MEETING
OF THE
BOARD OF GOVERNORS
OF THE
STATE BAR OF ARIZONA
November 30, 2007
Arizona Bar Center
Phoenix
BOARD MEMBERS PRESENT: Daniel J. McAuliffe, President, Phoenix; Edward F. Novak, President-Elect, Phoenix; Raymond A. Hanna, First Vice President, Prescott; Alan P. Bayham, Jr., Second Vice President, Phoenix; Joseph A. Kanefield, Secretary-Treasurer, Phoenix; Bryan B. Chambers, Globe; Richard D. Coffinger, Glendale; Roger H. Contreras, Sierra Vista; Amelia Craig Cramer, Tucson; Michael J. Crawford, Tucson; Whitney Cunningham, Flagstaff; Stephen M. Dichter, Phoenix; Diane L. Drain, Phoenix; Abbe M. Goncharsky, Young Lawyers Division, Tucson; H. Leslie Hall, Phoenix; Richard T. Platt, Florence; Dee-Dee Samet, Tucson; Jimmie Dee Smith, President, Immediate Past President, Yuma; Public Members: Frank Barriga, Glendale; Bennie R. Click, Munds Park; Fernando Gonzales, Tucson; and Alexander B. Jamison, Scottsdale; At-Large Member: Paul W. Ahler, Phoenix; Alternate Mike Baumstark, Phoenix; Virginia Herrera-Gonzales, Phoenix; Ex Officio Member: Dean Patricia White, Tempe.
BOARD MEMBERS ABSENT: Whitney Cunningham, Flagstaff; Richard T. Platt, Phoenix; Foster Robberson, Phoenix; Ex Officio Members: Dean Dennis Shields, Phoenix; Dean Toni Massaro, Tucson
OTHERS PRESENT: Teresa Schmid, Executive Director; Robert Van Wyck, Chief Bar Counsel; John Furlong, General Counsel; Colleen McManus, Senior Director of Human Resources; Larry McVey, Chief Financial Officer; I. Godwin Otu, Diversity Director; Nina Benham, Assistant to the Executive Director; Carrie Sherman, Director of Executive Projects; Patricia Giallanza, Director of Communications; Kathleen Lundgren, Government Relations Administrator; Tom Harper, Manager of Accounting; Betty Flores, Director of the Resource Center; Nedra Brown, Director of Committees and Sections; Jenn Moreira, Director of Web Services;.
GUESTS: Susan Brnovich, AWLA Representative; Frank Lewis, Debbie Weecks, Gary Whiting, Robert Ward
President Dan McAuliffe called the meeting to order at 8:45 a.m.
President Dan McAuliffe reported that he had attended the Northern Arizona Women Lawyers Association (AWLA) reception. President McAuliffe announced two new communication initiatives: 1) the Presidents’ Information Exchange, an e-mail discussion group for past, present and future presidents of the Board of Governors to provide their thoughts and ideas; and 2) Internet Chats that will be scheduled as lunchtime events beginning in February with topics to include diversity, the discipline system and CLE.
EXECUTIVE DIRECTOR’S REPORT
Teresa Schmid announced that two board members were receiving awards this week: 1) The National District Attorneys Association presented its highest honor to Pinal County Chief Criminal County Attorney, Richard Platt and Deputy County Attorney Sylvia Lafferty. They were both also inducted into the “Home Run Hitters Club” which is an honor recognizing their outstanding work in trying complicated and difficult high profile cases and 2) David K. Byers is being inducted into the Warren E. Burger Society of the National Center for State Courts.
Ms. Schmid then directed the Board to her Executive Directors report in their materials noting that the first part of the report recaps decisions that the Board made at their annual retreat last July.
Ms. Schmid reported that the Bar Leadership Institute was meeting today (11/30/07) and that she and President McAuliffe would be attending after the Board meeting.
On the Horizon – Ms. Schmid updated the Board on the approval of the United Kingdom Legal Services Bill which will include among other things, oversight of all lawyers in the United Kingdom. Additionally, this will provide new financing and investment opportunitites for UK lawyers.
President McAuliffe requested a motion to approve the Consent Agenda.
The Board voted on several proposed Rule amendments to the Supreme Court Rules that concern classes of membership, dues assessments and the obligation to earn Continuing Legal Education (CLE ) credits for members of the State Bar.
President McAuliffe reviewed all nine alternative senior dues proposals before the Board for vote which are as follows:
1. Take no action. Would continue dues exemption for active members over 70 indefinitely.
2. Repeal de facto exemption. Would require all active members over 70 to pay full dues, commencing January 1, 2009.
3. Pure Grandfathering Alternative: Would exempt from dues all active members who reached 70 years of age by January 1, 2009. Thereafter, all other active members would pay dues, regardless of age or length of membership.
4. Baby Boomer Exemption (Dichter Proposal): Would exempt from dues active members born prior to January 1, 1946. All other active members would pay dues, regardless of age or length of membership.
5. McAuliffe Initial Proposal: Would exempt from dues active members over age 70 who had been members of SBA for 25 years. All others would pay full dues, effective January 1, 2009.
6. Modified McAuliffe Proposal: Would exempt from dues all active members who reached 70 years of age by January 1, 2009. Thereafter, only active members over age 70 who had been members of SBA for 25 years would be exempt.
7. Coffinger Proposal: Would exempt from dues all active members who reached 70 years of age by January 1, 2009. Thereafter, only active members over age 75 who had been members of SBA for 25 years would be exempt. Effective January 1, 2009, active members between ages 70 and 75 would pay full dues.
8. Active members who certified that they practiced law 200 hours or less per year would be exempt from dues. All other active members over age 70 would pay full dues, effective January 1, 2009.
9. Adopt policy that active member dues for those over age 70 would be the same as dues charged to members of Young Lawyers Division. (Revised to include grandfathering for those senior members over 70 years of age by January 2009)
10. Adopt policy that active member dues for those over age 70 would be the same as dues charged to members of Young Lawyers Division.
After discussion, Alan Bayham moved and Dee-Dee Samet seconded and motion carried to modify proposal number nine to include grandfathering for those members over 70 years of age by January 2009, motion carried.
Richard Coffinger requested a Roll Call vote which was then treated as a motion, H. Leslie Hall seconded and motion failed.
President McAuliffe announced they would proceed with voting as an election.
Vote 1 - after each Board member cast a vote those remaining were Proposals 2,5,6, 7 and 9.
Vote 2 - after each Board member cast a vote those remaining were Proposals 2, 6, 7 and 9
Vote 3 - after each Board member cast a vote for either 2 or 9 or 6 or 7, number 6 or 7 won
Vote 4 -The final voting was between proposal 6 and 7 with Number 7, Coffinger’s Proposal getting the high number of votes.
Dee-Dee Samet moved and Amelia Craig Cramer seconded and the motion carried to modify the proposal for senior members who have not yet attained the 25-year requirement but are over 70 years of age to pay the dues at the same rate that Young Lawyer’s pay (active members under two years). .
The Board will authorize the State Bar staff to file a Petition with the Supreme Court recommending that Rule 32(c)(3) would be amended to restore the age requirement for waiving annual membership dues for senior active members to 75 years, and require those members to have been an SBA active member, judicial member, or any combination thereof for 25 years in order to qualify for the exemption. Senior members who attain the age of 70 before January 1, 2009, will be entitled to retain the exemption and senior members who have not yet attained the 25-year requirement but are over 70 years of age will pay dues at the same rate that Young Lawyer’s pay (active members under two years).
Alternative Senior Continuing Legal Education Proposals
1. Take no action. Would continue exemption from continuing legal education (CLE) requirements ofor members over age 70 or members for 45 years.
2. “McAuliffe Initial Proposal”: Require active members over age 70 to take 10 hours of CLE annually, at least 2 of which must be in ethics or professional responsibility.
3. Repeal exemption. Would require active members over age 70 to take 15 hours of CLE annually, at least 3 of which are to be in ethics or professional responsibility.
President McAuliffe, again asked the Board to vote on the Senior CLE Proposals as written.
Vote 1: after each Board member cast a vote, the two remaining proposals were number 2 and number 3.
Vote 2: after each Board member cast a vote, proposal number 2 was chosen in a vote of 12-10.
The Petition to be filed with the Supreme Court would recommend replacing Rule 45(b)(3) with Rule 45(a)(4) providing that active members who have reached the age of 70 must complete, in any educational year in which they maintain active status, a minimum of ten hours of continuing legal education activity, at least two of which must be in the area of professional responsibility.
President McAuliffe reviewed with the Board the initial proposal which would include an “Emeritus” membership available only to those persons who have attained the age of 70, and who have been active and/or judicial members of the State Bar for at least 25 years. An active, inactive, judicial or retired member who satisfies those criteria may transfer to Emeritus status upon written request to the executive director. Emeritus members shall not practice law in any state, district, or territory of the United States. Notwithstanding that, Emeritus members may provide volunteer legal services to approved legal services organizations as defined in Rule 38(e) of these rules, except that they need not have engaged in the active practice of law within the last 5 years as required by Rule 38 (e)(B)(1) or Rule 38 (e)(3)(A).
In a vote of 17-4, the motion passes to amend Rule 32(c)(1) to add a sixth class of membership, called “Emeritus.”
President McAuliffe reviewed the proposal to create a Senior Lawyer Division, which would include the amendment of Rule 32(e)(2) to expand the size of the Board of Governors from the existing 26 to 27 voting members. The new voting member would described as the “President of” or “Designated Delegate from” the Senior Lawyers Division. After discussion by the Board, the creation of a Senior Lawyer Division failed. (No motion was made and no action was taken on the proposal).
MCLE Requirement – 2 yrs provision
Robert Van Wyck, Chief Bar Counsel, addressed the Board regarding the modification to require 2 years of CLE when a member is switching from Retired, Inactive or Emeritus status to Active status. The member would be required to bring themselves current with Mandatory Continuing Legal Education (MCLE) and cannot bypass this step.
The Board voted unanimously to support the amendment to Rule 45 requiring proof of 2 years of Mandatory Continuing Legal Education (MCLE) when a member is switching from Retired, Inactive or Emeritus status to Active status.
Amelia Cramer, Chair, reviewed the recommendations from the Rules Committee to submit to the Arizona Supreme Court a petition to add Rule 5.2, Ariz. R. Civ. P., to permit limited representation by counsel in cases involving exploitation of vulnerable adults. After discussion,
The Board voted unanimously to approve the proposed Petition to amend the Rules of Civil Procedure to add a new Rule 5.2, as recommended unanimously by the Rules Committee upon submission from the Civil Practice & Procedure Committee. This petition was originally initiated by the Solo Practice/Small Firm Section, which supports the version of the petition recommended by the Civil Practice & Procedure Committee. (The version approved is version B attached to the report of the Civil Practice & Procedure Committee, which is contained in the agenda materials.)
Criminal Jury Instructions
Ms. Cramer reported that a few comments were received and the Criminal Law Jury Instruction group was meeting to address these concerns. A new proposal regarding Criminal Law Jury Instructions will be presented to the Board at its January meeting.
Joseph Kanefield reported on the proposed Rule 38(a) amendment to increase funding to Arizona’s legal services providers by (1) increasing the fees paid by pro hac vice attorneys from 85% to 100% of the dues paid by active members of the State Bar and (2) allocating the additional 15% to Legal Services. This will return for a vote at the December meeting of the Board.
John Furlong, General Counsel, reported on the four Bylaws changes that are being recommended: 1) change the Bar’s address from the former Monroe Street address to 24th Street; 2) stipulate that Secretary/Treasurer shall serve as the Vice Chair of both the Finance and Audit Committees; 3) allow some flexibility as to the time and place of the last regular meeting of the Board of Governors; and 4) require a minimum of nine regular meetings of the Board of Governors annually.
After discussion, the Board voted to accept all the recommended changes to the State Bar of Arizona’s Bylaws including: 1) change the Bar’s address from the former Monroe Street address to 4201 North 24th Street; 2) stipulate that Secretary/Treasurer shall serve as the Vice Chair of both the Finance and Audit Committees; 3) allow some flexibility as to the time and place of the last regular meeting of the Board of Governors; and 4) require a minimum of nine regular meetings of the Board of Governors annually.
BREAK 10:20-10:35 a.m.
September and October 2007 financial statements of the State Bar and the Chief Financial Officer’s financial report to the Finance Committee were included in the BOG package of meeting materials.
Larry McVey, Chief financial Officer, reported that the September surplus from all operations was $54,000 and was $4,000 less than budget. The October surplus from all operations was $38,000 compared to a budgeted surplus of $105,000, an unfavorable variance of $79,000. The unfavorable variance was due primarily to the purchase of 110 licenses covering four different software license packages for staff.
Mr. McVey reported the YTD surplus through October was $717,000 and is significantly above budget due to the following favorable variances from budget:
| Dues income less than budget by .2% | $ (10,000) | |
| Non-dues income is 3.9% higher than budget | $199,000 |
|
| Total Personnel Costs is 5.9% less than budget | 375,000 |
|
| Other expenses are 2.1% less than budget | 102,000 |
|
| Net Sections Activity less than budget | (36,000) |
|
| Net Favorable variance | $630,000 |
The forecast of the annual surplus is on page 4 of the financial statements. The forecast of the 2007 annual surplus is $632,000 at this time.
The Line of Credit balance at October 31, 2007 is $1,430,000 and the current interest rate is 6.56% per annum. The interest rate adjusts monthly based on the LIBOR 30 day rate. Availability under the LOC is $5,843,000. After the purchase of the Tucson property the availability will be $4,500,000. Net assets of the Bar at the end of October are $6,300,000 compared to $5,510,000 a year earlier. Sections carryover at October 31, 2007 is $216,000.
Mr. Ray Hanna, Finance Committee Chair, reported that the Finance Committee met Tuesday November 27, 2007 and reviewed the 2008 Budget Summary with Teresa Schmid, Larry McVey and Colleen McManus. After much discussion, and the removal of two items on the new initiatives and new FTEs list, the Finance Committee unanimously voted to recommend the 2008 Budget to the BOG. At the BOG meeting there was additional discussion and questions. Answers were received by the Board from Teresa Schmid, Colleen McManus, Larry McVey, Pat Giallanza and Robert VanWyck. The 2008 Budget was presented as an informational item at this meeting and will be voted on at the December BOG meeting. Staff will update the numbers and projections based upon these discussions and incorporate the October financial results into the 2007 forecast column of the budget summary.
Alan Bayham, Chair, reviewed the report concerning the public members of the Board of Governors. Mr. Bayham stated that four of the 30 member Board of Governors are non-lawyers. Public members are selected by the full Board and may serve a maximum of six years. The terms of three public members will conclude in June 2008. The committee was requesting the Board’s direction on the number of non-lawyer positions to be addressed next year. In June 2008, Frank Barriga and Alexander Jamison will have served one three-year term and are eligible for reappointment for an additional three years and have expressed a desire to be considered for reappointment. Also in June 2008, Fernando Gonzales will have served a total of six years and he will not be eligible for reappointment. The Appointments Committee recommends the reappointment of Frank Barriga and Alexander Jamison to a final three-year term as public members of the Board of Governors with their service to conclude in June 2011. No motion being required.
The Board voted unanimously to reappoint Frank Barriga and Alexander Jamison to a final three-year term as public members of the Board of Governs with their service to conclude in June 2011.
The Appointments Committee further recommended the Board to direct the Committee to advertise, recruit and interview individuals to fill Mr. Gonzales’s position. Applicants may be from any county other than Maricopa. The Committee would plan to have the Board of Governors meet the public member finalists at the Board’s April 25th meeting.
The Board voted unanimously to authorize the Appointments Committee to advertise, recruit and interview individuals to fill Mr. Gonzales’ position with the consideration that all applicants must be from any county other than Maricopa.
LEGISLATIVE REPORT
Janna Day reported on the three items pending for vote to be included in the Legislative Agenda. The Board was asked to support the proposals and authorize the Government Relations Department to proceed in introducing in the upcoming session of the Arizona Legislature the following: a) Arizona Trust Code b) Amendments to Section 14 - Guardians and Conservators, and c) Revised Uniform Arbitration Act. Present for discussion were Ernest F. Modzelewski on behalf of the Alternative Dispute Resolution Section, and Roger Curley on behalf of the Probate and Trust Section. After discussion,
Jimmie Dee Smith moved and Dee-Dee Samet seconded and the motion carried unanimously to support the following legislation and to authorize the Government Relations Department of the State Bar of Arizona to support this legislation for approval in the upcoming session of the Arizona Legislature as follows: a) Arizona Trust Code; b) Amendments to Section 14 - Guardians and Conservators and c) Revised Uniform Arbitration Act.
CHIEF BAR COUNSEL REPORT
Robert Van Wyck, Chief Bar Counsel, reported that the Supreme Court denied review of a petition filed by Lourdes Lopez. Ms. Lopez will be disbarred.
Mr. Van Wyck additionally provided the Board with the Statistics from the discipline department.
TUCSON BUILDING TASK FORCE REPORT
Amelia Craig Cramer reported on behalf of the Task Force that the Bar is still waiting for a completed property survey, but the Task Force is optimistic that the closing will take place in December.
SPECIAL RECOGNITION
The Board recognized Deborah Sheasby who placed first on the July 2007 bar exam.
LIAISON REPORTS
Young Lawyers Division - Abbe Goncharsky, President of the Young Lawyers Division, reported that the YLD will be hosting four Holiday Parties for Kids, around the state and are looking for donations.
Arizona Women Lawyers Association (AWLA) – Susan Brnovich reported on the activities of the AWLA. Their Gala was very successful with 288 people in attendance. The AWLA held their annual convention in Phoenix and it too was very succssful.
ADJOURN
Richard Coffinger moved and H. Leslie Hall seconded and the motion carried unanimously to adjourn.
Respectfully submitted,