Case Title: State Bar Dues Increase

Citation: 

Docket Number: 53d9cc8e-f968-4c89-97ca-acbeae136c10

State: montana

Court: Montana Supreme Court

Date: 2001-06-19T00:00:00Z

Document:
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oy
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No, 0:
2001 MT 108
JUN 1 9 any
INRE THE PETITION OF THE ) — opmitonrsvey ed, Son
STATE BAR OF MONTANA ) ‘AND ‘wsteraeit |
FOR A DUES INCREASE ) ORDER
Introduction

{1 The State Bar of Montana has petitioned this Court to increase the annual dues for
active members of the State Bar from $100 to $150, to increase the dues for inactive
_members from $50 to $75, and to amend the By-Laws of the State Bar of Montana to provide
‘a mechanism for the Board of Trustees to report to the Court once every five years, with the
report to serve as the basis for any recommendation by the Board for a change in dues. The
State Bar represents that general dues for active members of the State Bar were set at $100
per year in 1974, and, some 27 years later in 2001, they remain at $100, Despite the efforts
of Bar management to develop alternative sources of revenue, it became apparent in 1996
that the Bar could not continue to serve its historic purposes without a dues increase. The
Board of Trustees thus put the question of a dues increase to the membership for a
referendum vote, The referendum was defeated by a two-to-one margin.

{2 The Bar further represents that expenses cannot be further reduced and that without
Additional funding, it will be unable to continue many ofits programs. More than 6 percent
‘of the Bar's funding now comes from non-dues income and all substantial non-dues revenue

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sources have been exhausted. The State Bar budget for next fiscal year projects a deficit of
$120,000, and itis estimated that in five years, absent a dues increase, the Bar will have a
negative general fund balance of $248,000. The Bar's general fund budget is approximately
$800,000 pet year.

{8 The State Bar’ petition was published in The Montana Lawyer and comments were
invited. Numerous objections to the Bar's petition were lodged. Generally speaking, the
‘objectors question the need for a dues increase. More importantly, however, they contend
that when the Supreme Court ordered unification of the State Bar in In re President of the
‘Mont. Bar Ass'n (1974), 163 Mont. 523, 527, 518 P.24 32, 34, the Court made it clear that
it would approve dues increases only as provided in the by-laws. Under the State Bar's
present by-laws, there can be no dues increase without the approval ofa referendum vote of
the membership. Article XV (Amendment). In the absence of a referendum vote, they
contend that it is premature to present the issue to the Supreme Court for approval,
Secondly, as tothe proposed amendment to the by-laws regarding future dues increases, the
objectors argue that, under Article XV, there is no provision for the Supreme Court to
unilaterally amend the by-laws.

4 _In response to the objectors, the State Bar acknowledges that the present by-laws
specifically provide that dues may be increased only by a referendum vote of the entire

‘membership. The State Bar, however, contends that the Supreme Court retains ultimate

 
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control over the State Bar and thatas an essential Function of that governance the Court must

assure that funds are

 

ilable to support Bar programs and services.
15. Weagree with the objectors that under the 1974 Order unifying the Bar, the Supreme
(Court created a system whereby membership dues are, in the first instance, to be set by the
State Bar in accordance with the by-laws of that organization, subject to the “approval” of
the Montana Supreme Court, We further agree that under the present by-laws, there can be
‘no dues increase for the Supreme Court to approve unless and until such an increase has been
adopted by a referendum vote ofthe Bar membership. To dat, there has been no referendum
vote approving a dues increase. Furthermore, we cannot, consistently with the structure we
established in the 1974 Order, unilaterally "approve" an increase in dues that has not frst
bbeen adopted pursuant to the very by-laws envisioned in that Order. Likewise, we did not,
inthe 1974 Order, give this Court leeway to unilaterally amend the by-laws, Accordingly,
wwe deny the State Bar's petition for a dues increase and deny the request that we amend the
by-laws.
16 However, for the reasons set forth below, we determine that the 1974 Order unifying
the Bar, as interpreted by this Court in subsequent decisions, is at best unworkable and at
‘worst unconstitutional.

Discussion
V7 __InJanuary of 1974, this Court invoked its constitutional power to "govern and control

the practice of law in Montana.” See In Re President of the Mont. Bar Ass'n, 163 Mont. at

 

 
 

ns |

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526, 518 P.2d at 33; Art. VII, Sec. 2, Mont. Const. In its Unification Order, the Court
specifically directed that "[eJach active member shall pay the annual attorney license fee
Provided by law and shall pay such membership dues in the Unified Bar of Montana as are
approved by the Montana Supreme Court and contained in the by-laws." In Re President of
‘the Mont, Bar Ass'n, 163 Mont. at $27, 518 P.2d at 34
18 The Courtdirected that an organizational committee draft constitution and by-laws,
‘The drafting was accomplished, and the Constitution and by-laws of the State Bar of
Montana were adopted by the Supreme Court on January 23, 1975, Five months later, the
Board of Trustees adopted a resolution to amend the by-laws to increase the annual dues
from $40 to its current $100 level for active members. The increase was approved at the frst
‘annual meeting.

{9 The 1975 dues increase was challenged as an abrogation of the Court's authority to
control the Bar. But as noted in Douglas v. State Bar (1978), 183 Mont. 149, 598 P.2d 1078
(Douglas 1], and Douglas v. State Bar (1979), 183 Mont. 155, $98 P.2d 1080 [Douglas If],
‘question arose as to whether the Courts 1975 Order adopting the Bar's Constitution and by-
laws had indirectly given the Bar unilateral control over dues increases. As the Court

‘explained in Douglas I:

 

It appears a major opposition to the Unified Bar of Montana was a fe
‘of dues increases not approved by this Court. It would appear that this was
‘one reason for our statement in the 1974 order retaining the power to approve
cor disapprove dues increases. However, by issuing the 1975 order adopting the
constitution and by-laws substantially as presented to this Court by the

 
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organizational committee, we may have handed authority over dues increases
to the Unified Bar.

183 Mont. at 153, $98 P.2d at 1078,

{10 The Court accepted original jurisdiction to address the apparent conflict. Then in

Douglas 1, the Court ruled that the 1975 Order controlled for purposes of that action and
| held "[a]ecordingly, the dues increase voted upon by the membership and without the

approval of this Court, was proper.” Douglas IJ, 183 Mont. at 156, $98 P.2d at 1081. The

| Court in effect ratified the increase that the membership already had approved.

| LL Ratification of the membership's vote did not, however, signal the Court's abdication
of its reserved right to control prospective dues increases, The Court observed that:

‘The problem... .f future dues increases, continues to fester. Wenoted
in the first Douglas case that a significant opposition to a unified bar in this
state was prompted by a fear that fees would be increased without avote of the
full membership. These people did not want their dues increased solely by a
| vote of those attending the annual bar convention meeting. This, indeed, was
‘one of the reasons for our 1974 order wherein we specifically reserved the
right to approve or disapprove of membership dues. This Court realized that
often members cannot afford to, ot for some other reason cannot or will not
attend the annual meetings. Nonetheless, they should have a voice in
determining whether their annual dues are tobe increased. Presently, the voice
is limited to those who attend the annual meetings.

 

We also noted inthe first Douglas opinion that this Court inadvertently
passed control over dues increases to the State Bar of Montana. That was
something this Court did not intend to do. As far asthe future is concerned,
it should not stand unrectified. By retaining the authority to approve or
disapprove of annual dues increases in this Court, the entire membership will
‘have an opportunity to register their approval or disapproval. Cleatly, the
entire membership should have a say.

 
 

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We cannot grant relief to the plaintiff in this case. However, this Court
will, by appropriate order, reinstate our authority to approve or disapprove of
future dues increases, The State Bar of Montana will be instructed to take
appropriate action to comply with the order of this Court.

Douglas 11, 183 Mont, at 158-59, 598 P.2d at 1082-83 (emphasis added).

12 There is no record of the Courts instruction to the State Bar having ever been

implemented.

{13 The by-laws were amended in 1985 to eliminate the sliding dues scale and the

maximum assessment of $100 was unchanged. In an

 

ive in 1987, the membership, by
4 642 to 595 vote, amended the by-laws by adding the following language:
However, all changes in dues and fees may be amended or repealed only
through the referendum procedure in Article XIII by a majority vote of the
voting active members
The referendum procedure itself was modified as follows:
‘These by-laws, including all changes in dues and fees, may be amended or
repealed only through the referendum procedure in Article XIII by a majority
vote of the voting active members.

414 Despite the Courts reserving the right to "approve or disapprove" future dues

increases in Douglas IJ, no one challenged the 1987 member-

  

tiated by-law amendments.

 

A referendum comporting with the amended procedure failed in 1996 by a two-to-one
margin, despite concerted effort by Bar leadership to convince its membership that a dues
increase was necessary and explain how the revenues would be spent. Only 60 percent of

the active members voted.

 
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{U5 Inan attempt to clarify procedure, the State Bar's Board of Trustees amended the
<dues-related by-laws in 1990 and again at the September 2000 Annual Meeting. Article XV
currently provides:

These by-laws may be amended or repealed at any meeting of the Board of
Trustees of the State Bar by majority vote of the Board of Trustees, provided
notice setting forth the proposed amendment shall be given all Board of
‘Trustee members in the notice of the meeting, However, all changes in dues
and fees and Article Vi, Section 4 (powers of annual meeting) may be
amended or repealed only through the referendum procedure in Article XIII
by a majority vote of the voting active, active military service and judicial
members.

$16 In summary, the Court, 27 years ago, created a unified Bar in Montana for the
purposes of; aiding the Court in maintaining and improving the administration of justice;
‘maintaining high standards of integrity, conduct, competence and public service on the part
of practicing attomeys; providing a forum for the discussion of subjects pertaining to the
practice of law; and insuring that the responsibilities ofthe egal profession tothe public are
more effectively discharged.

{17 The Order Unifying the Bar provides for membership dues as are approved by the

‘Montana Supreme Court and contained in the by-laws. In Douglas IJ,in order to protect the

Bar membership's right to re

 

its say as to the dues structure, we reiterated that the Court

retained the authority "to approve or disapprove of annual du

  

eases.’
18 In the years since the 1974 Order Unifying the Bar, the Bar has, pursuant to this
Court's Order Unifying the Bar, adopted and amended by-laws. Those by-laws presently

provide tha

 

Il changes in dues and fees may be amended or repealed only through the

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referendum procedure by a majority vote of the voting active members. Article XV. With
the Bar membership effectively in control of the dues structure, the Courts ability to govern
and control the practice of law is considerably hampered.

19 The time has come to review the provisions of the 1974 Order Unifying the Bar and
‘determine whether that Order and our decision in Douglas [Tcomport with our constitutional
obligations. Article VII, Section 2, of the Montana Constitution states that the Supreme
Court is to gover and control the practice of law. The Court has, in part, exercised this
constitutional power to govern and control the practice of law through the creation of
Unified Bar. The Bar, of course, cannot carry out the Supreme Court's unification directives,
without dues revenue. However, under the present unification order, the dues structure is,
in the first instance, a function of membership vote-subject only to the "approval or
disapproval” of the Supreme Court. We determine that this structure of shared control over
the dues revenue of the Bar does not comport with Article VII, Section 2, of the Montana
Constitution, which places the govemance and control of the practice of law solely with the
Supreme Court,

{20 The structural deficiencies set forth above do not alter the fact that the Court needs
‘unified bar to assist in the governance and control of the practice of law. In our 1974 Order

we noted the need to promulgate and maintain ethical standards, the need to provide

 

continuing legal education and the need to provide forthe availability of legal services toll.

In the past 27 years, we have seen a marked increase in the number of ethical complaints

 
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coming before the Commission on Practice; we have seen an increase in the number of
practitioners coupled with greater specialization in the practice of law; and we have

experienced a drastic reduction in the funding for legal services for those unable to afford

 

attorneys. Thereis litle question but that our concerns with ethical conduct, continuing legal
education and availability of legal services to all are even more compelling now than they
were 27 years ago, The State Bar should continue with ts efforts to help fund legal services.
In addition, we recognize that attorneys impaired by alcohol, drugs or mental problems
adversely affect the practice of law, damaging both their clients and the credibility of the
profession. Thus, the State Bar of Montana must continue to address the Cour's and the legal
profession's responsibilities to the public through such programs as Lawyers Helping
Lawyers; Lawyers Fund for Client Protection; and arbitration of fee disputes.

{21 As the United States Supreme Court noted in Keller v. State Bar of California 1990),
496 USS. 1, 12, 110 S.Ct. 2228, 2235, 110 L.Ed.24 1, 13, "[ijtis entirely appropriate that all
of the lawyers who derive benefit from the unique status of being among those admitted to
practice before the courts should be called upon to pay a fair share of the cost of the
professional involvement in this effort."

{22 Thus, in order to fulfill our constitutional duty to govern and control the practice of
law in the State of Montana, we conclude that itis necessary that the 1974 Order Unifying
the Bar be amended to provide that annual membership dues will be set atthe sole discretion

of the Supreme Court.

 
 

23

ps

 

Accordingly, IT IS HEREBY ORDERED THAT:

(1) The rationales set forth for unification of the Bar in Sections I(a),(b) and (d) of

the 1974 Order Unifying the Bar are hereby reaffirmed,

ps

p6

v7

(2) Section (1)(c) of the 1974 Order is hereby amended to read:

All persons now or hereafter admitted to practice law before the
‘Supreme Cour of this State, excluding judges of courts of record, are declared
to be active members of the Unified Bar of Montana. Each active member
shall pay the annual attorney license fee provided by law and shall pay such
‘membership dues in the Unified Bar of Montana as are established inthe sole
discretion of the Montana Supreme Court. Effective March 1, 2002, the
membership dues are set at $150 per year for active members of the Bar and
‘$75 per year for inactive members. Nonpayment of membership dues shall
result in suspension of membership and the right to practice law until payment.

‘Any future dues changes, while in the sole discretion of the Court, shall
bbe implemented only after giving the Bar membership notice of the proposed
change and a 90-day period to comment on the proposed change.

 

(3) Section 1(f) of the 1974 Order is amended to read:

‘The Montana Supreme Court shall possess and retain original and
‘exclusive jurisdiction in the enforcement of professional ethics and conduct of
the members of the Unified Bar of Montana, as provided in the Code of
Professional Responsibility as now existing or which may hereafter be
adopted, The practice and procedure of the Commission on Practice of the
Supreme Court of the State of Montana as provided in the existing order
‘covering the same in Supreme Court Cause No. 10910, dated January 5, 1965,
‘or as the same may hereafter be amended shall be retained, The Supreme Court
retains the authority to assess Bar members, in addition to Bar membership
dues, such annual assessment as deemed necessary, in the Cour's discretion,
to fund the investigation, prosecution, presentation and resolution of matters
before the Commission on Practice.

 

(4) Beginning in March 2003, the State Bar of Montana shall report annually to the

‘Court as to the financial status of the Bar. Beginning in March 2005, and every three years

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thereafter, the State Bar shall file with the Court a special report analyzing the dues structure
in ight ofthe Bar's responsibility to address the purposes of the Unified Bar as stated herein
and in paragraph 1(b) of the 1974 Order.

{28 _ (5) The State Bar of Montana is hereby directed to amend the by-laws to conform to
this Order and submit the amended by-laws to this Court for approval, rejection or
modification no later than December 31, 2001.

{29 (6) Notice of this Order shall be given by mailing a copy of this Order to each

attomey licensed to practice law by this Court

DATED this. \OY sey of SNe, 2001,

 

 

Justices

 
Justice Jim Rice dissenting
180 [respectfully dissent from the Court's order.

{BI The Court today abrogates the Bylaws ofthe State Bar of Montana, imposes a 50%
dues increase upon the membership, and disenfranchises the membership of its suffrage in
regard to future dues increases. While I recognize the Court's constitutional authority to
govern the practice of law in Montana, Ido not believe such drastic measures are warranted.
{82_ Bypassing the requirements of its own Bylaws, the State Bar has petitioned the Court
for a dues increase without first submitting the question to the membership. On that basis
alone, I would deny the petition.

{83 As grounds forthe petition, the State Bar compl:

 

3s that our state’s dues are among
the lowest in the nation, that some State Bar programs are jeopardized, and that the 1996
dues referendum was defeated by the membership.

{34 Itmust be remembered that the 1996 referendum was interwoven with a controversial
Commission on Practice plan. Further, many members did not feel that the State Bar had
adequately explained the purpose for the increased revenue. Exercising its collective
prerogative, the membership rejected the proposed increase.

85 The State Bar appears to have concluded that the referendum vote of five years ago
is an indicator of the membership’s permanent opposition to any and all dues increases, for
‘whatever purpose, a conclusion which is not reasonable and to which I do not subscribe. A

plan to moderately increase the dues to support important bar programs would find much

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fertile ground within the membership, but such a plan has not been offered. The State Bar
hhas not responded to the membership, learned from the mistakes in 1996, and altered its

course accordingly. { cannot conclude that the State Bar has acted with the due diligence that

 

would entitle it to the extraordinary relief provided herein,

{36 While inflation has eroded the value of the dues established in 1974, it should not be
forgotten that the dues were increased by 150% that year. Since then, there has been a
substantial increase in membership, substantially increasing the State Bar's budget. Further,

to its credit, the State Bar

 

s creatively enhanced its revenue from non-dues sources, and
the State Bar's reserves currently stand at a half million dollars, While the State Bar is
experiencing revenue shortfalls, and there are dark clouds on the distant horizon, I do not

believe this mandates a conclusion that the 1974 Unifics

 

order is “unworkable,” oF that
‘a crisis exists of a magnitude that would justify the Court's actions herein. In the context of
governmental funding, compulsion of revenue by the courts is reserved for situations
constituting an emergency. Buite-Silver Bow v, Olsen (1987), 228 Mont. 77, 743 P.2d 564,
While this is not a matter of governmental funding, the comparison is helpful. 1 do not
believe the circumstances here constitute an emergency, and if one should develop which
necessitated intervention, the Court should consider at most, a temporary dues assessment
that would not permanently erase the rights of the membership.

{37 Most troubling is the Court’s elimination of the membership's right to vote on future

dues increases in exchange for a 90-day comment period. After the Court has ignored the

B

 
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results of a profession-wide referendum in issuing this order, many members may
legitimately doubt that a “90-day comment period” will provide an efficacious opportunity
to express their concerns about future dues increases.

$B8__ Many opponents to future dues increases will be silenced. Currently, a member's
‘opposition to an unreasonable dues proposal can be confidentially expressed “in the privacy
of the polling booth.” In the future, a member will be required to take a public stand in order

to register his opposition to the State Bar’s proposals. As a result, there

 

ill be a chilling
effect on the membership’s speech and participation rights, an ironic consequence of the
Court's exercise of constitutional power.

$89 Further, the Court is creating the temptation for the State Bar, whenever the budget
‘becomes tight-and budgets generally do-to run tothe Supreme Court for additional funding.
Instead, the State Bar should listen to its membership, and make budgeting decisions based
upon revenue that the membership provides. The Court's order eliminates the State Bar's
financial accountability to its members, the consequences of which are predictably
unfortunate,

$40 I would deny the State Bar's petition, and grant no other relief.

a

Justice

 
Justice James C. Nelson concurs
$41 While I understand the perspective from which Justice Rice dissents from this Court's
‘order, I respectfully suggest that his opinion misses the fundamental point of our decision

This Court, and this Court alone, bears the constitutional obligation--and concomitantly, has
the authority-to govern and contro! the practice of law inthis State. See Article VIL, Section
2(3), Constitution of Montana. The dues provision under our 1974 Unification Order
contravenes this authority. It always did. See Application, 163 Mont. at 527, 518 P.2d at 34,

{42 Forreasons that are lost in history (but which I suspect were driven by an attempt to
appease Bar members angered by the 1974 Unification Order), we approved the 1975 By-
Laws with the provision allowing the Bar membership to effectively set the dues for the
operations of the integrated Bar-an organizational structure which we mandated into
‘existence pursuant to our constitutional authority. When the challenge to this dues provision
was raised in Douglas J, we ostensibly recognized the problem for what it was: an

abrogation of our constitutional duty to set dues. Nonetheless, in Douglas II, in a cont

 

effort to placate the dissatisfied faction of the Bar membership, we punted,
43 And this is the point that Justice Rice's dissent misapprehends. Setting the dues
necessary to fund and operate the State Bar of Montana never was, constitutionally, the

prerogative of the Bar membership. Indeed, submitting yet another proposed dues increase

 

to the members of the Bar, separating out the "controversial Commission on Practice pla

from the dues increase proposal; and hoping to find "fertile ground” by the Bar leadership

1s

 
 

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offering a proposal for a “moderate” dues increase may well convey the sonorous ring of
Political compromise, but these suggestions miss the point completely. ‘These proposals do
rot solve the underlying constitutional problem of this Court "hand[ing] authority over dues
increases to the Unified Bar." Douglas J, 183 Mont. at 153, 598 P.2d at 1080. Rather, these
proposals merely prolong and exacerbate What amounts to an unconstitutional delegation of
this Court's dues authority to the members of the Bar. Purely and simply, the matter of dues
is not the Bar membership's call. It is the Court's, under Montana's Constitution.

144 We were wrong to not address this problem squarely and honestly in Douglas IJ; we

 

failed in our obli

   

tion to resolve the issue once and for all then; and putting off the
inevitable to another day and another Court is a cop-out.

{45 Iam absolutely satisfied that we have made the legally correct decision here
Unfortunately, that we have chosen to let this sore fester for nearly 20 years makes lancing

the boil no less necessary-it only makes the operation a good deal more painfy).

  
 

Chief Justice Karla M. Gray concurs in the foregoi

 
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Justice Terry N. Trieweiler concurs
146 agree and join in Justice Nelson's concurring opinion. I would also add the
following observations regarding Justice Rice's dissent.

447 _Iustice Rice defends the membership's rejection of a dues increase in 1996 based

ied the need for the

 

‘on many members’ feelings that the Bar had not adequately exp
increased revenue. As one who personally followed the 1996 campaign, I disagree. Any
‘member of the State Bar who did not understand the need for the increased revenue did
not care. Bar officials traveled from one end of the state to the other and met with every
county bar association which expressed an interest in an effort to communicate the
importance of and need for a dues increase, To suggest that a majority of the Bar's

‘members would willingly accept responsibility for financing the operations of an

 

integrated bar if only given enough information is a lame excuse for avoiding this Courts
constitutional responsibility to govern and control the practice of law as the majority of
the Court deems necessary based on the facts presented tous.

48 _ [also disagree with Justice Rice's suggestion that there is something helpful about
‘4 comparison of this Court's constitutional obligation to govern and control the practice of
law and prior decisional law regarding compulsion of governmental funding by another
branch of the government. No comparison could be less helpful. In one instance, this

Court is performing its constitutional obligation. In the other, restraint is exercised to

avoid constitutional conflicts. The comparison is like apples and oranges.

v

 
 

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{49 Finally, 1 disagree that this Court should listen to the expression of opinions by
individual Bar members “in the privacy of the polling booth." As Justice Nelson pointed
out, itis this Court's constitutional obligation to control the practice of law in this state
Anyone who has an intelligent or rational suggestion about how that responsibility can be
effectively carried out is welcome to and has had the opportunity to express that opinion
‘The only message that can be inferred from the results ofthe polling booth is that a
majority of those members ofthe profession who voted on the dues increase issue would
rather sarifice Bar programs from which they may not feel a direct benefit than increase
their own overhead,

150 _ Justice Rice advises caution absent an emergency. Fortunately, our constitution
oes not condition this Court's responsibility to govern and control the practice of law on
the existence of an emergency. Government that reacts only to emergencies is doomed to
failure

51 For these reasons, I join in the Court's order amending the State's by-laws and

imposing a dues increase on the membership of the State Bar of Montana.