The Utah State Bar plans to mend the error of its financial ways - as soon as it can figure out what its financial ways are.
Bar officials have hired a consultant to help them improve their accounting practices after an audit by the Grant Thornton accounting firm last summer indicted the bar's fiscal disarray and mounting debt."We are committed to not borrowing and to controlling our costs. We are cutting our costs where we can," said John C. Baldwin, director of the Utah State Bar. Baldwin addressed the first meeting of a task force appointed by the Utah Supreme Court to regulate the bar.
The task force met Friday in the new Law and Justice Center - the source of much of the bar's financial woes - to hear Baldwin, two state bar commissioners and a representative of Grant Thornton.
The financial confusion that reigns at the bar hindered Grant Thornton in its audit last summer. "We found that information we wanted was not readily available or couldn't be found," said Ray Westergard, a partner with Grant Thornton. "Oftentimes the information was compiled two or three different ways with two or three different answers supposedly representing the same facts," he said. Accounts were coded wrong, budget line items greatly exceeded and some programs not accounted for at all, Westergard said.
Baldwin assured the task force these problems were being solved as quickly as possible. At the advice of Grant Thornton, the bar may buy a more updated computer program to help improve accounting practices, he said.
"We are very encouraged about the changes they are implementing," Westergard said.
While the task force made it clear it did not intend to lay blame, members wondered how the bar could go from a $118,000 surplus in 1982 to a $287,000 deficit in 1989. (Of the 1989 deficit, $269,000 was incurred by construction of the Law and Justice Center.) During those seven years, the bar's annual revenues jumped from $575,000 in 1982 to $1.3 million in 1989.
Westergard pointed to a pattern of poor record keeping, inaccurate financial data, budget overruns, inaccurate revenue projections and audits conducted much later than they should have been.
"I'm convinced that no one knowingly understood there was a deficit," said bar Commissioner Randy Dryer. "In hindsight, one wonders what the hell these people were doing," he said. "But I don't think anyone knowingly decided to run up this kind of a deficit. I think all are men and women of good intention who have tried hard."
The Supreme Court instructed Grant Thornton to monitor the bar's finances for the coming year, submitting quarterly reports to the court. The first quarterly report has not been released.
Westergard pointed out problems at the bar that extended beyond red ink. Many Utah attorneys are frustrated with their bar, he told the task force. After learning that Westergard planned to audit the bar, attorneys phoned him and stopped him in the street to express their frustration, he said.
"We will institute a survey of the entire bar and try to get members' views," said Peter Billings Sr., task force chairman.
Westergard noted that the bar had no mission statement, the director had no job description and policies and procedures at the bar were not regularly reviewed.
Baldwin asked the task force to define the relationship between the Law and Justice Center, 645 S. 200 East, and the Utah State Bar. "We need to understand the relationship between the bar and the building. The bar membership doesn't understand it. I don't understand it," he said.
The bar owns half of the center and is committed to pay for $3.5 million of its construction costs. The bar helped build the facility to house its administrative offices, and the bar staff runs the center.
When Grant Thornton surveyed bars in eight other states, it found that no other bar owned its own building. It also found that the Utah bar members paid much higher dues than attorneys in any of the seven states, the audit said. The bar raised its dues recently to $350 in an attempt to stem its river of red ink.
The bar's rapid proliferation of programs between 1982 and 1990 also received blame for the bar's financial difficulties. The Supreme Court has ordered the bar to cut expenses by $215,000 a year and eliminate all non-regulatory programs that are not self-supporting by April.
The task force will meet again Dec. 7 to hear reports from local bar organizations and bar members.