive time schedule for the construction process and relocation.
Ms. Schmid reported that the Long Rang Plan will not have much budgetary impact in 2005 as this is an information gathering stage. In January Ms. Schmid will report on the status of the plan in relation to the 2005 budget which will be voted on today.
Ms. Schmid reported on her meeting with the Supreme Court on the funding crisis of the overburdened Licensed Document Preparer's Program. The Court has requested $108,523 in funding to hire additional support staff. At the same meeting potential sources for future funding of the program were discussed including pro hac vice revenues; procedural rule change would be considered; the prospect of registration of in-house counsel and other out-of-state attorneys that come within the ambit of ABA Model Rule 5.5, which the Supreme Court adopted in June 2004. Also discussed was a prospective service to member by which they could obtain subpoenas via the internet. This will require further study and they would like to ask the President to form a Task Force for such purpose.
Ms. Schmid attended the Task Force on Admissions & Reinstatements on December 6th along with President Wirken and Chief Bar Counsel Robert Van Wyck. The proposed rules will be presented to the Supreme Court at its January meeting and will probably go out for comment. Highlights include: extending the investigation period for reinstatements; establishing "presumptive disqualifiers" for applicants; having Lawyer Regulation represent the Committee at the Supreme Court when an applicant appeals a denial of admission.
Ms. Schmid reported on her activities which include appearing before the Coconino County Bar Association; attended the Maricopa County Bar Association Leadership Institute; attended
Arizona Judicial Council meeting and plans to attend the January 5th Law School for Legislators at The Arizona Biltmore Resort.
"On the Horizon"
This section of the report is to give the Board advance notice of emerging issues that may become significant to the Bar in the future but do not yet require action by the Board.
Ms. Schmid summarized the discussion held at the Maricopa County Bar Association Leadership Institute re legislative proposals for national regulation of non-profits (including 501(c)(6) organizations.) In July 2004 the Senate Finance Committee promulgated a discussion draft with the following features: 1) five year review of tax-exempt status by the IRS; 2) New "self-dealing" rules prohibiting transactions between public charities and substantial contributors; 3) National standards for for-profit acquisition of non-profits; 4) Requirement of CEO signature on Form 990; 5) Requirement that directors with special skills use them for the benefit of the organization; 6) Limits the size of board of directors; 7) To encourage best practices, the government may accredit entitites that meet specific standards.
Roger Contreras asked about questions from constituents regarding the $50 legal services contribution. If the box is not checked and did not include payment when filing will there be a problem or issue for the member? Requested a policy to clarify.
CHIEF FINANCIAL OFFICER'S REPORT
Larry McVey, Chief Financial Officer of the State Bar, reviewed the October 2004 financial statements. Highlights for the month are: total income was $4,113 (or .5%) less than budget, total expenses were 47,674 (or 5%) less than budget, and the loss from Bar operations was $71,609 versus a budgeted loss of $115,170. The budgeted loss in October is due to the fact that three biweekly payrolls occurred in October. The third payroll in October costing $210,000 is a timing issue and if it were excluded from the month the Bar operations surplus in October would be $138,391.
Year to date, through October 2004, total revenues are $217,698 (or 2.5%) higher than budget, total expenses are $439,751 (or 5.3%) under budget, and the Bar operations surplus is $657,449 higher than budget. Total surplus after building operations and Sections activities is $538,208 higher than budget.
Net assets of the Bar at October 31, 2004 were $4,161,638 and exceeded the two months operating reserve, the YTD sections carryover amount of $287,184), and the equity in the building by $801,604. The Finance Committee recommended and the Board of Governors approved an increase in the operating reserve amount from $1,500,000 to $1.600,000. The operating reserve is two months of average monthly expenses. Through October 2004 average monthly expenses averaged $792,413. The average amount was rounded up to $800,000 per month for purposes of the reserve. Staff and the Finance Committee was asked to review the Bar's operating reserve policy and report back to the Board if there were any recommended changes in the operating reserve policy.
The forecasted surplus for the year is $794,135.
The November 2004 Flash report results were discussed. Highlights for the month are: total income is $81,858 (or 11.5%) higher than budget, total expenses are $22,181 (or 3.2%) higher than the budget and the surplus from Bar operations was $56,677 higher than budget. YTD the Bar operations surplus is $717,126 higher than budget.
Mr. McVey invited questions on the financial information and encouraged Board members to email him if they had any questions later.
FINANCE COMMITTEE REPORT
Ed Novak, Chair of the Finance Committee, reported that last month the Finance Committee provisionally approved the budget as submitted and at this time there has been no changes.
A recap of the 2005 budget and comparison to the 2004 budget is:
2004
Budget |
2005
Budget |
|
| Bar Operations Surplus | $314,796 |
$180,209 |
| Sections activity (Loss) | (32,870) |
(15,318) |
| Building operations surplus |
54,793 |
|
| One time moving expenses |
(138,230) |
|
| TOTAL Budgeted Surplus | $281,926 |
$
81,454 |
The budget is based on a move into the new building by March 31, 2005. Budgeted salaries include a 3% cost of living increase. A Performance Pool of $171,000 is included to help retain good quality personnel and $30,000 pool is included for possible salary adjustments during the year. After discussion,
Richard Platt moved, Steve Dichter seconded the motion, and the motion was unanimous to approve the 2005 Budget as submitted.
Mr. Novak reported the Finance Committee had approved the 2003 401(k) Employer Match at $13,486.74 net of forfeitures of $487.40. The Finance Committee would request that the board radify their action.
Steve Dichter moved and Richard Platt seconded and motion carried unanimously to radify the action of the Finance Committee to approve the 2003 401(k) Employer Match in the amount of $13,486.74.
Mr. Novak reported the Finance Committee had approved the 2003 Pension Plan net funding in the amount of $258,254 after the 2002 forfeitures of $33,547. Further reporting that the 2003 forfeitures were $54,000 and will be used against the 2004 contribution. The Finance Committee would request that the Board radify their action.
Ben Click moved and Ray Hanna seconded the motion to radify the action of the Finance Committee to fund the net 2003 Pension Plan contribution of $258,254.
Mr. Novak reported on the Supreme Court's request for funding of the Licensed Document Preparer's Program additional support personnel. The request of $108,523 for 2005 is to add three additional personnel: investigator, assistant investigator and administrative support. Mr. Novak stated that the Bar requested the program and the need to support it as it benefits the public and the members. The future funding of this program would come from revenue enhancers and increase of fees to Document Preparer's.
Jim Smith moved and Emily Johnston seconded the motion to approve the Finance Committee's recommendation to approve the funding of the Licensed Document Preparer's Program at the Supreme Court with the requested $108,523 from the 2004 surplus. Motion carried with one abstaining.
Mr. Novak reported on the Finance Committee's decision to move the Employee 401(k) Plan from M & I Bank to American Bar Association's Retirement Program with State Street Bank as Trustee. M & I's costs are $10-$12k per year; investment returns at M & I were lagging the bench mark; expense ratios twice as high as market average and the selection of funds was more limited than the ABA Plan. The Finance Committee would request the board's ratification.
Steve Dichter moved and Diane Drain seconded the motion carried unanimously to discharge M & I Bank as Trustee for the State Bar's Employee 401(k) Plan and to move it to the ABA Retirement Plan with State Street Bank as Trustee.
Robert Van Wyck, Chief Bar Counsel, reported that discipline will have 71-73 formal complaints filed by year end; 2-3 of those are very complex. In 2003 at this time we had 50 complaints. There were 7,000 phone calls that went through A/CAP. Of those 1,000 make it to a formal complaint. The other 6,000 were resolved either in A/CAP or through other programs such as Early Resolution Program or Peer Review. Mr. Van Wyck reviewed the breakdown of those cases moving through the system. He anticipates the discipline department will be at 94-95% compliance with the Court's guidelines.
BREAK – 10:40 – 10:50 a.m.
APPOINTMENTS COMMITTEE
Dan McAulffe, Chair of the Appointments Committee, reported on the recommendations of the committee as follows:
a) Arizona Commission on Appellate Court Appointments has one vacancy with Albert Flores completing his term and requesting reappointment to another 4 year term. After screening other applicants it was the recommendation of the committee to submit the name of Albert Flores to Governor Janet Napolitano for re-appointment to the Arizona Commission on Appellate Court Appointments.
Dave Byers moved and Diane Drain seconded and motion carried unanimously to recommend Albert Flores to Governor Janet Napolitano for re-appointment to the Arizona Commission on Appellate Court Appointments.
b) Arizona Commission on Judicial Conduct had one vacancy for a six-year term. The current incumbent does not with to apply for reappointment. The Committee recommends either Sheila Polk or Andrew Sherwood for this position.
Ray Hanna moved and Helen Perry Grimwood seconded the motion to nominate Sheila Polk to serve on the Arizona Commission on Judicial Conduct.
Diane Drain moved and Steve Dichter seconded the motion to nominate Andrew Sherwood to serve on the Arizona Commission on Judicial Conduct.
The motion carried to nominate Sheila Polk to serve on the Arizona Commission on Judicial Conduct.
c) DNA People's Legal Services, Inc. Board of Directors has two vacancies. Faith Klepper is completing her term and is applying for reappointment to a four-year term. One appointment is to be made to fill the unexpired term (12/31/06) of James Padish who recently resigned.
Richard Platt moved and Paul Ahler seconded the motion to reappointment of Faith Klepper to the DNA People's Legal Services, Inc. Board of Directors and the motion carried unanimously.
Joseph Kanefield moved and Roger Contreras seconded the motion to nominate Craig Soland to fill the unexpired term of James Padish through 12/31/06 on the DNA People's Legal Services, Inc. Board of Directors.
Paul Ahler moved and Diane Drain seconded the motion to nominate Robert Bartels to fill the unexpired term of James Padish through 12/31/06 on the DNA People's Legal Services, Inc. Board of Directors.
The motion carried to nominate Craig Soland to fill the unexpired term of James Padish through 12/31/06 on the DNA People's Legal Services, Inc. Board of Directors.
d) Maricopa County Commission on Trial Court Appointments has one vacancy. Helene Fenlon is completing her term and is requesting reappointment to another four-year term. After discussion,
Joseph Kanefield moved and Diane Drain seconded and the motion carried unanimously to nominate Helene Fenlon to Governor Janet Napolitano for re-appointment to the Maricopa County Commission on Trial Court Appointments.
e) Pima County Commission on Trial Court Appointments has one vacancy. The current incumbent does not wish to apply for reappointment. The committee recommends the Board send the name of either John Hinderaker or Merle Turchick to Governor Janet Napolitano to fill the opening on the Pima County Commission on Trial Court Appointments.
Emily Johnston moved and Helen Perry Grimwood seconded the motion to send the name of Merle Turchick to Governor Napolitano to fill the vacancy on the Pima County Commission on Trial Court Appointments.
Steve Dichter moved and Joseph Kanefield seconded the motion to nominate John Hinderaker to Governor Janet Napolitano to fill the vacancy on the Pima County Commission on Trial Court Appointments.
The board approved the nomination of John Hinderaker to be sent to Governor Janet Napolitano to fill the vacancy on the Pima County Commission on Trial Court Appointments.
Dan McAuliffe reviewed the Appointments Process Summary for 2004 with the Board as an informational item only.
BOARD OF LEGAL SPECIALIZATION
Mark Harrison and Andrew Abraham, Chair of the Board of Legal Specialization, appeared before the board to discuss the Proposed Amendments to Rules and Regulations.
Mr. Harrison spoke first reviewing prior cases and having found inconsistencies, stating arbitrary decisions are made; subjective opinions; confidentiality issue as applicant never knows who makes the comment or why he or she is deficient. Mr. Harrison made suggestions for change.
Mr. Abraham addressed the board with ways to handle Mr. Harrison's concerns with four levels of review which would protect the applicant: 1) staff; 2) Advisory Committee; 3) Board of Legal Specialization and 4) Board of Governor's review. Mr. Abraham reported that the BLS supports Dan McAuliffe's detailed review and proposal and does not endorse Mark Harrison's proposal.
Foster Robberson, Chair, Rules Committee, first thanked Mark Harrison for bringing this to their attention and highlighting some necessary changes. The Rules Committee, however, does not recommend accepting Mr. Harrison's proposal to the rules. The Rules Committee recommends the changes as outlined in Dan McAuliffe's Memo and BLS accepts it.
Diane Drain moved and Roger Contreras seconded the motion carried unanimously to
table the issue to the January meeting with comments due to the Court by the end of January.
DISCIPLINE ON THE WEB
Helen Perry Grimwood, Maret Vessella, Deputy Chief Bar Counsel and Jennifer Moreira, Internet Services Manager gave a PowerPoint presentation showing the board samples of information that would be posted on the web if the board approves it. The presentation covered definitions that would be a part of the web pop ups when a cursor was placed over it. This topic is informational this month and will be voted upon in the future. Information to members with a way to comment on Discipline on the Web will be next issue of Arizona Attorney Magazine. Notice regarding Discipline on the Web will be in eLegal and information will be given to sections. There were a number of guests in attendance and were given the opportunity to provide their input.
Steve Sherick suggested it go to the membership through Arizona Attorney Magazine and get feedback summarized before having a vote on this issue. Helen Perry Grimwood and Matt Silverman, Director of Communications, will work together to put an article in eLegal with a method to receive responses from the membership. They will go to Discipline Oversight Committee for review.
LEGISLATIVE UPDATE
Christine Thompson, Director of Government Relations, reported on The Law School for Legislatures that is planned for January 5, 2005 from 8:00 a.m. to 5:00 p.m. at The Arizona Biltmore, reminding the board to please advise her if they are able to attend. The Board of Governors is asked to attend the luncheon from 11:30 a.m. to 1:30 p.m. which will have a criminal law program. The Board will be assigned one board member per table to meet the legislators. They will be covering Water Law; Indian Law; Family Law; Arizona Constitution and Federal Law.
Ms. Thompson reported that members of the defense bar community are seeking legislation to gain representation on the Arizona Criminal Justice Commission. Ms. Thompson will bring legislation to the board at a future meeting.
Ms. Thompson reported that the House and Senate Judiciary Committees assignments have been made.
Ms. Thompson stated that Breakfast with the Court is scheduled for January 12th and will have more information at the next meeting of the board.
Amicus – no report
Building Relocation Committee – Dan McAuliffe, Chair, reported that building plans had been submitted to contractors with critical dates but are not ready at this time for the city to permit. The walk through of the building with the bidding contractors is planned for December 14th. There is an explicit March 25th deadline. On the afternoon of December 20 and 21st interviews will take place by a sub-committee. We plan to have a negotiated contract by December 25th which will require the Board's action. The committee recommends approval of the negotiated contract for $30 psf equaling $1.3M as originally approved by the board and authorizing President Chas Wirken to sign on behalf of the State Bar.
Ray Hanna moved, Jeff Willis seconded and the motion carried unanimously to approve the negotiation of the construction contract for the new building located at 4201 N. 24th Street, Phoenix, AZ 85016 for up to $30 psf equaling $1.3M as originally authorized by the Board of Governors and authorizing the President to sign the contract on behalf of the State Bar.
Mr. McAuliffe reported further that approximately 50% of everything will be moved. The furniture that is being considered is Steelcase which is what we currently have. Mr. McAuliffe reviewed with the board other considerations that were being made by the Relocation Committee.
Discipline - Helen Perry Grimwood, Chair, reported earlier in the meeting that the Discipline Oversight Committee and Sub-committee with Don Carson, chair, is working on Discipline on the Web and gave its presentation. Ms. Grimwood also reported that MAP and LOMAP were doing an excellent job and had received letters of thanks from membership.
Finance and Investment Committee – nothing further to report
Human Resources – James Matthews, Chair, reported that the committee will be meeting to review the compensation philosophy forms the Hay Group had sent them which were received on December 16th.
Long Range Planning Committee – Steve Sherick, Chair, reported that they plan to meet in February to review the plan and progress.
Member Services – Whitney Cunningham, Chair, reported they had not met in December and had nothing to report.
Rules Review – Foster Robberson, Chair reported on the Petition proposed by the Civil Practice and Procedures Committee to amend Ariz. R. Civ. P. 53, the rule addressing the appointment and use of masters in Arizona Superior Court. The requested changes would amend Rule 53 in a way that conforms to current usage, makes express that masters can be used for pretrial discovery issues; takes into account recent amendments to Fed. R. Civ. P. 53 as well as related changes and clarifications as set forth in the draft Petition. Mr. Robberson, on behalf of the Rules Review Committee, request the boards approval of the draft Petition.
Richard Platt moved, Paul Ahler seconded and the motion carried unanimously to approve and file the Petition as submitted by the Civil Practice and Procedures Committee to amend Ariz. R. Civ. P. 53.
New Item
The latest draft of the Civil RAJI's (Revised Arizona Jury Instructions) were passed out for the boards review as an informational item and a vote in January. There is a CLE seminar scheduled for February 10th and board approval is required prior to this event. Christine Thompson, Government Relations Director and Foster Robberson will meet with Aaron Kizer who has raised several specific concerns. Paul Ahler suggested a memo to the board highlighting the 2 or 3 items with the differing views. The matter was tabled to January.
Arizona Foundation for Legal Services & Education – Jeff Willis reported that the Holiday Kickoff Party was very successful and made about $25,000.
Arizona Judicial Council – Chas Wirken reported that the next meeting is March 30th and they will debate new family court rules and the Court's web site.
Young Lawyers Division – Mike Dana, President, reported that the annual Arizona Kids Holiday Fest had 230 children present. Five years ago the program hosted 120 children. Contributions were made by Target, Harkins and lawyers. The AZFLS&E staff participated as well and it was a big success. A Wills for Heroes questionnaire has been prepared to determine eligibility and a draft will has been prepared.
AMERICAN JURY PROJECT SPONSORSHIP
Jeff Willis, ABA Board Delegate and his guest and partner, Patricia Lee Refo, asked the Board for approval to be directed to co-sponsor the American Jury Project at the ABA Mid-Year meeting in Salt Lake City, Utah. The board discussed the definition of co-sponsor and its implications. Mr. Willis stated that Arizona is at the forefront of jury innovations. Ms. Refo is the former chair of the ABA Litigation Section. After considerable discussion,
Jim Smith moved, Roger Contreras seconded and the motion carried over two dissents to co-sponsor the American Jury Project at the ABA Mid-Year Meeting in Salt Lake City, Utah. This is an endorsement of principles with the caveat that the sponsorship is not an endorsement of each and every one of the proposed principles, but supports the major goals and the majority of the principles proposed by the American Jury Project.
Jeff Willis was asked to identify controversial issues for the Board of Governors in advance of all ABA meetings.
CONSENT AGENDA
Alan Bayham moved, Dan McAuliffe seconded and the motion was unanimous to approve the updated MCLE Suspensions list and the Approval of Reinstatements suspended for non-compliance.
Chas Wirken asked that the board to clarify the November minutes regarding the following: the Admission on Motion, p.2702. The discrepancy was regarding the length of clear disciplinary history. The current rule is 15 years. When voting the board's red line version had an error that read "5 years". It was the intent of the board to maintain the current rule of 15 years; bottom of page 2702 delete "chair" under paragraph 2; amend the line in Paul Ahler's presentation. With these amendments,
Whitney Cunningham moved, Paul Ahler seconded and the motion unanimously carried to approve the November minutes as amended.
Roger Contreras requested the board clarify the dues statement if a member doesn't check the box. After discussion,
Diane Drain moved, Dan McAuliffe seconded and the motion carried unanimously to clarify that members would not be in violation if the box was not checked on the dues statement for the $50 legal services contribution and payment was not included. It will be considered no donation as if the box had been checked.
Jim Smith moved, Whitney Cunningham seconded and motion carried to adjourn. (1:45 p.m).
Respectfully submitted,
Edward
F. Novak
Secretary-Treasurer