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February 2010 Issue

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Court Budget Cuts Jeopardize the Economy and Justice for All

By Stacy D. Phillips and Ram F. Cogan, Phillips, Lerner, Lauzon & Jamra, LLP

The fact that California faces a major fiscal crisis should come as no surprise to anyone. After all, for more than a year now we have not been able to turn on the news or read a newspaper without being told that the entire country is in the worst recession since the great Depression - and California does not have a “get out of jail card” which makes it immune from the hardships which the rest of the country is experiencing. With the rejection of stop gap measures at the ballot box and Washington D.C. unwilling to bail California out of the mess it has gotten itself into, we face severe cutbacks across the board - with no savior in site.

What may not be as well recognized (despite efforts to “spread the word”) is the impact on this state’s economy resulting from the cutbacks that our judicial system is facing. We could accurately argue that the judicial system holds a “special” place in our state and therefore deserves special treatment. After all, the judicial system is the guardian of the constitutional rights and liberties which form the framework of our society and which we hold so dear. Further, it is the courts to which we resort when we seek protection and a peaceful means of righting grievances. As Ron George (Chief Justice of the California Supreme Court) stated: “Government without a functioning judicial system is not government as we know it.” Nor, frankly, is it government as we want it. However, the unique role our judicial system plays and the consequent need to preserve and protect that system is not the focus of this article. Instead, our focus is on the state-wide economic impact (which has not been as widely publicized and, therefore, not as widely known), from the erosion of our judicial system. The fact is that both ongoing and proposed budget cuts to our courts will have a dramatic impact on our bottom line - everyone’s bottom line.

Consider the following: in a report issued November 18, 2009, the Legislative Analyst’s Office (the non-partisan agency that reviews and monitors budget issues for the Legislature) projects California’s budget shortfall to be $21 billion by June 30, 2011 (the end of the 2010-11 state budget year). Further, the Legislative Analyst’s Office’s report warns that any economic recovery by the state “will likely come too short and too late to help resolve the $21 billion shortfall.” Nor is this a temporary shortfall. The report projects continued budget shortfalls of billions of dollars for the next several years - especially when federal stimulus dollars and revenues from the temporary tax increases end. For example, it is projected that California will experience deficits of $21.30 billion in 2011-12, $23 billion in 2012-13, and $18.40 billion in 2014-15.

How will this impact the judicial system? It is projected that by 2013 our court system will experience a $139 million deficit. Remarkably, this deficit could result in the closure of more than half of Los Angeles County’s civil courtrooms, including a third of the family law courtrooms. The Presiding Judge for Los Angeles Superior Court (The Honorable Charles W. McCoy), points out that “cuts already imposed on the Los Angeles Superior Court, if unabated, will force the closure of over 180 courtrooms and layoffs of more than 1800 employees in the coming years. This is a dramatic reduction in work force and courtrooms. There are approximately 605 courtrooms operating throughout 50 locations in Los Angeles County. The closure of 180 courtrooms includes the closure of nine courthouses. The loss of 1800 employees constitutes a 34 percent reduction in the court’s workforce. The cuts in staff and courtrooms/courthouses (along with the priority given to criminal cases) will result in an increase to the already existing backlog of cases, which, in turn, will slow the movement of virtually all civil cases to a snail’s pace.

This is not “rocket science.” The layoffs and closures resulting from the budget crisis will increase the already existing backlog of cases so that the movement of civil cases through the system will be slowed even further - in our opinion, to an intolerable level. Parenthetically, criminal cases will be impacted as well. For constitutional and public safety reasons, the criminal courts will not be affected as much. Nonetheless, if projections hold true, according to Judge McCoy, approximately 42 criminal courts will be closed in Los Angeles alone. As to civil cases, in December, 2009, Micronomics, Inc. completed its “Economic Impact on the County of Los Angeles and the State of California of Funding Cutbacks Affecting the Los Angeles Superior Court.” In its analysis and conclusions, Micronomics noted that the anticipated reductions “will significantly impact LACS’ ability to dispose of cases in a timely manner. Based upon the observed relationship between lost LASC courtroom operating days and average caseload clearance rates, clearance rates are expected to fall by no less than 19 percent by 2011… by no less than 30 percent in 2012 and by no less than 35 percent by 2013.” Micronomics further notes that: “As caseload clearance rates decline,…more cases remain pending [and] the backlog of cases to be disposed of grows…. Given the anticipated losses, the average time between filing and disposition will increase by more than 150 percent. . . [and the] average time-to-disposition [for cases filed in 2012-13] will be nearly four-and-a-half years.”

The impact will, as usual, be worst for the most vulnerable members of our state - children, juveniles, single parents, and those in abusive relationships. Justice delayed is justice denied. Litigants will, literally, lose their lives because they are unable to obtain the protection they need from the courts. This is the real tragedy of the situation - i.e., that our system will have let down those most in need of help. But, as noted above, the economic impact will be great as well. Simply put, the adverse impact on our judicial system will slow California’s economic recovery and cost the state tens of billions of dollars (that’s billions, with a “B”!). Without efficient and expeditious recourse, businesses will turn elsewhere. Our economic recovery will depend, in no small part, upon a strong, expanding tax base. Without the participation of new business and investment in our state, any such recovery will be significantly slowed.

In its December, 2009 report, Micronomics concludes that reductions in funds previously made available to the Los Angeles County Superior Court will result in: declines of $13 billion in business activity from decreased utilization of legal services; uncertainty among litigants resulting in approximately $15 billion in economic losses; damage to the Los Angeles and California economies, including close to $30 billion in lost output and more than 150,000 lost jobs; and, lost local and state tax revenue of $1.6 billion. Micronomics also concludes that: “If only [5] percent of local economic activity were removed from Los Angeles and went out of state, annual California output losses would exceed $104.1 billion, and job losses would reach beyond 560,000.” Note, these numbers apply to the adverse impact on this state’s economy resulting only from losses to Los Angeles alone.

What makes this crisis that much worse (and scary) is that there is no easy fix. The oftentimes “knee jerk” first impulse is to request more funds from the Legislature. That is not an option. There are no more funds to be had. The Legislature has already used every tool available to it (e.g., spending cuts, tax increases, borrowing, federal funds, and one-time budgetary maneuvers) to reduce approximately 90 percent of the 2009-2010 budget gap, addressing the existing budget problem and future deficits. As the Analyst’s Office puts it: “the scale of the deficits is so vast that we know of no way that the Legislature, the Governor, and voters can avoid making additional, very difficult choices about state priorities”  - which we interpret to mean, “cuts.”

Nonetheless, there is hope. An amalgam of possible solutions exists. While these solutions will not prevent court closures and layoffs (it is too late for that), they will mitigate the damages and minimize the adverse economic impact on our state. The space limitations are such that this is not the place to expound upon the possible (and needed) long term solutions. Rest assured there are various measures which can be implemented (many of which you may have already considered) such as: we can organize, present a united front, flex our “political muscle” and lobby for the results we need. We can learn from the plaintiffs’ bar which has done a terrific job of advocating in this fashion for its constituents. We can hire lobbyists and create PACs (political action committees) to advocate for the diversion of needed funds (see below) and ensure that our voices are heard into the future before (as well as when) we face the next economic downturn. Further, we can advocate for a restructuring of our judicial system. Desperate measures call for desperate action. We can reinstitute a version of the Master Calendar system, have specific cases assigned to specific jurists who have expertise in particular fields, and we can (as distasteful as this sounds), reinstitute Law and Motion departments. And, we can allow self-represented litigants to opt into a “self-represented litigant” track. “Self-Represented Litigant Days”, Self-Represented Litigant Workshops”, and “Self-Represented Litigant Courts” staffed with volunteers from the legal community (including retired Judges) could be (and have been in several counties) created. But these are long term solutions which will take time (a precious commodity of which we have very little) to implement.

What can we do in the short term? We need to make it known to the Legislature that there is broad based support for the proposition advocated so eloquently by Judge McCoy - that additional bond measure SB 1407 money as well as CCMS funds should be diverted and used to keep our courts and courthouses open. As evidenced above, this is imperative not only for our judicial system, but for the state as a whole. SB 1407 was meant to raise funds for new courthouse construction. CCMS funds were meant to be used to update the courts’ computer system. Do we need new and safer courthouses? Absolutely. Do the courthouses need an updated computer system to keep up with technological advancement and make the judicial process more efficient and expeditious? Absolutely. But what is the point of new, beautiful courtrooms in which updated computers are housed if the courts are closed and there is no one available to use those computers? We have to set our priorities and our priority should be to keep the courtrooms and courthouses open.

For the current budget year (July, 2009 - June, 2010), the Legislature approved the diversion of $25 million of bond money and $100 million earmarked for CCMS to court operations. Admittedly, there may not be much CCMS money left. But, by one estimate, Los Angeles alone is expected to account for an annualized revenue stream in excess of $50 million to finance the bond measure. State wide, it is estimated that these fines and fees will generate an annualized income stream of $280 million. In short, there is more than enough to keep the courtrooms and courthouses open (or, at least, to minimize closures). But it takes Legislative action to divert these funds and Legislative action rarely, if ever, occurs without constituents making their voices heard. This is not a “lawyer thing”, and it is not a “judicial system thing”. The diversion of millions of dollars into the judicial system will save California tens of billions of dollars (billions with a “B”) which, in turn, will help jump start our economy, get us back on the proper track, and bring us to the point where we can reorient our priorities and begin construction of new courthouses and update our computer system (among other things). Nor should the “other side of the coin” be ignored. If we do not divert the needed funds now, the adverse economic impact will ensure that we continue on our downward spiral  which we cannot afford.

This is your “call to arms.” Maintaining the status quo is not an option. As lawyers and guardians of our judicial system, we have an obligation to take action and take it now. Sitting passively by and waiting for others to act is irresponsible. United we can have a dramatic impact - not only for the courts, but for our state. We need to organize, contact our local representatives and make your opinion in favor of diverting further funds to the judicial system known, and you need to volunteer - whether it be in your local bar organization or when the courts begin to implement the above-referenced programs. Admittedly, it is easy to sit back and do nothing. This time we literally cannot afford not to act.

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