New State Bar Building Underwritten (In Part) By Lawyers | Eastern North Carolina Now

   Publisher's note: The author of this fine report, Dan Way, is an associate editor of the Carolina Journal, John Hood Publisher.

Some worry Bar may give special treatment to high-dollar donors

    RALEIGH     The North Carolina State Bar expects to complete its $18 million office in downtown Raleigh by March. But some legal observers have raised red flags over its capital campaign through a proxy foundation seeking high-dollar donations from lawyers to help pay for construction.

    The State Bar created the North Carolina State Bar Foundation, a 501(c)3 charitable corporation with its own board and director. Its original goal was "to raise $2.5 million, and I understand they now have contributions and pledges in excess of that number," said Thomas Lunsford, State Bar executive director.

    The State Bar is a state government licensing and regulatory agency that oversees lawyers and conducts disciplinary hearings for those who run afoul of state laws and judicial canons. Lawyers pay mandatory dues to the agency to fund its operations.

    "Any time you hear about anybody who's been reprimanded, or disciplined, or disbarred, that's done by the State Bar," said Jeanette Doran, executive director and general counsel of the North Carolina Institute for Constitutional Law.

    Because of the State Bar's power to prosecute attorneys before its Disciplinary Hearing Commission, Doran and others are leery of the Bar soliciting lawyers for donations to help underwrite the costs of the new four-story building - some of which are in the $100,000 to $200,000 range - and granting naming rights for various rooms in it.

    One concern is whether accepting the donations might open the State Bar to the suspicion that it might base disciplinary actions against lawyers on the amount of money firms gave to the building project. The bar might go easy or not act at all on an infraction by a large-scale donor, or penalize lawyers whose law firms declined to donate to the building project.

    "I think it's something where there's enough sunshine, and we've got a lot of good media coverage, I think those sorts of things would make it unlikely that any one donor would receive special treatment. But it is the sort of thing I think the public could fairly question," Doran said.

    "I think we should be careful that this isn't the sort of thing that causes public concern, that in-kind donors don't get special treatment from the State Bar," Doran said. "I would emphasize that I don't think that has happened. But it does raise the question if that appearance has happened."

    If a law firm makes a large cash contribution to an agency that regulates it, "people just instinctively think" it might be receiving favorable treatment, said Bob Phillips, executive director of Common Cause North Carolina.

    "Even if it's not true, there is the perception. Is there a favor, is there a threat, is there some punishment" for law firms or lawyers who either donate or rebuff solicitations, Phillips asked.

    He said Common Cause is concerned with the increase of organizations in North Carolina using nonprofits to further their agendas.

    It is "something that is all legal, but something that we wish wasn't happening so much," Phillips said.

    Perry Newson, executive director of the North Carolina Ethics Commission, said the Ethics Commission does not have jurisdiction over the State Bar, but does have authority over its Disciplinary Hearing Commission.

    Despite that, the Ethics Commission issued a favorable opinion to the State Bar to allow the nonprofit North Carolina State Bar Foundation to raise funds from attorneys and law firms.

    "I don't think we've ever faced that before, not saying it's right or wrong either way, it's just something we haven't addressed," Newson said of an agency creating a nonprofit organization to launch a donation and naming rights effort, which he called "fairly common practice" in capital campaigns.

    Asked if that scenario presents, at a minimum, the potential for appearance of a conflict, Newson said, "There isn't an appearance-of-conflict provision in the [state] Ethics Act."

    But, he said, "It's not out of the realm of reasonableness" that a donor to the State Bar's capital campaign might get favorable treatment because of the cash gift, but "it's a bit of a stretch."

    "We were certainly advertent to the possibility that there might be an issue in regard to our soliciting our members, and because of that we decided to pose the question to the state government Ethics Commission, and actually receive advice that there was not a problem, and there would be no reason why we could not go forth with the fundraising effort," Lunsford said.

    "I couldn't speak for every member of our board as to what their personal feelings might have been. Ours is a large board and there's quite a diversity of opinion, [but everyone] was quite comfortable" once the ethics decision had been received, Lunsford said.

    Further, he said, naming rights to the courtrooms where disciplinary hearings will take place are restricted to retired lawyers and law firms that are no longer active.

    Construction of the 60,000-square-foot building at the corner of Edenton and Blount streets should be completed around the first of March, with move-in shortly thereafter. In the meantime, the State Bar is leasing the building it formerly owned at 208 Fayetteville Street, which is about half the size of the new building.

    "We have had to rent space in various other downtown office buildings because we couldn't house everybody under our roof," Lunsford said of the need for a 60,000-square-foot building.

    The new building "will certainly accommodate additional growth as the legal profession grows inexorably within our state. We also have two state-of-the-art courtrooms, which will enable us to manage the increasing caseload" of disciplinary matters, Lunsford said.

    "We know that over the last 10 years or so the [legal] profession in North Carolina has been growing at about 3 or 4 percent a year. We know that the law schools are full. Indeed, they are oversubscribed and it would appear that condition will continue at least into the foreseeable future," Lunsford said.

    There were between 7,000 and 8,000 licensed lawyers in North Carolina when he joined the State Bar's legal staff in 1981, Lunsford said. Now the number is "approaching 25,000," and internal projections show that could double in another 20 years.

    Meeting rooms in the new building will accommodate all 68 members of the State Bar Council, the Bar's governing body. In the past, the council had to rent meeting space.

    Of the $18 million construction cost, $12 million was borrowed from First Citizens Bank "on very favorable terms," Lunsford said. "We have realized something in excess of $2 million from the sale of our current building." The balance will come from cash reserves and the capital campaign.