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Bill seeks to dump unspent revenue from AGC into general fund

ANNAPOLIS — The Attorney Grievance Commission’s annual budget would need to be approved by the state, and any unspent annual revenue would go to Maryland’s general fund rather than remain with the disciplinary body under a legislative proposal the Maryland Judiciary opposes as an illegal money grab.

If the proposal becomes law, the AGC’s nearly $8 million surplus as of June 30 would go to the state treasury, as would any future annual surpluses.

The Judiciary, in papers submitted to the General Assembly’s budget committees, contends the state has no authority over the commission’s money, which is raised not through taxes but entirely via annual dues that the state’s top court assesses on Maryland’s approximately 34,500 attorneys.

AGC Chair Linda H. Lamone added Tuesday that it would be unconstitutional for either the legislature or the treasury to claim a right to the disciplinary fund, which is money the commission, an arm of the judiciary, collects from attorneys as its revenue base.

“It violates the separation of powers,” said Lamone, who is also Maryland’s administrator of elections.

But the General Assembly’s research arm, which first made the controversial proposal, counters that the AGC’s funds are “monies of the state” and thus subject to state control.

The Judiciary and the Department of Legislative Services, the research arm, are expected to battle next Wednesday before the House Judiciary Committee when it considers House Bill 765. The measure, sponsored by Del., Frank M. Conaway Jr., D-Baltimore City, would require that unspent portions of AGC’s disciplinary fund go to the state and that the commission submit its annual budgets to the state Department of Budget and Management for approval.

Conaway, through an aide, declined to comment on his bill Tuesday.

Both provisions of Conaway’s measure would run counter to how AGC funds have been regarded since 1975, when the Maryland Court of Appeals — not the legislature — created the disciplinary fund by rule to pay the commission’s expenses, the Judiciary stated.

“The disciplinary fund is established pursuant to Rule 16-714(a) and is used to support the infrastructure of the Attorney Grievance Commission, which is not a state entity, but rather a court-related agency,” the Judiciary stated in papers filed with Senate and House budget panels.

“Most important, when the Court of Appeals created the Attorney Grievance Commission in 1975, it did not consider the funds that would be assessed from attorneys to be public funds. Accordingly, the money received by the commission does not constitute ‘monies of the state.’”

The Judiciary added it takes “strong exception” to a proposal that is less about helping the legal profession than about collecting money for the state.

“It cannot be argued seriously that the intent of the DLS proposal is to aid the Judiciary in the performance of its judicial function of overseeing the legal profession,” the Judiciary stated in its testimony. “Instead, the intent is to tap into a pot of money, dedicated for a particular purpose, under the rationale that the Attorney Grievance Commission needs less per year than it has on hand.”

In defense of its proposal, the Department of Legislative Services points to a provisions of the Maryland Constitution barring the levying of any fees without the legislature’s consent and that all collected fees must receive a legislative appropriation before being expended.

“Under these provisions, the annual assessment fees would be considered monies of the state and, therefore, should be subject to the same laws governing other special funds,” DLS stated in papers submitted to the budget committees.

Currently, $125 of the $145 annual assessment on Maryland attorneys goes to the AGC’s disciplinary fund. The other $20 goes to the Client Protection Fund, which is not affiliated with the commission and reimburses claimants for losses caused by theft of funds by attorneys, the Judiciary stated.

In fiscal year 2010, which ended June 30, AGC had a starting balance of $6.2 million, raised about $4.76 million and spent $3.11 million, giving it an ending balance of $7.85 million.

The commission said it anticipates having a $9 million surplus at the end of this fiscal year.