Saving CEB: A Case History

How a Group of UC Employees, More Than a Decade Ago, Saved Their Department from Privatization and Kept Their Jobs

by Mariam Grodzins

mariamm@berkeley.edu

On November 7, 1997, the University of California Office of the President (UCOP) announced that a review committee had recommended that the University sell Continuing Education of the Bar (CEB). Employees who had been around for a while knew that, at the University, “committee recommendation” was code for “we’ve already made up our minds.” November 7 quickly became known to us as “Black Friday.”

I had been reasonably happily employed at CEB for almost 19 years. If UCOP successfully implemented the privatization, I would probably lose my job, and so would roughly 150 of my fellow employees. I was 56 years old, and had hoped to retire some day without fear of poverty. A considerable number of long-term CEB employees had similar hopes and fears.

When I started to work at CEB in early 1979, I was a 37-year-old, impoverished single mother with a nine-year-old daughter. I was hired as an editorial assistant at $949 per month, and I was filled with gratitude. I wanted to stay forever. I thought the job would be there for me forever.

Background

CEB was established in 1947, under a joint agreement between the University of California and the State Bar, to meet the continuing education needs of California’s attorneys. Under the joint agreement, CEB was expected to be self-supporting. At the time I was hired, CEB had little competition as a provider of continuing legal education in California, and its publications were accurate, well-respected, and widely used. In those days, the organization generally had no problem in meeting its financial obligation to the University.

The 1980s brought competition from for-profit legal publishers. CEB employees found themselves worrying about CEB’s financial status, while supervisors became a lot more serious about budgets and schedules. There was a long recession and, along with the rest of the country, CEB’s financial situation deteriorated. In the early 1990s, CEB suffered three consecutive years of losses over $1 million.

In March 1993, in response to this situation, UCOP decided to bring in new management, and hired Richard Lee, previously with a large San Francisco law firm, as director. When Lee was introduced to CEB’s employees, the first thing he said was that we would all have to make sacrifices to bring CEB back to financial stability. At this time, the University was in financial crisis, and rank-and-file employees were faced with a 5 percent pay cut imposed across the UC system. Even though we were well aware that high-level administrators demand high salaries, we were a little put off when we learned that Lee had negotiated for himself an annual salary roughly 50 percent higher than the salary paid to the previous director. In addition, it didn’t take long to realize that Lee was a hopeless manager.

Lee immediately established a number of task forces to study ways of making CEB more efficient and more competitive in the legal publishing market. Every task force had an expensive consultant or two. Some of them not only collected large fees but managed to do a considerable amount of damage. For example, the consultant to the systems task force, charged with making recommendations for both publishing systems and financial/customer service systems, recommended that CEB buy financial software from a company that had, as it turned out, (1) filed fraudulent financial statements with the SEC, (2) attempted to deceive its shareholders, and (3) sold CEB what was known in the industry as “vaporware,” i.e., software that didn’t yet exist. Since vaporware was well-known to anyone familiar with the software industry, Lee’s ignorance was reflected in his failure to question the people who sold him this product.

Lee then hired ten programmers from Minsk to write the financial software application in-house. When he announced, in a managers’ meeting, that the Russians were coming, everyone in the room initially thought he was joking. No such luck. The Russian programmers soon took over CEB’s training room, apparently working very hard and happy to be there. Relatively minor problems included the facts that their English was limited and that they had no knowledge of American business practices. The situation reached the level of absurdity when we learned that they had been told to write a program that would mimic the old system. In other words, even if the application they were writing had worked (it never did), it would have been no better than what CEB already had. In the end, CEB was forced to scrap the whole project and take a multi-million dollar writeoff.

Bad luck or bad management? A number of CEB programmers who attempted to use the software as it was being developed consistently reported that it would never work. But CEB’s managers apparently considered themselves too important to listen to these people, just as they had previously not bothered to find out whether the Russian programmers had the necessary skills to do the job.

In February 1997, shortly before Lee’s scheduled retirement, the University announced the formation of the review committee. The committee was appointed to assess, among other things, CEB’s mission, the quality of its products and services, its position in the marketplace, and the joint agreement between the University and the State Bar. On Black Friday, it was announced that the review committee’s recommendation was to sell CEB. The University issued a press release and the recommendation was reported in the media.

After the panic subsided, we went out to lunch to do some serious talking.

Getting Organized: November

It was easy to see why the University wanted to divest itself of CEB. After all, CEB was roughly $10 million in its debt. On the other hand, it was also easy to see that the review committee’s report was anything but fair.

CEB employees immediately questioned the conclusions of the committee, noting, among other things, that:

· William Coblentz, a member of the five-person review committee, openly told CEB employees in May 1997 that he thought CEB should be sold, and that the Practising Law Institute (PLI), a New York based private nonprofit continuing legal education provider, was a potential purchaser.

· Coblentz was previously active in advocating privatization at UC through the merger between UCSF and Stanford hospitals (which collapsed in financial chaos a few years after its implementation).

· The “Sources Consulted” section of the report listed 18 people that the committee spoke with outside of current CEB employees. One of them was Richard Lee, and three others were associated with PLI.

· The committee apparently gave considerable weight to negative reports from Lee, but failed to note in 20 pages of facts and findings that CEB faced its worst crisis under Lee’s directorship.

A group of employees began to meet regularly in the hope that something could be done to prevent the sale of CEB, and in the process save our jobs. We were counting on support from the unions, primarily University Professional and Technical Employees (UPTE) and the Coalition of University Employees (CUE, representing clerical employees).

Some of us had some political organizing experience in the 60s and 70s. We were knowledgeable enough to see that it was overwhelmingly likely that we would fail, and we were aware enough to know that most of the good things CEB did were things that management wanted to stop doing (in the name of “acting like a business”). Mostly, we wanted to keep our jobs, and it looked like a tough sell. Nevertheless, we felt that, win or lose, we had to try.

We met almost every Wednesday for a year. We gave ourselves a name, the CEB Employees Advisory Board, consisting of whoever showed up at any given time (usually about 20 people at any particular meeting). A handful of us, who were willing to put in the time, ran the group. Everyone else at CEB was kept informed of what we were doing through weekly meeting notes, sent by e-mail.

At the first meeting, on November 19, 1997, we decided on our first steps:

· We agreed that then-UC Provost C. Judson King, to whom the director of CEB reported, needed to hear from us. We wrote three group letters, addressing (1) various issues raised in the review committee report, (2) achievements at CEB during the eight months since Dick Lee’s departure, and (3) the possible conflict of interest issues of some members of the committee.

· We formed a number of committees of our own, and encouraged employees who had not attended the meeting to volunteer. The publicity committee was charged with coming up with some guidelines for press releases, and generally trying to get the legal press on our side. The investigative committee was to look further into the financial relationship between CEB and UCOP, the possible conflicts of interest among members of the review committee, and anything else that might help us. The legislative committee was to lobby various presumably sympathetic state legislators to put pressure on Provost King and then-UC President Richard C. Atkinson.

Over the next few weeks we made a promising start on several fronts. The legislative committee met with representatives of UPTE to discuss a legislative strategy. A number of legislators were targeted and we agreed to send a delegation of CEB employees to meet with each of them and ask them to write to Provost King and President Atkinson. We discussed the kind of information we would need to bring to these meetings, including financial data and a statement concerning the value of the services provided by CEB.

The investigative committee was able to obtain copies of UCOP’s financial reports, which we decided should be examined regarding the issue of CEB surpluses in the golden years when CEB had surpluses. According to the joint agreement, 75 percent of any surpluses were to be put aside to cover future deficits. We wanted to know if this actually happened.

We also examined the written procedures for reporting misuse of UC funds. “Misuse” was defined to include fraud, waste, and abuse, and we would have to decide at some point if we wanted to file a formal complaint re misuse of funds during Lee’s tenure.

We began discussions of what came to be called “the copyright issue.” The joint agreement stated that “title of all assets, . . . including copyrights, shall be in the name of the Regents of the University of California. . . . In the event of termination, accumulated assets will be retained by the University to be used for the continuing education of California attorneys.” We agreed that we should ask an expert in copyright law to give us an opinion on whether invoking this section of the joint agreement might make it possible for us to prevent the sale of CEB to a for-profit publisher. If copyrights were retained by the Regents, there was nothing of value to sell.

We were also interested in the legal challenge pending at that time to the UCSF/Stanford hospital merger. This case had raised various issues including the question of whether turning public property over to a private entity constituted an illegal gift of public funds. We had the name of the attorney representing the petitioner in the pending case and decided to try to get in touch with her.

Rolling on: December

On December 10, we sent out our first press release to about 50 media contacts. Without making direct accusations, our goal was to suggest that the review committee functioned as a screen for a long-standing back-door agreement to sell CEB:

The employees of Continuing Education of the Bar (CEB) have expressed concern about the fairness of a review process conducted by a committee appointed by the University of California. . . . The formation of the Review Committee was announced in February of 1997. In May, after two members of the Review Committee, William Coblentz and Earl Cheit, had visited CEB to gather information from various staff volunteers, it was widely reported by these staff members that Mr. Coblentz spent virtually the entire day haranguing them about why CEB should not continue to be part of the University of California and stating that there was already a potential buyer, the Practising Law Institute . . . .

On December 16, another press release was sent out jointly by UPTE and CUE:

Employees of the University of California’s Continuing Education of the Bar (CEB) are questioning the objectivity of a University review committee’s recommendation that CEB be sold to an existing provider of continuing legal education. . . .

Over 2,000 members of the California State Bar contribute their time and services to CEB as experts in their fields. It is questionable how these contributors would respond on learning that their valuable copyright interests, given to the University with the understanding that the material is to be used in the public interest, are about to be turned over to a private entity.

And we did get some publicity. On December 18, KPFA gave us about ten minutes on the evening news, which was rebroadcast the following morning. The LA Daily Journal published an article on December 22 headlined “CEB Employees Rip University Report,” and in the following months there were stories in the Bay Guardian, the Berkeley Voice, the SF Recorder, and California Lawyer.

Letter-writing campaign. We wanted to keep letters coming in to President Atkinson, Provost King, the State Bar, and the members of the CEB Governing Committee (which included representatives of the University and the State Bar). We provided CEB employees with the addresses of the committee members and asked that any letters written to Atkinson or King be copied to them and to the Executive Director of the State Bar. Within a week or so, we heard on the grapevine that King was indeed getting a lot of mail, including a letter from the chair of the Estate Planning, Trust, & Probate Law Section of Alameda County on section letterhead, thus speaking for 200 attorneys in the section.

Meetings with legislators. The legislative committee arranged a series of meetings, initially with aides to four state legislators—Don Perata, Bill Lockyer, Tom Hayden, and Ted Lempert. We were pretty sure that the first three would be sympathetic, and hoped for the best with Lempert, a member of the higher education committee and a Republican from Palo Alto. The CEB delegation (five CEB employees, including myself, and two union representatives) had prepared information packets and sample letters that the legislators, assuming their willingness to help, could send to Provost King.

The meetings took place on December 9, and kicked off our lobbying effort with the state legislature, an effort that eventually proved to be crucial in saving CEB. Assemblyman Don Perata wrote to President Atkinson and Provost King within days:

I am deeply concerned about the recommendation of the committee that reviewed Continuing Education of the Bar (CEB), a productive and respected part of the University for 50 years. Lawyers and judges across California rely on CEB for their legal information. Over 200 jobs are on the line if CEB is sold.

Employees claim that previous management is the cause of most of the review committee complaints. I am concerned that the employees might lose their jobs and California relinquish a public asset because of past problems that could be corrected. . . .

Shortly afterwards, Bill Lockyer, President Pro Tem of the Senate, wrote to King and Atkinson:

I am worried by reports I have received that, as a result of an advisory committee review, the University is considering selling to the private marketplace Continuing Education of the Bar (CEB). . . . As you know, CEB has used funds from programs of broad interest to support publications in important but less widely followed areas of law. . . . I have received letters indicating that many attorneys are concerned about the “cherry picking” that occurs with other, private legal publishers. . . . I think, too, that relinquishing the public assets and intellectual property rights owned by CEB and the University raises even more questions. Finally, I am hearing from other interested parties that the review process and methodology of the advisory committee leaves much to be desired.

We didn’t have much luck with Assemblyman Lempert. He indicated that he would be following “this important issue,” but apparently he never got in touch with President Atkinson or Provost King. We did, however, get a bonus to our largely successful day: We spoke with an aide to Assembly Speaker Cruz Bustamante, and his office then got in touch with the chief UC lobbyist to the California legislature to find out what was going on and express concern about CEB.

At our next meeting, we decided to compile a list of ZIP codes for CEB employees so that we could provide them with the names, fax numbers, and e-mail addresses of their state senators and assembly representatives. We were looking forward to a day when we might want to deluge the legislators with faxes and e-mail, and we wanted to be prepared.

Help from the unions. By this time, representatives from two unions (Jennifer Lawrence from UPTE and Judy Shattuck from CUE) had begun to attend our meetings. UPTE was preparing a request to obtain various kinds of information from UCOP, which was submitted to Provost King on December 17. We were told that we should not expect all the submitted questions to be answered, but that the union had the right to raise the issue of whether a sale is legitimate and information relevant to this issue had to be provided by the University.

We ended the year and faced the holidays with a measure of hope.

Support from all over: January

Legislation Committee. At our first meeting in the new year, we discussed the coming turnover of leadership in the state legislature due to the failure of legal challenges to term limits. We knew that Senator Lockyer and Assembly Speaker Bustamante would be out and we didn’t know who would be in, but we were betting on a new Democratic governor, accompanied by a little less enthusiasm in Sacramento toward privatization of anything that could be sold to a for-profit company, free of burdensome rules designed to protect employee rights.

On January 5, we received a very supportive letter written by State Senator Quentin Kopp, in response to a letter from a CEB employee. We had been asked by CEB senior management to leave Senator Kopp off our list of legislators to contact. He was described as a “loose cannon,” difficult to predict, and just as likely to get us in further trouble as to help us. As it turned out, he had fond memories of CEB from his early days as a lawyer, and when he wrote later to President Atkinson, said: “Why, I cut my teeth on [CEB’s] early works, many of which I retain.” In the end, he was one of the legislators who protested the sale of CEB most effectively.

In late January, the committee met with an aide to Assemblywoman Dion Aroner. Aroner’s office is very pro-labor, and asked the committee to draft a letter for Aroner to send to Provost King and President Atkinson.

Publicity Committee. On January 14, the Bay Guardian ran a story about CEB under the headline “UC moves to sell off another piece”:

The University of California is at the privatization game again . . . . A special panel convened by Provost Judson King issued a report in early November urging the University to rid itself of CEB. . . . [The panel] was headed by San Francisco lawyer William Coblentz, who represents many of the city’s biggest corporations and who played a central role [as a member of the UCSF Foundation Board of Directors, which lobbied for the merger] in the UCSF-Stanford merger. . . .

[UC spokesperson Terry Lightfoot] told us he could not comment on charges that the review committee’s work was flawed. Nor would Lightfoot comment on allegations that committee members have a financial stake in the proposed privatization.

We were, of course, very pleased with this story, and decided to move forward quickly with another press release, sent out under our new name:

CEB EMPLOYEES ADVISORY BOARD

LAWYERS, JUDGES ACROSS STATE EXPRESS SUPPORT FOR CEB

January 7, 1998

. . . .Lawyers and judges across California have written to University of California Provost Judson King, expressing support for . . . CEB, as well as concern at the potential loss of the only California-based nonprofit continuing legal education provider. . . . “This will be a great loss to the entire profession, the University and continuing education as a whole,” predicts probate attorney Robert A. Schlesinger of Palm Springs. . . .

According to Alameda County Superior Court Judge Michael E. Ballachey: “The ‘profit’ . . . in the continuing legal education of the lawyers in this State cannot be measured solely in bottom line considerations. The quality of the practice, the protection of consumers of legal services, and, if I might make a personal pitch, the quality of the legal work in our courts, are all affected by the . . . work of CEB.” . . .

Some state legislators have also expressed interest in the future of CEB. The offices of State Assembly member Perata, State Senator Lockyer, and Speaker Bustamente all sent expressions of concern to Provost King . . . .

CEB employees, working with their unions—UPTE, CUE, AFSCME Service, and AFT—have been pressing the University to explain a number of inaccuracies and omissions in the review committee report, on which the recommendation to sell CEB was based, as well as questioning the report’s objectivity (one committee member appeared to be acting virtually as an agent for an interested purchaser, the Practising Law Institute).

Investigative Committee. The investigative committee had begun turning up financial information regarding CEB surpluses and deficits over the years. The original 1947 joint agreement between CEB and the State Bar specified that 75 percent of surpluses would be put into a special fund to cover future deficits and also to be used for special projects approved by the Governing Committee. By early January, the committee had obtained financial data from a variety of sources, such as old reports and employee representative notes, but information for about 10 years of CEB’s 50-year existence (FY 1966-1967 through 1974-1975) was still missing. The committee estimated that if a recalculation were done, totaling surpluses and then deducting deficits over the years, it could reduce the debt to below $6 million. (Unfortunately, we also learned that UCOP did not balance running surpluses against running deficits.)

The information request that went to UCOP from UPTE included a request for the missing records, but the only response thus far to the request had been an acknowledgment that it was received. Because we had no idea when (or whether) UCOP would hand over the data, we decided that the committee should pursue its effort to fill in the missing years from internal sources or the UC microfiche archives. Assuming we would eventually have complete figures, we hoped to produce a report that would eventually prove useful as a bargaining chip.

The committee was also tracking down the costs of the administrative overhead CEB paid to UCOP to see if we could confirm our hunch that the University was overcharging considerably for its services. Apparently, CEB was being charged much more for these services than it would cost to hire outside contractors to do them, and also paying for accounting services, not all of which were being performed.

Good advice from a good lawyer. On January 21, we met with Jane Lawhon, of Eggleston, Seigel & LeWitter. This firm represented UPTE and was experienced in litigating with the University. Lawhon stated that her background was as a union lawyer, focusing on the protection of employee rights. She wanted to make it clear that she might not be able to answer all of our questions, particularly questions concerning the issue of the copyrights. We had submitted a list of potential legal issues:

· The copyright issue. Could we argue that no sale could go forward without a determination of whether intellectual property can be conveyed to a third party? I had discussed this with Frank Zimring, a professor at Boalt Hall, who called it a “novel and troubling legal issue.” He believed that, before the University could sell CEB, it would have to be determined whether intellectual property could be conveyed to a third party, because without that determination the University would not know what was for sale. He further stated that, in almost any circumstances, it would be recommended that a condition for sale should be two bidders and valuation as an ongoing concern, but when assets consisted of intellectual property and “an actively interested purchaser has in effect had representation on the review committee, independent valuation and meaningful competition are probably legal necessities.”

· Misuse of funds. Could we claim that UC wanted to get rid of CEB to avoid embarrassment and exposure re misuse of funds and faulty oversight? Could a sale be delayed pending an investigation of these issues?

· Conflict/bias. Could we claim that the review process was so tainted by bias that no decision should be made on the basis of its recommendations?

· Illegal transfer of public assets. Could we use some of the same grounds used by the unions opposed to the UCSF/Stanford hospital merger? See Lisa Davis, Giving Away the Hospital, S.F. Weekly (September 10, 1997). Was CEB a public asset? Would a sale in fact be an illegal transfer of a public asset?

Concerning the copyright issue, although Lawhon emphasized that copyright was not her area of expertise, she nevertheless had some thoughts. She suggested that we argue that transferring the copyrights would constitute a gift of public funds (as the labor is donated by our contributors in the public interest). The gift of public funds was the same issue raised in the hospital merger case—that such a transfer is a violation of article XVI, §6, of the California Constitution. Lawhon thought that the argument may have been stronger in the hospital case as the hospital was directly funded by the public, but she suggested that CEB’s contributors might be concerned about the use of their donated contributions. This suggested to us that we needed to launch an informational campaign to make certain that they would become concerned if they weren’t already.

Lawhon said the misuse of funds issue is useful primarily in its potential for generating adverse publicity that the University would rather avoid. She said seeking to expose mismanagement is protected under the whistleblower statutes, and we should probably focus specifically on what happened under Dick Lee rather than focusing too much on long-term faulty oversight from UCOP. In other words, we didn’t want it to look like Lee represented just one facet of an endless bleeding of UC funds by CEB.

Concerning the bias issue, Lawhon did not believe that we would get too far attacking members of the review committee directly, as they had stature and would stand by their report. This was a disappointment, but we accepted her judgment.

We then discussed the issues raised by the hospital merger. Lawhon was one of the attorneys involved in this ongoing case, and gave us a brief history. The lawsuit was initially filed under the Public Records Act, before a final decision re privatization of the hospital had been made. The unions were unable to obtain the documents that were requested. The University argued that it was exempt from the disclosure requirements of the Act during the deliberative process (we thought this gave some insight into why we had received a little note re ongoing deliberations from Provost King the previous day).

Lawhon also discussed a recently enacted piece of legislation (SB 1350), sponsored by Assemblyman John Burton, who was shortly to become the Assembly speaker. The bill stated that, although it is “not intended to legitimate transfer of assets,” the laws restricting such transfers don’t apply if competitive advantage is lost by failing to complete the transfer. In other words, UC was able to privatize the hospital by claiming that it could only remain competitive if privatization occurred. The new private entity, among other things, is not subject to the disclosure laws that apply to public entities, is not obliged to treat medical indigents, and was able to free itself from its union contracts. Lawhon stated that the gift of public funds argument in this case seemed “irreducibly correct” to her—but that UC has a lot of power and it was possible that SB 1350 would become the statutory way around the California constitutional prohibition against giving away public funds.

Developing a strategy. The meeting with Lawhon brought forward an issue that we realized we had neglected. We had been very busy with day-to-day details, but hadn’t spent much time on developing an overarching strategy. We had no idea what they were thinking at UCOP and we had no way to find out (in other words, no internal source). What did they want? What did they care about? We knew some things that top UC managers pretended to care about, for example, education, public service, and the welfare of UC employees. But behind that façade? We figured it essentially amounted to preserving their high salaries, bonuses, perks, and corresponding lifestyles. They also wanted to avoid negative publicity, which could cause a lot of problems for them, including being bothered by the Regents. (Consider the immense impact of the series of articles in the San Francisco Chronicle, beginning in 2005, which brought to light a culture of self-indulgence at UCOP and showed, among many other things, that our guesses of 1998 were only too true. The Chronicle investigation was partially responsible for the eventual resignation of UC President Dynes, whose successor, Mark Yudof, is reputed to have a noticeable lack of sympathy for the many UCOP employees who have been or will be laid off under his ongoing “restructuring” of UCOP.)

We needed to create an environment in which the folks who ran the University would feel less comfortable selling CEB than keeping it. I decided, personally, that if it took me a whole day to cause Provost King five minutes of anxiety, it was worth it.

February: Did UCOP blink first?

Following Lawhon’s advice, we decided to back off from the bias issue and focus on the copyright issue, framing it as a question of whether the transfer of CEB copyrights was essentially an illegal transfer of public assets. We needed to alert contributors to the situation, and by mid-February we found a contributor willing to sign a cover letter to colleagues, emphasizing the public service role of CEB and the fact that CEB’s volunteer contributors assign their copyrights to the University with the understanding that the material would be used in the public interest:

Dear Colleague:

I am writing to you because, like you, I have put long hours of volunteer work into CEB publications and programs. Our experience and expertise have been essential to CEB maintaining the high quality of its products, which are in turn essential to the training and education of California’s attorneys.

You may be aware that the University of California is now considering selling CEB to a private provider of continuing legal education. This plan, I believe, will seriously undermine the ability of CEB to provide high quality and affordable legal education to attorneys practicing in California. It will also undermine our volunteer contributions, which were made not to a private corporation planning to profit from them but to a public service organization which for 50 years has been operated jointly by the State Bar and the University of California.

The Joint Agreement between the University and the State Bar states that “all assets, . . . including copyrights, shall be in the name of the Regents of the University of California. . . . In the event of termination, accumulated assets will be retained by the University to be used for the continuing education of California attorneys.” Under this agreement, it is not even clear that CEB can be sold unless there is a determination that the copyrights are transferable to a third party.

The public, the state’s attorneys, CEB’s contributors, and CEB’s staff all stand to lose if the university chooses to sell. Our valuable contributions, made in the public service, will become “assets” of a private entity, and there is little likelihood that the public mission they were created for will be continued. I would like to urge contributors who have volunteered to assist CEB in the public interest to take a stand against the proposed sale. Please sign the enclosed letter and send it to University Provost Judson King. Please help keep CEB publicly owned and operated for the public good.

Along with the cover letter, we would send to contributors a sample letter to Provost King, which we would ask them to sign and mail to King, or write a letter of their own. We would include a stamped envelope addressed to King. In the sample letter, we attempted to combine a tone of polite concern with just the smallest suggestion that messing with copyrights belonging to a bunch of lawyers could eventually prove to be a mistake the University would regret:

Dear Provost King,

As a past—and I hope future—volunteer contributor to CEB, I am disturbed by the prospect that CEB may lose its affiliation with the University. I became a CEB contributor with the understanding that the material I contributed, at considerable cost in time and labor, was to be used in the public interest, not that it would eventually generate revenue for a private publisher. Having assigned the copyrights to the Regents of the University of California with this understanding, I was dismayed to learn that CEB might be sold to a private entity whose commitment to the public interest would certainly be, at best, secondary to its commitment to the bottom line.

It is my conviction that, by offering members of the legal profession publications and programs that set a high standard for comprehensiveness, accuracy, and impartiality, CEB serves the public interest in a way that private organizations have little incentive to match. Clearly, that standard is largely attributable to CEB’s status within the University, and I urge you to recognize CEB’s commitment to public service as a valuable element in the larger service of the public interest to which the University is dedicated.

We planned to have an envelope-stuffing party when everything was ready and, as we considered the addressed, stamped envelopes vital to our effort, we asked employees to contribute as much as possible for postage.

In the time it would take to get all this done, we would work on a press release regarding CEB’s public service role and nonprofit status. We wanted to emphasize that the role of CEB was consistent with the mission of the University (even the review committee agreed with that). The idea was to put CEB in a less defensive position and possibly save some of the not-so-profitable (but nevertheless valuable) services provided by CEB that might otherwise be cut in the coming months.

Meanwhile, Jennifer Lawrence of UPTE received a two-page response from UCOP regarding the union’s information request. The only “information” supplied was (surprise!) a copy of the review committee’s report. The cover letter stated that the information request was premature as “the University is still gathering information and looking at options.” UPTE agreed to review the situation and determine if there were any issues that could be taken to the Public Employee Relations Board. In addition, we decided to get in touch with the reporters and legislators’ aides who had shown interest in CEB and bring them up to date on the information request.

New press release. On February 4, we sent out the new press release, in preparation for the big push on the copyright issue:

. . . CEB is the only nonprofit, California-based provider of continuing legal education, and the legal community fears that sale would seriously undermine the ability of CEB to provide high quality and affordable legal education to attorneys practicing in California. Many CEB contributors also have concerns about continued use by a private entity of their volunteer contributions to CEB publications, which were made on the understanding that they would be used in the public interest.

The public, the state’s attorneys, CEB’s staff, and CEB’s contributors all stand to lose if the university chooses to sell. . . . Consistent with the University’s public responsibilities, CEB products are geared toward educating the profession as a whole, rather than toward maximizing profits. CEB publications approach issues from both sides—for example, CEB’s landlord-tenant book advises attorneys representing both landlords and tenants on approaching an eviction. For-profit publishers must design their products to appeal to whichever side is most likely to boost sales. . . .

In a letter to University Provost C. Judson King, prominent Los Angeles appellate attorney Roy Weatherup noted that “CEB . . . played a major role in creating the literature with respect to California law, and disseminating knowledge of the law to the bench and the bar . . . I would not want to see CEB swallowed up by a multibillion dollar national or international publishing empire.”

The suddenly converging interests of management and staff. Since Black Friday, the relationship between our employees’ committee, representing staff, and CEB senior management had undergone a certain change. CEB’s director and co-director, of course, were expected to publicly take the stand that whatever Provost King decided was the correct thing to do. But they wanted to keep their jobs as much as we did. Within hours of the announcement of the review committee’s recommendation, the co-director (a long-time employee who had risen through the ranks) dropped by my office, asked if we had called the unions yet, and said that if we hadn’t we should do so right away. We were fairly certain that the director, Craig Conly, had been sent from UCOP as a caretaker until CEB was sold. But when it appeared that a sale was no longer certain, his point of view changed.

The director and co-director could not publicly endorse our project with the copyright issue. After we announced our need for postage money, however, they appeared separately, at the doors of two of our committee members, and each handed over $100 in cash.

Stamping and stuffing. Over 30 people showed up to help stamp and stuff envelopes. We mailed the cover letter to over 900 contributors to CEB’s publications and programs. The letter was signed by our volunteer contributor and explained the public service/copyright issue. Along with it, we provided a sample letter to be signed and returned to Provost King. Because we had collected enough money to enclose stamped, addressed return envelopes, we expected a good rate of return.

It wasn’t long before we found out that our efforts had an impact. I was told by Director Conly that “they had gotten a lot of mail over there at UCOP,” and that they were indeed concerned about the trouble that could result if a group of CEB contributors (who also happened to be angry lawyers) decided to pursue the copyright issue.

While all that was going on . . . . We began to realize that CEB might actually not be sold, at least not right away. We then began some discussions based on the assumption that a “saved” CEB would be a changed CEB. On February 10, the probability of “significant reductions in personnel” was mentioned in a supervisors’ meeting, and we asked Jennifer Lawrence and Judy Shattuck, from UPTE and CUE, to give us some information regarding layoff rules (e.g., notice requirements, seniority) for represented employees (layoff rules for nonrepresented employees were available on the UCOP website).

An all-staff meeting was scheduled for February 17. The meeting did not leave us particularly satisfied, and a bigger crowd than usual turned up for our committee meeting the following day, which was briefly attended by the director and co-director. They introduced their “Strategic Plan Highlights,” which had been released that morning, and they at least claimed to be interested in receiving employee response to this document.

Implementation details were omitted from the Strategic Plan Highlights on the ground of their “competitive importance,” but the highlights were so general as to tell us very little that we didn’t already know and that hadn’t already been said. We understood being excluded from certain decision-making processes (e.g., those regarding personnel issues). However, if management intended, for example, to re-examine the way CEB produced its products, employees had specific knowledge of internal processes that management could not afford to ignore.

We wanted to complete the research of the investigative committee into the surplus/deficit issue. At the all-staff meeting, Director Conly had expressed interest in using the results of our research to bargain down the debt. By the end of February, the investigative committee had obtained inclusive financial information back to 1987. The documents provided not just closing numbers (enabling the committee to finish the deficit/surplus report) but also information regarding all accounts that CEB reported to UCOP (consultant information, etc.).

Letter from Assemblywoman Aroner. At the end of a busy month, we received copies of a very strong letter, sent by State Assembly member Dion Aroner to both Provost King and President Atkinson on February 24:

I am writing to express my serious concern over the proposed sale of CEB. I have spoken with employees and received copies of letters from judges, lawyers and other concerned Californians. The information I have received is in direct contrast to the Review Committee’s recommendations . . . .

While I have a general distaste for the privatization of university services, I have two main concerns that I would ask you to address: First of all, as most of these employees are my constituents, I am troubled that the existing 200 employees would lose their jobs as a result of this transaction. The employees . . . question the financial evidence collected as well as the integrity of the decision-making process. They are concerned that the process was merely a formality, and that the recommendation to sell CEB was made at the onset of the review process. Their right to know hinges on their job security, and I urge you to respond to their concerns.

My other concern is that this recommendation does not address the replacement of the quality specialized materials provided by CEB. . . . My own staff has benefited from CEB’s written materials on various areas of public interest law, and would certainly suffer if this information were no longer available. I do not believe for-profit institutions and private practice law firms share the same commitment to public interest law, and I do not think they will fill that void. Please explain to me why that service is not considered to be consistent with the University’s mission.

March: Was UCOP about to announce its decision?

Article in California Lawyer; letter (at last) from Tom Hayden. The March issue of California Lawyer included an article about CEB, subheaded “CEB’s fate is up in the air, with suitors at the ready.” The article provided a mini-version of CEB’s financial history:

Although former director Richard Lee previously spent millions on CD-ROMs and a digital accounting and billing database, the company continues to offer all but a handful of products in one format—old-fashioned paper. Though the CD-ROMs have been successful, the database was an unmitigated disaster. It was written off as a loss on CEB’s balance sheet because of technical glitches and the fact that the system was never able to handle the company’s needs. CEB’s debt to the university doubled during Lee’s tenure, which ended in March 1997. Lee, however, states that investment in information technology remains the only way to revitalize CEB. “My only regret is I didn’t spend more,” he says. . . .

If UC decides to bow out, CEB will likely attract some major suitors. New York-based Practising Law Institute (PLI) has already expressed interest, and legal publishing giants Thomson Corp. and Reed Elsevier (corporate parents, respectively, of West Group and Lexis-Nexis) might also consider offers once UC’s King makes a final announcement on CEB’s fate this spring.

The smaller PLI probably won’t be able to bid as much as the larger publishers. But PLI sources suspect that UC officials might prefer their offer because of the company’s public service charter from the State University of New York. One PLI official also argues privately that a company like West or Lexis might quickly dismantle CEB by plucking out its most profitable products and discarding the rest of the organization. Officials from West and Lexis declined to comment on any possible acquisition.

We had been hoping for some time that Tom Hayden (chair of the senate Committee on Higher Education) would write a letter of support for CEB, and on March 13 he wrote to President Atkinson:

I urge the University to reconsider any planned “privatization” of CEB. I hope the University considers the following in its decision:

· CEB has been serving the University’s mission.

· CEB apparently has a cash inflow of over $23 million a year.

· CEB serves an influential segment of the population and improves delivery of legal services to California’s consumers.

· CEB’s authors are essentially volunteers and are the real copyright holders of CEB’s materials.

I am concerned about whether a sale would be fiscally appropriate or a transfer of public assets.

April: The budget hearings in Sacramento; the layoffs at CEB

Budget time in Sacramento. The long and agonizing annual ritual known as the California budget process was starting to gear up, and the unions representing UC employees were planning to send a delegation, including a member of our group, to attend UC budget hearings. The delegation was hoping to raise a number of issues, including CEB’s situation. The CEB employee took with him a prepared statement that he read into the record. The statement suggested that the legislature might ask the University to forgive CEB’s debt, or to make the debt interest-free, on the ground that CEB enhanced the University’s reputation and contributed to the University’s fulfillment of its public service mission. It also mentioned our belief that a decision on CEB was imminent. After the statement was read, Larry Herschman, Vice President for the Budget at UCOP, informed us that a decision was not imminent. Provost King was in attendance, and was apparently caught by surprise at hearing the CEB issue raised in this context. We were pleased to hear this. As a subtext of our strategy we wanted King to think that he might be confronted by CEB supporters anywhere he might go.

Layoffs. Since the middle of March, it had been clear that layoffs were inevitable. By April, it was widely rumored that a decision from UCOP would be announced within the next couple of weeks. This turned out not to be true, but it seemed credible and we believed it. We thought our time was running out, and we discussed at length how we could most effectively use whatever time remained for a last-minute push. We agreed that pressure from state legislators was our top priority. We had received a copy of Tom Hayden’s letter and, in addition, an aide to Assemblyman Don Perata had promised that he would follow up his previous letter with a phone call.

Our group’s efforts became focused almost exclusively (and in the end not very successfully) on trying to minimize the impact of the coming layoffs. We knew that the University had plenty of personnel rules and procedures, and we also knew that many of them were ignored at the University’s convenience. The University in general was aggressively anti-labor. In personnel matters, its position could be roughly stated as: “We have lots of money and lots of time and an army of lawyers and if you fight us, win or lose, we will make your life miserable for a long long time.”

May: Nineteen employees laid off

Nineteen CEB employees received layoff notices on May 6. The layoffs were noted in the legal press. The San Francisco Reporter published an article by Daniel Terdiman, who apparently had not troubled himself to do any fact-checking. Among other things it stated (without attribution) that “CEB has been a money-losing thorn in UC’s side for years.” Anthony Aarons, in the Los Angeles Daily Journal, wrote a much more objective piece, stating that “CEB officials hope the layoffs will convince University of California officials that the Berkeley-based publisher is willing to take the steps necessary to ensure its financial viability.”

On May 13, we sent out a press release:

A week after 19 employees (roughly 10 percent of the workforce) of Continuing Education of the Bar (CEB), received layoff notices, the remaining staff is struggling to put the pieces back together. The bulk of the layoffs were in the product development department, and affected research attorneys and legal research analysts. According to management the layoffs were “product driven,” in other words made necessary by CEB’s decision to cut back on money-losing products. But CEB employees, about half of whom have union representation, feel that, once again, it is a long history of mismanagement that has lead to rank-and-file employees losing their jobs. . . .

Although the University claims it has been “subsidizing” CEB, here are the facts:

CEB pays the University $700,000 annually to service the debt.

CEB is required by the University to use UC Berkeley payroll services. CEB currently pays UCB $359,000 a year for this “service,” far in excess of its actual value (put another way, CEB pays roughly $150 for each check the payroll system writes).

CEB pays the UC Office of the President $229,000 per year for “administrative overhead,” for which CEB receives no tangible benefit. Although CEB has been trying to get out from under this burden for several years, UC has refused to lower these fees. . . .

Post-layoff questions. On May 11, management called an all-staff meeting. We had prepared some questions, centered around our inability to figure out what sort of planning resulted in the form the layoffs had taken. The legal staff, which generated CEB’s products, had been cut by 40 percent, with only minimal cuts in operations staff. Could anyone tell us why that made sense?

Apparently not. The plan presented by the managers seemed, to put it mildly, lacking in logic. Essentially they changed the names of all the jobs. Most of the work formerly done by the highly paid research attorneys (who became “project managers”) was shifted to the lower-paid legal research analysts (who became “senior writers”). CEB management had long maintained that the legal research analysts did not have the necessary experience or training to do the work of the research attorneys. Now, suddenly, given a new job title but no training, they were told to “figure it out.” Further, the addition of the new project managers created a structure in which at least three tiers of managers stood between every decision and its execution. It is true that CEB saved money, but it took a long long time for the legal staff to figure out how to get the work done with so few people, all of them untrained in their new jobs.

What’s Next? “Pass the Prozac, please.” Most of us were pretty depressed in the wake of the layoffs. The director announced that anyone in need of counseling could contact the psychologist available at UCOP, who could provide a referral for outside therapy. The University was generally willing to pay for a limited number of sessions.

We had lost several members of our group to the layoffs, and struggled to re-orient ourselves and continue with our various projects. We had received some information indicating that a state legislative subcommittee might hold informational hearings on CEB, so it made sense to focus on the legislature.

As hard as it may be today to remember fiscal conditions in 1998, the state legislature was then arguing over how to spend a $1 billion windfall. UPTE’s lobbyist in Sacramento suggested that we might ask the legislature to spend a few million dollars to reduce or even retire CEB’s debt. Not everyone supported this idea. We knew that to make such a suggestion we would have to present very convincing evidence that CEB provided an invaluable public service and was vital to the University’s mission. On the other hand, we couldn’t exactly say “we’re trying as hard as we can to create a brutal corporate culture within the University—please help us.”

Meanwhile, UPTE representatives were asking for a meeting with Provost King, in order to pursue the union’s earlier request for information. If the meeting failed to produce the requested financial documents, we had been told that an aide to John Burton, speaker pro tem of the senate, had expressed a willingness to make the request through Senator Burton’s office.

June: Enter Senator Kopp

In mid-June, we received a copy of a letter sent by State Senator Quentin Kopp to President Atkinson expressing concern about a potential sale of CEB:

I am in receipt of constituent letters expressing concern regarding the rumored sale of the Continuing Education [of the] Bar by the University of California. As the only non-profit provider of continuing legal education in California, this naturally causes alarm in many users of the CEB service. Please advise me regarding the status of any proposal to divest the University of the CEB program and any related educational service for attorneys the University is considering.

On June 24, Provost King sent a lengthy response to Senator Kopp, who was kind enough to send us a copy. King assured Kopp that “we have not made a final decision about the future of CEB,” that he and President Atkinson were aware of widespread support for CEB, and that layoffs had occurred as a result of cutting publications and programs “that were not meeting expectations” and in order to avoid increasing CEB’s debt. Although King’s letter contained no new information, it certainly made clear UCOP’s sensitivity to legislative pressure.

CEB employees also received a letter from Provost King, which appeared to be encouraging, especially his statements that: (1) UCOP wanted to allow time for changes at CEB to take effect; and (2) UCOP was looking into the issue of the administrative overhead CEB was required to pay to UC Berkeley and UCOP.

We agreed that, as far as our situation vis-à-vis UCOP was concerned, there was not much we could do at that point other than keeping pressure on the legislators. We encouraged employees, especially those who had not yet faxed or e-mailed some legislators, to stop waiting and do it. We were prepared to provide anyone who asked the names, fax numbers, and e-mail addresses of their representatives. And if they didn’t know what to say, we could provide that as well.

July: Senator Kopp makes it clear that he’s serious, and we’re a little surprised

We sent some material to the six legislators who had actively supported CEB in recent months. We weren’t expecting them to pay much attention until the budget process was over and the state figured out what to do with the megabucks then at its disposal. Once a budget had passed the legislature would recess briefly until August, when we would try to get back in touch.

In response to a suggestion from an UPTE representative, we also considered sending some material to the few Regents known to be against privatization. This seemed like a risky strategy, however, as UCOP didn’t seem to be paying much attention to CEB at the time, and most of us regarded going to the Regents as equivalent to poking a stick at a bunch of rattlesnakes.

In mid-July, we received a copy of a letter written by Senator Kopp, as follows:

Honorable Ward Connerly, Member
The Regents of the University of California
2215 21st Street
Sacramento, CA 95818

Dear Ward:

I am increasingly disturbed by the evident financial problems of the Continuing Education of the Bar program, several of which have apparently been caused by the administration of the University of California.

I enclose herewith a letter sent me by facsimile on July 10, 1998 from the CEB Employees Advisory Board. Granted that the writers possess a financial interest in the future of their employer, CEB, the letter raises points which disturb me very much. I’m particularly struck by the analogy to the David Pierpont Gardner* situation of five years ago in the information concerning a former CEB director, Mr. Richard Lee, who was allegedly allowed to retire in March 1997 with a generous pension benefit plan after presiding during a period in which the CEB debt to the University of California assertedly increased by twice the amount of pre-existing debt. I am also curious about the allegation concerning payment of $229,000 per year to the office of the President of the University of California for “administrative overhead,” for which CEB assertedly receives no tangible benefit.

I write to request that the matter be investigated by your colleagues and you, independently of the president’s office. In the alternative, I shall seek an oversight hearing by the Senate Select Committee on Higher Education.

Thank you for your time and attention and please advise me accordingly.

Sincerely yours,

Quentin L. Kopp

cc: Senator Tom Hayden

Interested Parties

*Gardner, a former University president, received a seven-figure retirement package that was greeted with outrage by much of the University community.

The letter arrived in my CEB mailbox in the middle of a quiet afternoon. My first reaction was panic, something along the lines of “Oh my God, now we’re in bed with Ward Connerly, and what the hell are we going to do about that?” Why couldn’t Senator Kopp have written to some other Regent? Why did he have to pick the Regent determined to kill affirmative action in California, if not the whole country?

I raced all over CEB, trying to find even one member of our group with whom to speculate, but everyone appeared to be in a meeting or otherwise unavailable. Eventually I found Mary Gerber, a long-tern CEB employee and lawyer, and we concluded that, on the whole, it wasn’t a bad thing. Senator Kopp was, after all, bringing our case before the Regents, and demanding an investigation either by the Regents themselves or by the Senate Committee on Higher Education (chaired by Tom Hayden). Surely, the prospect of such an investigation would not be welcomed by President Atkinson and Provost King, and the best way to avoid an investigation would be to keep CEB within the University. Therefore, good news for us.

We wrote a thank you note to Senator Kopp, including a copy of an article about CEB that appeared in the Los Angeles Daily Journal on July 20. The article quoted Barbara Gerber, special assistant to Provost King (and not related to Mary Gerber), as acknowledging that the charges paid by CEB to the Berkeley campus “don’t bear any relationship to the actual amount of the work.”

August/September: The legislature in recess, we wait for the long hot summer to end

The state budget impasse had been resolved, we were hoping to find it a little easier to get attention from the legislators (although we were aware that the ones who were going out on term limits might not care and the ones who were running for re-election might have other things to think about).

On August 4, Assemblyman Don Perata (who was running for the State Senate), wrote another strong letter in support of CEB to Atkinson and King.

I am writing to express my ongoing concern and support for Continuing Education of the Bar (CEB). In view of the uncertain future of the State Bar [see Note below], CEB’s role as the only nonprofit provider of continuing legal education in California has become increasingly important. If the University eventually divests itself of CEB, the effects on the legal community, and ultimately on the consumer of legal services, could be disastrous.

In a letter to CEB staff dated June 12, 1998, Provost King stated: “In my office, we are looking for ways that we might appropriately reduce the amount of overhead charged by the Berkeley campus and the Office of the President.” In light of the facts noted below, I request that the University expedite the process of reviewing and reducing these charges, and that the amount of CEB’s debt to the University be audited and reduced accordingly.

Note: At this time, Governor Wilson, along with Republican legislators, unhappy with certain positions taken by the State Bar, were threatening to cut its funding.

The “facts noted below” included: (1) the excessive amount CEB paid the Berkeley campus for running the payroll, (2) the excessive amount CEB paid UCOP for “administrative overhead,” (3) the fact that, although UCOP claimed to be “subsidizing” CEB, the University was collecting roughly $700,000 per year from CEB for debt service, and (4) the fact that “a former director of CEB, Richard Lee, was virtually given a blank check by your office, . . . resulting in a doubling of CEB’s debt.”

Encouraged by Assemblyman Perata’s letter, I wrote a note to one of his aides, Lindy Graham, who I had never met, but with whom I had communicated frequently by phone and e-mail over the past few months. I wondered if she knew about Senator Kopp’s letter to Ward Connerly, and if she might have any knowledge about what we might expect when the legislature re-convened.

I don’t know if you are aware of the correspondence that has been taking place between Senator Kopp and Ward Connerly concerning CEB. Senator Kopp, who has strongly supported CEB, asked Connerly to set in motion an investigation by the Regents into some issues regarding oversight of CEB by the UC Office of the President. Connerly appears to have no interest in pursuing an investigation (which is OK with us) but Kopp had said that in the alternative he would request an investigation by the Senate Select Committee on Higher Education (on which he sits). We would like to see this investigation go forward, and hope Senator Kopp is willing to make this request before he leaves office. If your assemblyman is able to support a request for a legislative investigation in any way, we would of course be grateful.

Lindy’s advice was to wait as patiently as possible until after the November election, and when things had settled down she would help us decide on our next moves.

Guess what? We needed all those people to get the work done. By mid-August, a number of the attorneys laid off in May had been rehired, although some were offered only non-career positions (i.e., as casual employees or contract workers). Every member of the legal research staff was back (although only two as career employees) or had been offered work but turned it down. In addition, CEB was posting job openings in the legal press. In spite of the temptation to praise management for its foresight and excellent planning, we did our best to keep quiet.

October–December: We end the year with a really nice Christmas present

October passed in anticipation of the coming election, but with no news of particular interest to CEB. We talked politics a lot, spent time on internal personnel issues, and wondered about CEB’s financial status. We had a lot of questions, but management appeared to have once again shut down the lines of communication. Director Conly at one time promised to hold all-staff meetings regularly, but we hadn’t had one for a number of months. We didn’t know where CEB stood re its debt to the University. Mostly, we waited.

The election gave California a Democratic governor (the rather disappointing Gray Davis) and saw Don Perata advance to the state Senate. On November 11, I got an e-mail from Lindy Graham, who said “Get your stuff together so you will be ready to rock ’n’ roll” (i.e., “be ready when I call you, these people don’t have a lot of time.” She said that there would be some changes in the make-up of the Committee on Higher Education, and recommended that, once we were certain of the new membership, we meet with their support staff “to explain what is going on.” Even though she was working on health issues and transportation, she promised to “squeeze in CEB.”

This promising news was followed by another lull. Thanksgiving came and went. We were increasingly (like everyone else) transfixed by the spectacle in Washington of a procession of apparently crazed Republican congressman expressing their horror over oral sex with the most exaggerated eloquence (“the flames of self-centered morality are licking at the very foundation of our society”).

I left town for ten days in December and returned the day of the CEB Christmas party. I had a headache and almost decided to skip it, but I went. The party was about half over when Director Conly said he wanted to read something to us. It was a letter from Provost King, stating in the second sentence that “we have concluded that CEB should continue as an activity of the University . . . .” It went on at some length about “measures of success,” “financial oversight,” and “continued progress on the challenges ahead.” We figured that the subtext was “you cause a lot of trouble, but it’s nothing compared to the trouble an investigation by the Senate Committee on Higher Education might cause.” In other words, we won.

But how could that have happened, when everyone thought we would lose? The CEB Employees Advisory Board had very limited resources. But we were motivated, and we knew that just a few people, making full use of e-mail and fax machines, can appear to be a larger and more influential group than they are in fact. On Black Friday, the prevailing opinion was that, if UC decided to sell CEB, we were powerless and had no choice but to accept the decision. But we got organized, and surprised even ourselves by showing that the people who hold the most power don’t always win.