Hefty Fees: Lawyers Get a Taste

The California State Bar is throwing open the door to out-of-state lawyers, but strict conditions and high costs have some worried about tripping over the welcome mat.

On September 11, the State Bar Board of Governors, meeting in Fresno, CA, approved new rules that let in-house counsel and legal services lawyers practice in California without taking the state's bar exam. The rules, which go into effect November 15, establish registration requirements and set fees aimed at helping cover the expense of running the programs.

Other rules adopted on that same day revise the application standards for out-of-state lawyers who are already allowed to practice in the state under certain conditions, such as arbitrators and attorneys practicing pro hac vice on particular cases with local counsel. Filing fees for such lawyers went up from $50 to $250.

State Bar officials estimate that in 2005, about 500 in-house counsel and 50 legal services attorneys will apply to practice in California. They also calculate that about 315 arbitrators will apply to work in the state next year, and that there could be as many as 3000 pro hac vice applications.

All told, the programs could bring in $1.5 million in their first year.

Breaking down the state's legal barriers has been considered inevitable for a long time, as the legal practice continues to go global. Many of the biggest boosters for multijurisdictional practice have been in-house counsel who work with large national and international companies.

Earlier this year, the California Supreme Court approved rules allowing out-of-state lawyers to practice in the state, and the State Bar was charged with implementing them.

But on September 13, John McGuckin Jr., chairman of the Washington, DC-based Association of Corporate Counsel, expressed concern about the adopted rules. His group, which represents the interests of more than 2400 in-house counsel, had proposed that the Bar make a few revisions, including a shorter application form, permission to practice pro bono and no requirement to list the title “registered in-house counsel” on all letterheads and correspondence.

The State Bar board ignored the group's pleas.

“We're disappointed that the Board of Governors, of which I was a member in the 1990s, saw fit not to adopt any of the changes we suggested,” said McGuckin, the San Francisco-based executive vice president, general counsel and secretary of Union Bank of California.

“We're most disappointed,” he added, “at the fact that the rules as proposed prohibit in-house lawyers from providing pro bono services to the poor and indigent across the state of California. We see no basis for this major step back.”

McGuckin also said he thought the Bar's fee schedule was out of line: To practice in California, in-house counsel will have to pay one-time fees of $550 to apply and $363 to undergo a moral character check. They also will have to pay the annual fee paid by most California Bar members – now $390 – and complete 25 hours of legal education within a year.

“I'm concerned that after so much study and so much debate, that this is not going to be beneficial, that lawyers may not take advantage of it,” McGuckin said. He contended that the rules and fees create “two classes of lawyers” with out-of-staters being treated as “second-rate.”

Meanwhile, Brad Seligman, executive director of The Impact Fund in Berkeley, said he worries that the costs might discourage relatively low-paid legal services lawyers from applying to work in California.

Although legal services attorneys, who help the poor, will not be charged an application fee, they still will have to meet the other financial and educational obligations. State Bar officials said, however, that some might be able to scale down the annual fee based on their income.

“I thought the idea was to make it easier to bring people in,” Seligman said. “But it doesn't sound like they've done anybody any great favors here.”

Starr Babcock, special assistant to State Bar Executive Director Judy Johnson, said Monday that the fees put the State Bar “sort of in the middle of what other states have done.” For example, State Bar documents note that application fees for registered in-house counsel range from $50 in Virginia to $1300 in Florida, “with the majority charging in the $750-$1000 range.”

The California State Bar is throwing open the door to out-of-state lawyers, but strict conditions and high costs have some worried about tripping over the welcome mat.

On September 11, the State Bar Board of Governors, meeting in Fresno, CA, approved new rules that let in-house counsel and legal services lawyers practice in California without taking the state's bar exam. The rules, which go into effect November 15, establish registration requirements and set fees aimed at helping cover the expense of running the programs.

Other rules adopted on that same day revise the application standards for out-of-state lawyers who are already allowed to practice in the state under certain conditions, such as arbitrators and attorneys practicing pro hac vice on particular cases with local counsel. Filing fees for such lawyers went up from $50 to $250.

State Bar officials estimate that in 2005, about 500 in-house counsel and 50 legal services attorneys will apply to practice in California. They also calculate that about 315 arbitrators will apply to work in the state next year, and that there could be as many as 3000 pro hac vice applications.

All told, the programs could bring in $1.5 million in their first year.

Breaking down the state's legal barriers has been considered inevitable for a long time, as the legal practice continues to go global. Many of the biggest boosters for multijurisdictional practice have been in-house counsel who work with large national and international companies.

Earlier this year, the California Supreme Court approved rules allowing out-of-state lawyers to practice in the state, and the State Bar was charged with implementing them.

But on September 13, John McGuckin Jr., chairman of the Washington, DC-based Association of Corporate Counsel, expressed concern about the adopted rules. His group, which represents the interests of more than 2400 in-house counsel, had proposed that the Bar make a few revisions, including a shorter application form, permission to practice pro bono and no requirement to list the title “registered in-house counsel” on all letterheads and correspondence.

The State Bar board ignored the group's pleas.

“We're disappointed that the Board of Governors, of which I was a member in the 1990s, saw fit not to adopt any of the changes we suggested,” said McGuckin, the San Francisco-based executive vice president, general counsel and secretary of Union Bank of California.

“We're most disappointed,” he added, “at the fact that the rules as proposed prohibit in-house lawyers from providing pro bono services to the poor and indigent across the state of California. We see no basis for this major step back.”

McGuckin also said he thought the Bar's fee schedule was out of line: To practice in California, in-house counsel will have to pay one-time fees of $550 to apply and $363 to undergo a moral character check. They also will have to pay the annual fee paid by most California Bar members – now $390 – and complete 25 hours of legal education within a year.

“I'm concerned that after so much study and so much debate, that this is not going to be beneficial, that lawyers may not take advantage of it,” McGuckin said. He contended that the rules and fees create “two classes of lawyers” with out-of-staters being treated as “second-rate.”

Meanwhile, Brad Seligman, executive director of The Impact Fund in Berkeley, said he worries that the costs might discourage relatively low-paid legal services lawyers from applying to work in California.

Although legal services attorneys, who help the poor, will not be charged an application fee, they still will have to meet the other financial and educational obligations. State Bar officials said, however, that some might be able to scale down the annual fee based on their income.

“I thought the idea was to make it easier to bring people in,” Seligman said. “But it doesn't sound like they've done anybody any great favors here.”

Starr Babcock, special assistant to State Bar Executive Director Judy Johnson, said Monday that the fees put the State Bar “sort of in the middle of what other states have done.” For example, State Bar documents note that application fees for registered in-house counsel range from $50 in Virginia to $1300 in Florida, “with the majority charging in the $750-$1000 range.”