Below are pages 82 through 84 of the Joint Legislative Audit and Review Commission of the Virginia General Assembly Review of the Virginia State Bar, Senate Document 15 (1996 Session).
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The Bar’s growth has included the adoption of several commercial activities. These activities appear to be within the Bar’s authority as specified in Court Rules. Nevertheless, VSB involvement in commercial activities is unusual for a State agency, particularly a professional regulatory agency. This makes it difficult to compare its performance with other professional and occupational regulatory agencies in Virginia.
This expanded focus on commercial activities by the Bar creates the potential for conflicts, especially with respect to its regulatory functions. Over time, the Supreme Court may find even greater difficulty in identifying the proper role of the Bar as an administrative agency of the Supreme Court due to its commercial relationships and the reluctance of members to relinquish the Bar’s role in providing these services.
Review of the Bar’s current involvement in the provision of commercial products and services raises several questions which the Supreme Court of Virginia and the General Assembly may wish to examine such as:
JLARC staff review of VSB involvement in commercial activities identified several which are unusual for State agency involvement. These include: (1) endorsing computerized legal research services for members, (2) endorsing a professional liability insurance product, (3) sponsoring personal insurance products, and (4) sponsoring vendor displays and memento sales (the lawyers expo) at the VSB annual meeting. These activities are non-regulatory and do not clearly support the agency’s regulatory mission.
Product sponsorship and endorsement by the VSB may also present a conflict of interest because the Bar has benefited monetarily from these arrangements. Given its status as a State agency with mandatory membership requirements, it may be unsuitable for the VSB to negotiate commercial contracts which contain agreements to provide access to the VSB members through its mailing list or guarantee marketing efforts which will be supported by the agency. This may disadvantage other commercial providers of these services and may be inconsistent with statutory and Supreme Court intent regarding the scope of the Bar’s activities.
The VSB became involved in sponsoring computer-assisted legal research services in January 1990. Given its regulatory mission, VSB involvement in soliciting subscribers for these services does not appear suitable for a State agency for several reasons. First, it presents a potential conflict of interest for the VSB because: (1) the Virginia State Bar, as a state agency, benefits directly from soliciting these services by receiving commissions on services and products, (2) the Bar obtains free computerized legal research time for staff in its department of professional regulation, and (3) the seller of these products subsidizes a reception for Bar members at an official Bar function, its annual meeting.
In addition to potential conflicts of interest, other concerns with the Bar’s involvement in this type of commercial activity exist. The provision of these services has no direct link to the Bar’s central mission of regulating the legal profession. Involvement in selling products or soliciting customers for a private company by a State agency is unusual and raises potential issues regarding unfair competition. Moreover, the provision of the Bar’s mailing list for commercial purposes may also violate statutory intent regarding the use of this list.
In the early 1990s, the VSB entered into an agreement with a private company to begin offering a group discount for computerized legal research activities to its members (mostly those practicing in small firms or in solo practices). In 1992, the VSB agreed to act as an authorized sales agent of this company with the right to solicit subscriptions to the company’s membership group program for providing computerassisted legal research and information retrieval services, and CD-ROM products licensed by another company. The current agreement between the VSB and this company requires the VSB to “assist....in soliciting third parties (“Subscribers”) to subscribe to the Services.”
Currently, the Bar receives a quarterly royalty payment of $1,200 plus an additional amount for each new subscription agreement and each CD-ROM product sold. The VSB receives $10 per each new sale, up to 120 sales per quarter. For each sale greater than 120 per quarter, the VSB receives $20. Table 18 illustrates the net program revenues received by the Bar for its program sponsorship over the past three fiscal years.
Virginia State Bar Revenue and Expenditures
for the Computerized Legal Research Subscription Endorsement
| Fiscal Year | Program Receipts Paid to Company | Amounts Received From Subscribers | Commissions | Net Program Revenues |
| 1993 | $216,624 | $200,669 | $18,054 | $2,099 |
| 1994 | $313,446 | $285,749 | $47,113 | $19,416 |
| 1995 | $156,042 | $193,511 | $34,354 | $71,823 |
| Total | . . . | . . . | . . . | $93,337 |
Source: Virginia State Bar, Summary Ledger, FY 1991 to FY 1995 and data provided by the fiscal department,November 28, 1995.
Exhibit 6 summarizes the VSB’s current obligations under its sponsorship agreement for these services and benefits it receives. As mentioned above, one of the Bar’s obligations is to make available four full sets of mailing labels per year. In addition,the Bar must undertake a number of promotional activities to solicit customers for theservice and its products.
In accepting this agreement, the VSB may have thwarted statutory intent regarding access to the Bar’s mailing list. The Code of Virginia states:
When requested, copies of the Virginia State Bar membership address list shall be made available to Virginia professional legal organizations which operate not for profit and which regularly conduct continuing legal education programs in the Commonwealth (§59.4-3918).
This specific language limiting the availability of the VSB mailing list suggests that the General Assembly did not intend for the VSB to make the mailing list generally available to commercial entities for marketing purposes. However, one of the VSB’s current obligations under its sponsorship agreement for these services is to make available copies of the Bar’s mailing list.