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State High Court Ruling 12/16/13  12/16/13 9:09:25 AM Printer Friendly VersionPrinter Friendly Version

Nebraska State Senator
Scott Lautenbaugh

State High Court Ruling Shakes Up Way State Bar Association Is Funded
By Lorraine Boyd
The Daily Record
On December 6, 2013, the Nebraska Supreme Court issued a ruling that promises to reverberate throughout the state’s legal community for some time to come.
Petitioned to create a voluntary state bar association, the Court – “per curiam” or “of the whole court” – ruled that, while it will remain a mandatory or unified bar, the Nebraska State Bar Association cannot use the members’ mandatory dues to lobby issues other than those directly affecting the profession. To that end, the Court reduced the amount of a member’s assessment to $98 annually, to fund regulation of the profession. Any other programs and services are to be paid for by voluntary dues. The opinion stated: “Thus, we grant the petition in part and, in part, deny the petition.”
The Petition
It was almost two years ago, on February 29, 2012, when Omaha attorney and Nebraska State Senator Scott Lautenbaugh filed a petition with the Supreme Court asking it to “abolish, strike, or repeal Chapter 3, Article 8, of the Nebraska Supreme Court Rules, and make whatever other rule changes are necessary to remove any requirement that attorneys licensed in Nebraska be members of the Nebraska State Bar Association.”
His position was that the Bar was using mandatory dues money to fund lobbying efforts not within the scope of the association’s mandate.
In October of 2012, he also filed a federal civil rights suit to force the change.
Contacted by The Daily Record for comment, Chief Justice Michael Heavican referred to the wording in the opinion:
“In our view, the best solution is to modify the court’s rules creating and establishing the Bar Association (and other related rules) to limit the use of mandatory dues, or assessments, to the regulation of the legal profession. This purpose clearly includes the functions of:
(1) admitting qualified applicants to membership in the Bar Association;
(2) maintaining the records of membership;
(3) enforcing the ethical rules governing the Bar Association’s members;
(4) regulating the mandate of continuing legal education;
(5) maintaining records of trust fund requirements for lawyers; and
(6) pursuing those who engage in the unauthorized practice of law.
“The mandatory Supreme Court assessments supporting these functions will be paid to the Bar Association on behalf of the Nebraska Supreme Court in much the same way that the existing disciplinary assessment is administered.
“By limiting the use of mandatory assessments to the arena of regulation of the legal profession, we ensure that the Bar Association remains well within the limits of the compelled-speech jurisprudence of the U.S. Supreme Court and avoid embroiling this court and the legal profession in unending quarrels and litigation over the germaneness.”
The Court concluded the opinion by saying, “The amendments to Articles 3 and 8, and the amendments to Neb. Ct. R. §§3-100 and 3-1010, shall be effective on January 1, 2014. In order to ensure an orderly transition of adminis­trative functions regarding admissions, trust funds, and the unauthorized practice of law, all other amendments to the rules, regulations, and procedures identified above shall be effective on April 1, 2014.
“And we reiterate that the need for further amendments may arise.”
The Court issued its opinion after oral presentations by both Lautenbaugh and the Nebraska State Bar Association, as well as invited public comment.
The full opinion is available at: http://supremecourt.ne.gov/sites/supremecourt.ne.gov/files/sc/opinions/s36-120001.pdf
Opinion on the Opinion
When asked about the nearly 70 percent cut in the Bar’s income, Omaha attorney Mike Kinney, who represented the Bar, said, “So much of what the Supreme Court describes as ‘laudable and worthwhile’ activity performed by the NSBA and its hard working volunteers will be at risk if people don’t agree to continue to voluntarily support the Bar at the rate previously done.
“I am heartened by all the firms who have already announced their intention to continue to pay all firm members’ voluntary share on their behalf. How can we survive as a legal community without a fully functioning Nebraska Lawyers Assistance Program (NLAP)? Who is going to look after the underprivileged if Volunteer Lawyers Project (VLP) fails?”
Asked if he thought the “opt out” clause was sufficient to protect members’ First Amendment rights, he replied,  “If the opt out procedure wasn’t sufficient, I believe there were less harsh alternatives [than the new ruling] available.
“What’s next depends on the generosity and kindness of our members.”
Petitioner Lautenbaugh
Asked what he was hoping for, Lautenbaugh said, “This ruling was more than I had hoped for.”
Senator Lautenbaugh told The Daily Record, “I am thrilled with the Court’s ruling. I think the Court took into account both the proper Constitutional limits upon the activities of a mandatory bar, and the Bar Association’s unwillingness to acknowledge or abide by such limits, and did what it needed to do.”
As for the future of his federal lawsuit, he said,  “We are reviewing our options now.”
We asked, what do you think the Bar will look like a year or two from now?
“I hope it will be a leaner organization focused on providing services that attorneys actually want and need, paying particular attention to the needs of the smaller, private-practice attorneys who make up the bulk of the membership.”
NSBA Reaction
New NSBA President Mike Fenner, an Omaha attorney and Creighton School of Law professor, offered his reaction to the ruling: “My first reaction was surprise. The executive council of the NSBA had been working on various scenarios, but this particular outcome – a unified/voluntary bar – sort of came out of the blue.
“My second was disappointment.
“My third was concern for how the staff felt. The Court ordered us to solicit, collect, and forward to the Court the $98 ‘mandatory assessment.’ Staff read that and saw that the Bar did not get any of that mandatory money. Right away I realized that we had to deal with the staff’s quite natural reaction: fear that they’d be out of a job just before Christmas. My reaction was to deal with that fear.” Ironically, the NSBA staff’s ning.
Fenner went on to say, “the Executive Council has been working pretty much full time since last Friday morning to settle how we will implement the Court’s amendment to its rules. We do not have much time. The change was announced on December 6 and the NSBA was ordered to implement it by January 1. We have 25 days (including Christmas) to make the transition.”
As a first step, “We got the Executive Council together and began to think through how to implement these changes in the Court’s rules. We put a lot of smart lawyers on the problem.”
Liz Neeley, the new executive director of the NSBA, said, “We were very surprised by the Supreme Court’s decision. Regardless, what’s important now is that we act quickly to ensure that the vital functions of the NSBA will continue – and that bar leadership determine a clear, best path as the Association moves forward.
“The Nebraska State Bar Association has been providing high quality programs and services to Nebraska lawyers and the people of the State of Nebraska as a mandatory bar for over 75 years. While the actions of the Court will require that the Association change and adapt, we remain committed to our mission of helping lawyers help people,” she said.
While what to do after the initial payments have been made “is still under discussion,” Fenner said, “We have a number of great ideas on the table.” A joint meeting of the Executive Council and the House of Delegates was scheduled for last Friday.
“We are asking Nebraska attorneys to make the full payment as indicated on the dues statement that was sent out some time ago. Many have agreed to do so. We do need that to happen so we can fund the transition,” Fenner said.
Neeley said, “Our first priority is to notify the membership of the Court’s opinion. The opinion was released in the middle of our dues cycle and this has raised questions among our membership about the amount they owe, what to do if they have already paid and what benefits they’ll receive in return for their voluntary dues.” A letter went out last week outlining the details.
“Next, we’ve had to focus on defining the direct benefits attorneys will receive by paying their voluntary dues. Among other things, those who elect to pay voluntary dues will receive:
• Casemaker,  the  NSBA’s  free online legal research tool.
• Professional development opportunities.
• Discounts on all NSBA CLE, plus 2 free hours of NSBA Ethics.
• The Nebraska Lawyer magazine.
• Access to the  NSBA  online member directory.
• Full access to the NSBA website including an online resource center which will include practice manuals, forms and worksheets.
• Access to NSBA listserves.
• Membership  in  NSBA  Sections and Committees.
• Access to the NSBA Legislative Updates.
• Representation of the Association’s interests before the Nebraska Legislature.
May Lose Benefits
“Those who do not choose to pay the voluntary dues will be licensed to practice law in Nebraska and will continue to receive their annual Bar card but, on January 1, will lose all other benefits of the NSBA,” Neeley said.
“Based on the experience in other states, we may lose up to one third of our membership. However, we are hopeful that the clear value of our direct member benefits will encourage our members to continue their support.”
Fenner agreed, saying, “Many have agreed to [pay the voluntary dues]. We do need that to happen so we can fund the transition [which includes printing, mailing, collecting and forwarding the assessments to the Court].”
While Fenner was not able to predict a worst-case scenario, he did say, “We are not going to have to lay everyone off and we hope not to have to lay off anyone.”
When Neeley was asked if it is possible to continue all of the Bar’s current programs with voluntary dues, she said, “No, it’s not possible. The staff proposed a revised budget to the Executive Council and House of Delegates last week. The proposals included the elimination of a number of valuable programs that serve both the profession and the public.”
Fenner added, “If the Association cannot continue to fund all of the programs and services we currently offer, then we will have to prioritize. As of now, we think we will be able to continue a lot of what we have been doing. There are a lot of very valuable benefits we have been providing our members, including:
• Casemaker, the NSBA’s free online legal research tool.
• Professional development opportunities.
• Discounts on all NSBA CLE, plus 2 free hours of NSBA Ethics.
The Nebraska Lawyer magazine.
• Access to the NSBA online member directory.
• Full access to the NSBA website.
• The Rural Practice Initiative.
• The GAP class.
• NSBA listserves.
• Membership in NSBA Sections and Committees.
• Access to eCounsel – the NSBA online newsletter.
• Access to NSBA Legislative Updates.
• Representation of the Asso-ciation’s interests before the Nebraska Legislature.
• Opportunity to serve as leadership for the Association.
• Access to other discounts for products and services.
• Access to the NSBA’s online resource center (under development), which includes Practice Forms, Manuals and Worksheets.
“We hope to be able to continue all of those services. … We are working on it daily – hourly, really.”
Fenner said the Solace program is not affected since it is funded by voluntary contributions. The Volunteer Lawyers Project is at risk.
Charged with collecting the new $98 assessment and forwarding it directly to the Supreme Court to fund admission to the Bar, lawyer discipline, and the unauthorized practice of law, Neeley said, “This is an important question facing the NSBA right now. Processing the Supreme Court’s assessment and the NSBA’s dues for 9,000+ attorneys requires a dedicated team of staff working from November to February.
“While the Supreme Court has changed the amount of the assessment, the process for collection of the assessment and our workload remains the same. There are real costs associated with collecting the funds to regulate the profession, and I feel that a portion of the mandatory assessment should be used to support that process.”
The Association, which currently has about 9,300 members, was founded as a voluntary bar in 1899. Then in 1937, it was integrated by order of the State Supreme Court. It is one of about 40 unified, or mandatory, bar associations in the United States.
Members of the Supreme Court are Chief Justice Heavican, and Associate Justices William Cassel, William Connolly, Lindsey Miller-Lerman, Michael McCormack, Kenneth Stephan and John Wright.

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