April 2008 Nevada Lawyer

PRESIDENT’S COLUMN - Bar Finances

by Nancy Allf

"Don't tell me what your priorities are. Show me where you spend your money and I'll tell you what they are."

James W. Frick

Supreme Court Rule 85 requires the State Bar of Nevada to annually publish information about its receipts and expenditures. This column is being written to provide our members with current information about the financial operations of the bar.

Revenues in 2007 were approximately $6,970,410. Revenue is derived from Administration, Admissions, Communications, CLE, Discipline, Lawyer Referral Service, section dues and the Annual Meeting. The largest source of revenue in 2007 was $3,058,000 from member dues. It is healthy for the association that member dues represent only approximately 44 percent of total revenue. The sources of revenue in order of amount of income are:

·       CLE: $1,031,160

·       Admissions: $795,909

·       Lawyer Referral Service: $707,872

·       Section revenue: $154,077

·       Communications: $152,142

·       Discipline: $8,140

The state bar staff prepares an annual budget which is reviewed by the board’s Finance Committee (currently chaired by Cam Ferenbach) and brought to the board for approval. The budget is reviewed again at the mid-year point and adjusted as necessary. In addition, throughout the year the board considers budget impact as it transacts the business of the association. A thorough financial report is included in the materials received by board members in advance of each board meeting. We use a consent agenda for our meetings, but the bar’s staff accountant, Marc Mersol, is always available for questions from board members regarding the financials. Also, the bar has an annual audit (with oversight by the Audit Committee, currently chaired by Dara Goldsmith), composed of members of the Board of Governors.

The following 2007 expenditures by department are noted below:

·       Administration: $1,176,250

·       Discipline: $1,125,032

·       CLE: $973,440

·       Admissions: $754,986

·       Communications: $302,704

·       Lawyer Referral Service: $241,733

·       Annual Meeting: $145,699

·       Fee Dispute: $130,456

·       Sections: $106,704

·       Pro Bono: $97,532

·       Lawyers Concerned for Lawyers: $59,392

Total expenditures in 2007 were approximately $5,528,410 before depreciation.  In addition, the bar’s assets include cash on hand (which include an operations reserve as well as a building reserve), the Las Vegas headquarters and the Northern Nevada Bar Center (both of which are free of mortgage), and the furniture and equipment in the two offices.

Last fall I had the duty to inform you about a defalcation that occurred when a third party, who was responsible for buying certificates of deposit for the association’s savings, notified the bar that not all CDs for which we’d advanced funds had been purchased by its independent contractor for the bar. We took immediate action by filing suit against Rate Search, Inc., its principals and the independent contractor. The suit has progressed and we have a judgment against Rate Search, Inc. to recover the $300,000 lost and attorney fees. We are examining all avenues which we might be able to use to recover the missing funds, since there is concern about the ability of the culpable parties to respond to our loss. We will report further as more information is known and decisions are made by the Board of Governors. 

In the meantime, we reacted to this situation proactively, by convening a subcommittee of the Finance Committee to review the bar’s investment policies (which are consistent with Supreme Court Rule 86) and to provide instructions for the staff on how to invest the bar’s savings. The policy was approved by the board at its March meeting. Thank you to Cam Ferenbach, Connie Akridge and Dara Goldsmith for your contribution and efforts on behalf of the bar.

The State Bar of Nevada, even with this loss, is financially sound. We are beginning the third year of a five-year dues cycle. We anticipated that during the first two years of this cycle we would accumulate cash from operations, the third year we would be revenue neutral, and we expected to operate at a loss the following two years. Through the fiscal management of the board and other revenue sources, we are seeing evidence that we can go beyond the projected five-year dues cycle. A set dues cycle allows the board to make good recommendations to the Supreme Court regarding dues matters.

At the end of 2007, the State Bar of Nevada has cash on hand of approximately $3,280,000 (including reserves for dues, operations, building and LRIS). As discussed above, part of that cash is expected to be used to fund operations in the last years of the dues cycle, when we expect to operate at a loss. A building reserve has been set aside for facilities due to the fact that we have outgrown our Las Vegas headquarters. The staff has been compiling demographic information about our members, and the board and staff together are doing strategic planning regarding our need for facilities, so that we can anticipate our future space needs and determine how to house future operations.