State audit says attorney licensing fees exceed regulatory cost; lawmakers press courts and bar for clearer accounting

At a July 2025 Administrative Rules Review Committee meeting, former State Auditor John Dougal and current State Auditor Tina Cannon presented a limited review of attorney licensing fees paid by Utah lawyers and raised questions about how the Utah State Bar allocates overhead and service spending.

The audit found the bar’s annual, court‑approved license fee for active attorneys is “substantially higher than the associated average cost to regulate those practicing attorneys,” and auditors said they were unable to “fully identify the regulatory expenses that should be properly borne by licensed attorneys because the bar does not adequately track its expenses in a manner that allows us to make that determination,” Dougal told the committee.

Why it matters: Fees that are regulatory should reasonably relate to the cost of regulating a profession, auditors said. Where fees fund services that benefit members or public programs, the auditors argued those items should be accounted separately so attorneys can decline or seek refunds for non‑regulatory spending when the law requires it.

What auditors presented John Dougal, speaking in his capacity as “a former state auditor,” summarized the legal standard the auditors used and the office’s limited review. He cited a Utah case — transcribed as “v 1 oil versus Utah state tax commission” — that the auditors used to distinguish regulatory fees from taxes and non‑regulatory service fees. Dougal told the committee the bar’s accounting did not provide a clear line separating the direct cost of regulation from other activities paid by the license fee.

Current State Auditor Tina Cannon said the office used the same fee criteria it applies statewide. Cannon noted the review was limited, that the bar cooperated with auditors and that the accounting systems “have the ability” to allocate overhead, but the allocation in place did not let auditors isolate regulatory costs.

Auditors’ concerns included: - The bar mixes regulatory and service functions and does not track expenses in a way that lets auditors isolate the regulatory portion. - Overhead allocation appeared to be a major driver of excess fee revenue; auditors said the allocation percentage should not be assumed to be zero. - The bar has, in practice, used licensing revenue to fund activities described in the audit as “lobbying activities,” “legislative activities,” or “public policy action related to the practice of law,” which raises questions about whether those costs are regulatory.

Responses from the courts and the bar Michael Drexel, assistant state court administrator, told the committee the Supreme Court has received the audit, is reviewing it and “is committed ... to reviewing the reasonableness of the fee and the programs that those fee funds are dedicated to accomplishing.” Drexel also said the court currently views $425 as the fee for active practicing lawyers but that the court is reassessing the reasonableness of that amount.

Elizabeth Wright, executive director of the Utah State Bar, described the bar as “a 5 0 1 c 6 nonprofit professional association,” said the bar maintains annual outside audits and that its financials are publicly available. Wright told the committee the bar complies with Keller‑type limits on political activity and that only spending germane to regulation of the practice of law or administration of the courts is permissible under controlling precedent; she said the bar’s internal processes limit what it will advocate for and that some small refunds for certain political spending are provided to objecting attorneys.

Committee questions and next steps Lawmakers pressed multiple topics: whether attorneys have input into fee decisions; how the bar’s governance and elected membership participate in budgeting; the legal status of the bar and its claim of governmental immunity in some contexts; and whether the Supreme Court’s rulemaking and the bar’s delegated administrative role leave sufficient transparency and legislative oversight.

Representative Provost and Representative Thurston asked whether the regulated attorneys can influence fee uses and whether lobbying activities are disclosed; Dougal said attorneys can seek refunds for the lobbying portion but a correct refund requires a proper cost allocation. Wright said the bar provides a comment period and that the court sets the fee by rule after considering the bar’s proposal.

Several legislators raised constitutional and antitrust questions, citing cases discussed in the hearing transcript (notably Keller and a labor of cases referenced as examples), and asked whether the legislature should open a formal review or bill file. The committee chair suggested giving the court 60 days to respond with further analysis; other members urged that a bill file be opened to ensure the issue receives legislative study. The committee later opened a joint resolution bill file to consider changes in court rules related to regulating the practice of law (see related committee action below).

What auditors recommended Auditors recommended the Supreme Court “fully analyze the direct cost of regulating the practice of law, and to develop and use a reasonable methodology for allocating overhead expenses across all functions of the bar,” language Dougal described when presenting the audit’s conclusions and recommendations.

Quotes from the hearing “I initiated a limited review of attorney licensing fees … the court itself admitted that it was using attorney licensing fees not simply to offset the cost of regulation, but to generate excess revenue to fund … public policy action related to the practice of law,” John Dougal said.

“The office of the Utah State Auditor was unable to fully identify the regulatory expenses that should be properly borne by licensed attorneys because the bar does not adequately track its expenses in a manner that allows us to make that determination,” Dougal said.

“Currently, the Supreme Court feels and believes and has established that the $425 fee for active practicing lawyers is the appropriate amount. But that is subject to consideration and reconsideration,” Michael Drexel said.

“We are a 5 0 1 c 6 nonprofit professional association,” Elizabeth Wright said, adding the bar subjects its finances to outside audits and posts financials online.

Ending The audit prompted an extended committee discussion and a pledge from the Supreme Court’s representatives to continue review. Lawmakers ranged from urging statutory change to suggesting more oversight and clearer accounting; the court and bar said they are working on clarification and that the court is reviewing the audit’s recommendations.

If the committee proceeds with legislation it could address separation of regulatory and service costs, the refund process for objecting attorneys, and the scope of activities financed by mandatory licensing fees.