MEETING
OF THE
BOARD OF GOVERNORS
OF THE
STATE BAR OF ARIZONA
March
25, 2005
Snell & Wilmer LLP
Phoenix and Tucson
BOARD MEMBERS PRESENT (Phoenix): Charles W. Wirken, President, Phoenix; Jim D. Smith, First Vice President, Yuma; Daniel J. McAuliffe, Second Vice President, Phoenix; Edward F. Novak, Secretary-Treasurer, Phoenix; Bryan B. Chambers, Globe; Bennie R. Click, Munds Park; 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; Ex Officio Member: Immediate Past President, Pamela Treadwell-Rubin, Tucson; Public Member: James B. Matthews, Phoenix; and At-Large Members Paul W. Ahler Phoenix; David K. Byers, Phoenix.
BOARD MEMBERS PRESENT (Tucson): Jeff Willis, Tucson; Roger H. Contreras, Bisbee;
Public Members: Emily R. Johnston; At-Large Member: Donald W. Carson, Tucson;
BOARD MEMBERS WITH EXCUSED ABSENCES: Alan P. Bayham, Jr.; Helen Perry Grimwood, President-Elect, Phoenix; Foster Robberson, Phoenix ; Steven P. Sherick, Tucson; Ex-Officio Members: Dean Toni Massaro, Tucson; Dean Patricia White, Tempe.
OTHERS PRESENT (Phoenix): 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, Senior Director of Human Resources; Matthew Silverman, Senior Director of Communications; Larry McVey, Chief Financial Officer; John Furlong, General Counsel; Justice Andrew Hurwitz, Phoenix; and Christine Thompson, Director of Government Relations.
President Charles W. Wirken called the meeting to order at 8:30 a.m.
Senator William Brotherton, joined via conference call to discuss SCR 1038 regarding modifications to the judicial selection process. Senator Brotherton stated that he understood that the Bar had supported the original compromise legislation. He further stated that the version that was passed March 24th, was different than the agreed to compromise. Ed Novak noted that the compromise had been modified by changing the population cap for election of judges from 250,000 to 400,000 residents. After considerable discussion:
Jim Smith moved and Dan McAuliffe seconded the motion to take a neutral position on SCR 1038. The motion passes over one abstention (Dave Byers).
Dave Byers asked what the Bar’s position would be if in the bill was to change again back to unfettered gubernatorial appointment and confirmation when it is scheduled to appear before the House Judiciary Committee on March 31, before the next Board of Governors meeting. It was discussed that at the Scope and Operations meeting March 1, 2005, a vote passed to oppose full senate confirmation and unfettered gubernatorial appointment. After further discussion:
Joseph Kanefield moved to reconsider, with no second heard, and motion fails.
BOARD OF LEGAL SPECIALIZATION
Marnie Leinberger, BLS/MCLE; Jim West, public member, Board of Legal Specialization appeared before the board requesting Recognition of National Certification Entities: National Board of Trial Advocacy (NBTA) and National Elder Law Foundation (NELF). The board discussed their qualifications meeting Arizona specific standards and the changes necessary. Diane Drain suggested it return for Committee and Section approval with discussion today and vote in April.
Diane Drain moved and Whitney Cunningham seconded the motion to pull this item from the Consent Agenda and to table to April to gather input from the Bar’s interested groups.
PROFESSIONALISM TASK FORCE
Ed Novak and Professor Paul Bennett, co-chairs of the Professionalism Task Force along with members Maria Hoffman, Amelia Cramer, Bennie Click, Justice Andrew Hurwitz and Mike Dana were present. Ed Novak presented a PowerPoint covering the report. Professor Bennett led the discussion and reviewed the history starting in January 2002 ABA’s Litigation Section’s Survey. Professor Bennett’s report went on to say that solutions rest with the Bar, law schools and the judiciary. Mr. Novak urged the board to read the report on peer review.
The Task Force proposed several solutions, including specific recommendations to the law schools; creating video’s on professionalism; revising the Creed and Oath, and the Task Force’s suggested revision of the Comment to E.R. 4.1 (truthfulness). The Task Force report suggested the need of creating a culture of professionalism.
Pamela Treadwell-Rubin personally thanked the Task Force for all their hard work and extended the Bar’s appreciation for all their effort and excellent suggestions.
PRESIDENT’S REPORT
President Wirken reported that he had attended the Volunteer Lawyers Awards Luncheon where the F. X. Gordon Traveling Award was given to Access to Justice Task Force.
President Wirken further reported that he had attended a hearing of the House Judiciary Committee in which they considered several bills affecting the court. The bills were heard at the end of the agenda and after a three and a half hour wait, no one was allowed to testify except Chief Justice Jones who was given 3 minutes.
President Wirken further reported on attending the Arizona Judges Association meeting; Gila County Bar’s Annual Dinner and University of Arizona Annual Banquet Fund Raiser where he, Joe Arpaio, Terry Goddard were the celebrity’s challenged by others in bowling for $1 a pin for the Law College Association and raised $7k.
President Wirken stated that the topic of personal injury law was this month's Lawyers on Call program. Once again this program in partnership with Channel 12 was very successful.
President Wirken updated the board on the Western States Bar Conference (WSBC) where 17 jurisdictions were represented in a 3.5 day program. President Wirken reported on the Roll Call of the States where the commonality of issues facing the Bar’s was apparent. Also attending was Helen Perry Grimwood, Jim D. Smith and Teresa Schmid.
President Wirken further reported attending the online discussion regarding Discipline on the Web with Section leaders conducted by the Membership Services Committee, Whitney Cunningham, Chair.
President Wirken reported that he had met with Senator Jon Kyl to discuss the Bar’s opposition to proposed split of the 9th Circuit. Senator Kyl suggested the Bar consider what realignment might be preferred.
President Wirken further reported that a letter had been sent to Congressman Jeff Flake regarding the Bar's opposition to the Bankruptcy Act legislation before Congress. The bill will be heard in committee on April 4th and then return to the full house for consideration.
Break – 10:30 a.m. and returned 10:50 a.m.
President Wirken thanked Dan McAuliffe and Snell & Wilmer LLP for the use of their offices and gave continued best wishes on Dan’s recovery.
President Wirken welcomed back Carrie Sherman and Pamela Treadwell-Rubin; offering Ms. Treadwell-Rubin condolences on the loss of her Father.
President Wirken thanked Larry McVey, Chief Financial Officer, for all his efforts on the relocation efforts.
EXECUTIVE DIRECTOR’S REPORT
Teresa Schmid, Executive Director, noted that “today is moving day”. The Bar will be located at 4201 N. 24th Street, Suite 200, Phoenix after this weekend. The April meeting will be planned at the new offices.
Ms. Schmid reported on the meeting of the Long Range Planning Committee on February 17th. The committee will be meeting quarterly and to bring forward any issues to the Board and submit any proposed changes.
Ms. Schmid reported that the Foundation for Legal Services & Education were moved in and have a separate entrance. The IOLTA agreements with the banks have been signed. Ms. Schmid reported that the Proclamation by the Governor had been signed declaring April as Legal Services Month.
Ms. Schmid further reported that President-Elect Helen Perry Grimwood is doing outreach to minority bars to recruit more minorities as candidates for committee appointments. To support this ongoing effort, the appointment deadlines have been extended to April 15, 2005.
Ms. Schmid reported that she participated in ASU’s Study on non-profit Board Effectiveness. Ms. Schmid responded to the survey sent to executive directors, and the results will be shared with participants.
Ms. Schmid gave highlights of the Chief Staff Executive and Bar Leaders Institute and topics included: volunteers needs and wants (emphasis on young lawyers); New Hampshire Bar initiative: a conference on who is not involved with the state bar but should be; the elements of sound financial management; and themes of ABA President-Elect, Michael Greco: reinvigorate idealism and be mindful of what’s happening to the role of the profession; our role in society is being diminished.
Ms. Schmid further previewed the Western States Bar Conference and issues being discussed among the large state bars (15,000+ members): 1) Multi-jurisdictional practice and “four-corners”reciprocity agreements; 2) Relations between state bars and their legislatures; 3) ABA governance: balance of voting between state and local bars and ABA sections; 4) Funding crises of the courts; 5) Federal regulation of lawyers (e.g. Sarbanes-Oxley, Bankruptcy Act); 6) what state bars do that members really love.
Ms. Schmid reported on the upcoming ABA Day in Washington and the list of priorities include: 1) Funding for the Legal Services Corporation 2) Anti-terrorism and the Patriot Act 3) Lawyer/Client Privilege 4) Federal Tort Law; 5) Legal Immigration; 6) Independence of the Legal Profession/Judiciary and 6) Tax Implications, etc.
“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.
Multi-jurisdictional Practice: The Navajo Nation is exploring a reciprocity agreement with New Mexico, Ms. Schmid and Helen Grimwood hope to attend the annual meeting of the Navajo lawyers in June.
New Law School: Opened a night school in January 2005 and will open a day school in September 2006. The school’s emphasis is in recruiting a diverse student body and in educating lawyers for international practice.
Ms. Schmid reported on attending the Power Breakfast with new President/CEO Barry Broom of Greater Phoenix Economic Council.
Disintermediation: This is a term that became popular as technology displaced certain businesses or functions in the economy. Lawyers are the classic intermediators between the public and the justice system; disintermediation could be used to describe the displacement of lawyers in this role. Ms. Schmid gave examples of evidence of this trend.
The Goldwater Institute will be holding a program April 8th about the Arizona Supreme Court and their adherence to the rule of law. Additionally, judicial selection will be discussed.
CHIEF FINANCIAL OFFICER’S REPORT
Larry McVey, Chief Financial Officer of the State Bar, reviewed the January 2005 financial statements. Highlights for the month are: total income was $61,921 (or 8.2%) higher than budget, total expenses were $100,686 (or 11.6%) lower than budget and the income from Bar operations was $52,501 versus a budget of ($110,106) resulting in a favorable variance of $162,607.
January Arizona Attorney revenues were higher than projected due to an improving economy and improved morale on the sales support team. The Sales and Marketing department predicts that it will continue to beat its sales budget from February through May. Some CLE events were rescheduled since the budget was submitted in October 2004 so January results were much better than planned ($28,686 higher than budget). February and March has fewer events planned than budgeted so revenue is expected to fall short of plan.
January personnel cost expenses were under budget due primarily to ten open staff positions totaling $47,000 as well as overall under spending by managers of $36,000 compared to budget (focus has been on move to new building vs. originally planned projects).
Section activities netted a loss of $7,727 versus a budgeted surplus of $15,026 resulting in an unfavorable variance of $22,753. This will be reviewed and explained later. Building operations produced a book loss of $15,055 versus a budgeted loss of $20,438. The favorable variance is due primarily to a lower interest bill on the line of credit.
The January bottom line surplus after Sections Activities and building operations was $29,719 and compares favorably to the to a budgeted loss of ($115,518).
The revolving line of credit was paid down to $300,000 as of January month end and is expected to be paid off during February. The January interest rate charged on the line was 4.35% and is less than the prime rate of 5.25%.
Net assets of the Bar at January 31, 2005 were $4,109,795 and exceeded the two months operating reserve of $1,600,000, the YTD sections carryover amount of $270,443, and the equity in the building of $1,472,850 by $766,502.
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, congratulated Larry McVey and Teresa Schmid with the move of the State Bar. The building budgeted improvements were $1.3M and came in around $1M. Furniture cost was approximately $600,000 to $700,000. Equipment was over budget approximately $25-$50k but the bottom line was under budget. One item that was not budgeted was required ADA compliant drinking fountains and upgrade on the restrooms, $12k.
Mr. Novak, on behalf of the Committee, thanked and commended Ron Messerly of Snell and Wilmer LLP, for his negotiations in the tenant improvements and help on the building and additionally to thank all of the dedicated staff that worked so hard during this move process.
Diane Drain will be working with volunteer lawyers on April 7th at the Bankruptcy Court and asked for any used equipment for this group.
Robert Van Wyck, Chief Bar Counsel, reported that Discipline was fully staffed with lawyers and recently several UPL cases were successfully prosecuted. Mr. Van Wyck reported on the Discipline statistics and then went on to say that Professionalism is critical and it is about our ability to do our job and do it well. Mr. Van Wyck thanked the Professionalism Task Force for all their effort and their report.
APPOINTMENTS
Dan McAuliffe, Chair, reported on the candidates for the Conflict Case Committee. The Committee recommends reappointment of Michael R. Palumbo and Donald M. Peters to serve a second three-year term and appoint J. Vincent Gonzalez to serve his first three-year term. After considerable discussion:
Ed Novak moved and Diane Drain seconded the motion to approve the Appointments Committee’s recommendation to reappoint Michael R. Palumbo and Donald M. Peters to serve a second three-year term and appoint J. Vincent Gonzalez to serve his first three-year term.
LEGISLATIVE UPDATE
Christine Thompson, Director of Government Relations, reported
The following are the State Bar’s positions on current bills:
Bills Supporting:
SB 1343 - Revised Uniform Arbitration Act - Jarrett sponsor;
SB 1261 -$5 Civil Filing Fee – Indigent Legal Services
HB 2636 -ACJC Membership - Smith sponsor;
HB 2342-Administrative Law Judges; Confidential Information
HB 2705-Appropriation; Domestic Violence
Bills Opposing:
HB 2403-Judges; Automatic Increase Eliminated
HCR 2013-Election; Presiding Superior Court Judges;
HCR 2014-Supreme Court; Jurisdiction;
HCR 2026-Supreme Court; Administrative Supervision;
HCR 2031-Separation of Powers; Judicial Lawmaking
HCR 2040-Judges; Merit Selection; Population
HCR 2056-Justices and Judges; Governor Appointments
HCR 2057-Court Appointments; Commissions; Members
SCR 1025-Court Judgments; Legislative Approval
SCR 1032-Superior Court Judges; Supervisorial Districts
SCR 1038-Justices and Judges; Senate Confirmation
After discussion:
Alan Bayham moved, Jim D. Smith seconded and the motion carried to adopt the “support” and “oppose” positions as indicated, but to take no position on the remaining bills and to direct staff to monitor them as the session unfolds.
Amicus – Dan McAuliffe reported that there was no word on the James Hamm case.
Building Relocation Committee –Larry McVey, reported that the contractor finished on March 18th, which was ahead of schedule thanks to Chas Wirken and Dan McAuliffe. There is an open house being planned tentatively for October with Cari Gerchick as Chair. Lexis/Nexis is sponsoring $9k towards this event.
Discipline - Paul Ahler, Chair of the Discipline subcommittee on petition 04-0032, reviewed the comment regarding petition R-04-0032, which addresses the rules governing admissions and reinstatement to the practice of law in Arizona. After discussion, the board suggested the following changes: 1) page one of comment, third paragraph, replace the word “reflect” with “clarify”; 2) Attachment A, page 1, Proposed Rule 36(b)(2) at page 8, #2 last line replace the words “should be” with “shall be”…; 3) Attachment A, page 3 under Proposed Rule 64(b) at page 37 (b) last line, replace the word “should be” with “shall be” 4) Attachment B, page 1 under Proposed Rule 36(b)(2) at page 8 #2 last line replace the word “should be” with “shall be”; 5) Attachment B, page 3 under Proposed Rule 64(b) at page 37(b) last line replace the word “should be” with “shall be”. After discussion,
Ed Novak moved, Paul Ahler seconded and motion the carried to adopt the comment to petition R-04-0032 as amended and file the comment with the Court. Dave Byers abstained.
Finance and Investment Committee – nothing further to report
Human Resources – James Matthews, Chair, reviewed the summary of the Human Resources at the Bar handout. Mr. Matthews reported on the Compensation Philosophy that is presented this month for a vote in April.
Long Range Planning Committee – Steve Sherick, Chair, reported that they plan to meet in quarterly to review the plan and progress. This document is a living document and the committee will recommend changes as warranted according to the environment.
Member Services – Whitney Cunningham, Chair, reported on the March 4th Sections meeting live with audio interactive. On behalf of the committee I would like to thank the staff for making this possible and Helen Grimwood for fielding the questions on Discipline on the Web. Seventeen of the 28 Sections participated in this meeting.
Rules Review – Jeff Willis reported on the ABA communication on the Model Rule of the Virginia State Bar. Mr. Willis reviewed the last three years considerations for Mandatory Insurance and Disclosure and the Virginia Rule. April 4th is the deadline for comment on R-04-0025 Petition Regarding ABA Model Rules on Insurance Disclosure.
Ed Novak moved and Paul Ahler seconded to adopt the draft comment on R-04-0025 Petition Regarding ABA Model Rules on Insurance Disclosure and submit to the court with the following amendment: on page 3, in last paragraph after “thousands of clients.” add “This, however, is not a consequence of the rule proposed by the ABA.” The motion carried unanimously.
CONSENT AGENDA
Item 12, MCLE Suspensions was removed by President Chas Wirken.
Jim Smith moved and Dave Byers seconded the motion to approve Items 10 (February Board Minutes; Item11 (Approval of Resignations of Members in Good Standing and Item 13 (Approval of Reinstatements) from the Consent Agenda.
Ed Novak moved and Dan McAuliffe seconded and the motion carried unanimously to approve the updated list of MCLE suspensions (Item 12) knowing that number 49 will file an affidavit March 28th.
American Bar Association – Jeff Willis reported on the matter regarding the ABA Veteran’s Affairs pertaining to counsel representation regarding Veteran Benefits claims and attorney representation that the board voted to support in the January meeting. The Bar has been asked to provide a formal resolution, which President Wirken will be signing.
Arizona Foundation for Legal Services & Education – Teresa Schmid reported that the Foundation was moving with the Bar. The Proclamation was signed by the Governor declaring April as Access to Justice month.
Arizona Judicial Council – Chas Wirken reported that new rules for family court proposed rule will be reviewed and will plan to implement January 2006
Young Lawyers Division – Mike Dana, President, reported that the Wills for Heroes program is on track. The end of April will be their test run.
Mike Dana, on behalf of YLD, reported on the proposed bylaws amendment which would allow associate membership to (JAGs) military lawyers stationed in Arizona, not SBA members, however they can participate in all activities but would be non-voting. After discussion,
Roger Contreras moved and Amelia Cramer seconded the motion to accept the recommendation as submitted of the amendment of the bylaws of the YLD and the motion carried unanimously.
Dan McAuliffe moved, Jeff Willis seconded and motion carried to adjourn. (1:00 p.m).
Respectfully submitted,
Edward F. Novak
Secretary-Treasurer