The Price of Justice

My learning curve as a new member of the Board of Governors for the Oregon State Bar has been quite steep. The Board oversees many functions of the Bar, including attorney discipline, legal malpractice insurance and operations. One of the highest priorities of the Bar is to ensure that Oregon’s courts are open and accessible to the public. Now that the Oregon Legislature is in session a number of bills are being closely followed by the Bar. One such set of measures, House Bills 2710A and 2712, will directly impact the accessibility of Oregon courts. These measures set the court fees and fines collected by our court system to fund its operations.

Although the court system is critical for public safety, accessible courts are an equally important part of a vibrant economy. If businesses are not able to efficiently and effectively resolve disputes, risks and uncertainty increase. Capital is risk adverse. If companies cannot recover funds justly owed to them for products and services, or if ownership of property cannot be resolved, investment in business would stagnate. The rule of law not only keeps us safe, but it also helps us prosper.

The court fees imposed by HB 2710A and 2712 directly affect businesses seeking a judicial resolution of their disputes. In order to utilize our judicial system, each business or business owner must pay a number of “user fees.” Not surprisingly, most governmental agencies are exempt from paying court fees. Fee waivers or deferrals are frequently granted to individuals who are below certain household income levels. As in many other areas of our society, business and individuals of average or above-average means carry more than their “share” of the expense.

In the 2009 legislative session, Oregon’s court filing fees and criminal fines were dramatically increased. These increases were in response to the loss of governmental revenues resulting from the recession. Fees to commence a civil lawsuit were determined by a complex matrix which considered the amount in dispute and the number of parties. For the types of commercial litigation handled by our firm, filing fees sharply increased. There were several civil cases filed by our firm under this schedule in which the court fees exceeded $5,000. I also heard anecdotal reports in which filing fees reached into the tens of thousands of dollars. And these fees were just for the commencement of the lawsuit! As cases progressed through court additional fees were imposed for filing motions, scheduling hearings, submitting orders, and trying the case before a judge or jury.

Unfortunately, the sharp increase in court fees did not increase service. However, the increases probably staved off any significant reductions in service. Although court staffs were furloughed and a few layoffs occurred, Oregon courts were (for the most part) able to stay open despite the significant downturn in the economy and governmental revenues.

In the 2011 session, the Legislature has proposed a fee schedule that ameliorates some of the excesses of last session’s court fee schedule. These proposed schedules slightly increase the base filing fee, but eliminate the multiplier for additional parties. This adjustment should reduce the outrageously large filing fees in complex civil litigation. The legislation also minimizes the number of add-on fees for additional steps in the litigation process such as fees for filing motions or submitting orders. Finally, significant changes are being proposed to the distribution of revenues raised from criminal fines, including traffic violations. Consideration is being given to reducing some of the higher penalties for more routine traffic violations because of concerns that the fines have become so expensive that police are reluctant to write citations.

Although some of the more pernicious aspects of the previous fee schedule may be eliminated, the proposed fee schedule is designed to raise about the same amount of revenue for the biennium operations of the Oregon court system. As presently configured, HB 2710A and 2712 are expected to generate $54 million for court operations over the next two years. The amount of revenue expended on our court operations is significant, especially when one understands that the system is largely funded by “user fees.” Generally speaking, court operations do not receive property or income tax revenues. Counties do provide support for courthouses, facilities and security, but court operations such as clerks and judges are funded from fees largely paid by the parties involved in lawsuits or fined for violations or crimes.

Court filing fees are also used to pay for other court-related services. In 2010, nearly 20,000 low income and elderly Oregonians received legal aid services. Most of these services were for resolution of domestic disputes and violence. Legal issues surrounding housing and income support, such as social security, are the next largest service segments. This work is funded by a combination of state, federal and private partnerships. However, the largest single component of legal aid funding has been state court filing fees. Filing fees under HB 2710A are anticipated to raise an additional $11.9 million for legal aid services. Other special programs receive a portion of court filing fees and fines. These programs include indigent criminal defense, courthouse libraries, and domestic dispute mediation services.

Although the process is far from perfect, Oregon’s courts are well run and recent system changes have increased efficiencies. Conversion to an electronic filing system will continue to improve efficiencies. Nonetheless, the cost of providing justice to our society is substantial. It is critical that access to the courthouse be maintained for all members of society and it is remarkable that the most significant revenue source for judicial operations comes from “user fees” and not from the general fund.

If you are interested in learning more about pending legislation that may affect accessibility to Oregon’s courts, please contact a member of the firm’s Litigation Group.