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FINANCIAL TROUBLES PLAGUE UTAH STATE BAR

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Raising the dues lawyers pay to be members of the Utah State Bar will generate enough money to overcome a 5-year-old deficit but may not cure other financial and management ailments plaguing the organization.

The accounting firm of Grant Thornton submitted that conclusion to the Utah Supreme Court, which governs bar activities and is studying a request to increase annual dues by as much as $150 for most of the state's 5,000 lawyers. Senior, practicing lawyers currently pay $225 per year.According to the Grant Thornton report, most of the bar's financial troubles can be traced to its $3.5 million commitment to the Law and Justice Center, 645 S. 200 East. The bar built the facility to house its administrative offices, organizational functions and other activities.

"The costs of running the center seem to be high for the level of service it offers bar members," Grant Thornton said. "However, the costs of selling the building and leasing office space - both economically and politically -

appear to be greater."

The center represents a "tremendous cash drain," the report said, citing mortgage payments of more than $16,000 per month and a balloon payment of about $1.3 million due on Oct. 3, 1993.

"Given the performance of the bar during the past few years, the prospect that it will be in a position in three years to make any kind of balloon payment is extremely unlikely."

Some lawyers have suggested that the bar sell the center - critics call it a "white elephant" - but the accounting firm said, "There appear to be serious adverse consequences with this solution."

The specialized nature of the building will preclude the bar from selling the center for a price even close to the amount it has already invested in the facility.

"In addition, the bad publicity resulting from the decision to sell would likely do considerable harm to the credibility of bar management," Grant Thornton added.

In addition to its mortgage burden, the bar is suffering from general revenue deficiencies, a flawed leadership structure and poor accounting practices, the justices were told.

One explanation for the five years of deficits is that the bar's budgets are based on direct costs of programs without regard for indirect costs, the report said. More programs mean more staff and higher indirect costs, which apparently are not always taken into account by bar officials.

"If the dues increase is granted as requested and the loans relating to the building are renegotiated, the bar would find itself in a fairly solid financial position," the report says.

The report also recommends that the bar consider charging fees for every program and eliminate those programs that lack membership support.

(Additional information)

Annual dues

New Mexico - $265

Idaho - $250

Utah - $225

Wyoming - $225

Arizona - $210

Montana - $120

(Dues shown are for practicing, senior members. Junior members and others pay less.)

Source: Grant Thornton Accountants and Management Consultants