New Discipline Standards Appear, Startling Nearly Everybody

On May 7, the State Bar’s Regulation and Discipline Committee (RAND) approved the first substantive revision to the Standards for Attorney Sanctions for Professional Misconduct (SASPM, otherwise known as Title IV of the State Bar Rules of Procedure) since 1986. A day later, the full Board of Trustees voted to approve the new SASPM, ushering in a new era of greater public protection. Or not.

“Huh?”, you might say.  SASPM?  What the hell are you talking about?

If you did say “huh”, you are not alone, for knowledge of the SASPM is largely confined to the practitioners of attorney discipline, prosecution and defense, and the Courts in which they appear, State Bar Court and the California Supreme Court.

Outsiders might encounter the SASPM through the occasional Supreme Court opinion (last discussed in In Re Silverton (2005) 36 Cal.4th 81) or in most Review Dept. opinions, but there is scant evidence that anyone outside really cares.  Literally, scant evidence.   Despite being the first substantive revision since 1986, it garnered only a handful of public comments, even with two public comment periods.  Not even lawyers within whose wheelhouse the Standards reside worked up much interest in saying anything about the new and presumably improved SASPM.  Only the Chief Trial Counsel expressed support for the new SASPM.

The project got off to a grandiose start with a press release by the State Bar in on January 29, 2014, and two months later it announced that the initial meeting of the Discipline Standards Task Force would be on May 12, 2014.  The initial meeting featured opening remarks by the then Executive Director, who reminded everyone about the open meeting laws. The then Assistant Executive Director (now acting Executive Director) also spoke and provided the Task Force members with a broad overview of the purposes of attorney discipline, including a discussion of a law review article by the late Prof. Fred Zacarias entitled, forthrightly, The Purposes of Discipline.  Among the ideas advanced in the article is that deterrence is a permissible purpose of professional discipline and that deterrence of other lawyers’ misconduct would justify a harsher level of discipline than would otherwise by the traditional analysis of discipline as an individualized inquiry into the fitness of that particular practitioner to practice law. (See Zacharias, at pages 65-66.)

Dr. Stangelove reminded us that deterrence only works if the deterrent is known to the actor.   While lawyers do read the discipline decisions, almost no one outside the arcane little world of discipline is aware of the SASPM.  Even if you buy the deterrence theory, this is not the vehicle for it.

Dr Strangelove

The bigger problem is that emphasizing deterrence would be departure from California Supreme Court’s long standing approach to discipline as an inquiry into the fitness of the practitioner. As succinctly stated in Read v. State Bar (1991) 53 Cal.3d 394, 422 : “In arriving at an appropriate discipline, we balance all relevant factors, including mitigating circumstances, on a case-by-case basis.”

At that first meeting, the Discipline Standards Task Force declined to embrace this path to punishment, correctly concluding that it was circumscribed by the Supreme Court’s case law and, to a much lesser degree, by the statutory mandates of the Business and Profession Code.  But the idea that the SASPM serves a deterrent function survived in the Task Force’s decision that there should be a separate Standard for each type of violation.

Thus, the Task Force adopted new Standard 2.5, which applies to violations of Rule of Professional Conduct 3-310. (“Avoiding the Representation of Adverse Interests”). Presently, such violations are governed by the “catch all” provisions of soon to be former Standard 2.15, “Violation of Rules In General”, which unhelpfully provides a range of discipline from reproval to three years of actual suspension. New Standard 2.5 very helpfully specifies that a violation of Rule 3-310(C) or (E) will result in actual suspension if informed written consent is not obtained and there is actual harm to the client, and, in a successive representation conflict, when the attorney fails to protect material confidential information.

The problem with Standard 2.5 is twofold.  First, as pointed out by Task Force member Steven Lewis, there is no meaningful case law supporting such a level of discipline for a “stand alone” violation of the rule.  Second, and this is related to the first, violations of Rule 3-310 are seldom prosecuted by the State Bar.  Why?  These violations are typically addressed through motions to disqualify counsel.  The standards for a disqualification motion are different than for a discipline proceeding.  And this type of misconduct is often committed by larger law firms who are not typically targeted as “public protection” problems.

High profile disqualification motions, some involving large law firms, appear to be increasing and this was perceived by the Task Force Chair as a problem that should be addressed.  As well it may be, but it has not, heretofore, been a problem that the California Supreme Court or the State Bar has recognized as something to be addressed by the discipline system.  So deterrence as a public policy choice creeps in, subtly or perhaps not subtly, resulting in a Standard that seems a lot more like a statement of what we want to the law to be rather than a guideline telling us what the law is.  Only the Supeme Court, and Review Dept., under the guidance of the Supreme Court, can make law or set policy in this area.

Not everyone is offended by this.  The Chief Trial Counsel’s only problem with Standard 2.5 is that it did not go far enough, leaving out the notice requirements of Rule 3-310(B) and everyone’s favorite trap for the unwary, Rule 3-310(F).  The Office of Chief Trial Counsel has long sought to place the SASPM on the same lofty plateau as other substantive discipline law, in the name of consistency and, for goodness’ sake, just to make the whole process of figuring out the appropriate discipline simple. Why wade through all that nasty old case law when SASPM has the answer?

No new era of public protection will be ushered in by the new and improved SASPM. Even the press announcement of their approval carefully described them as guidelines. Guidelines do not a revolution make, but it will be interesting to see if the Task Force’s foray into discipline policymaking results in more standalone prosecutions of Rule 3-310.  If someone runs a flag up the flagpole, are we not supposed to salute it?  And it will be interesting to see, if and when the California Supreme Court gets its shot at Standard 2.5, whether it decries it as “not faithful” to its teachings, as it did with old Standard 2.2(a) in Edwards v. State Bar (1990) 52 Cal.3d 28.

In the meantime, those of us in the arcane world of attorney discipline can ponder the place SASPM holds in our universe.  Everyone else can relax.

 

Carrots, Not Sticks: Building an Attorney Integrity System

donkey-and-carrot

 

Throughout its existence attorney discipline has been a punitive system.   While couched in the rubric of public protection, attorney discipline systems have always operated by imposing sanctions for proven misconduct, sanctions that hurt, including the ultimate sanction, removal from the profession.  Older cases refer to attorney discipline as “quasi criminal”  (see In Re Ruffalo (1968) 390 U.S. 544, 551.)  While attorney discipline almost always contains educational and remedial elements these days, it is still a fire department that almost always arrives after the house has burned down.

But what is we could prevent those fires before they breakout?  Prof. Susan Fortney writes of the recent approaches that have been adopted in Australia in her paper Promoting Public Protection through an “Attorney Integrity” System: Lessons from the Australian Experience with Proactive Regulation of Lawyers in the most recent issue of The Professional Lawyer, the scholarly publication of the ABA Center for Professional Responsibility.

As part of the reforms that legalized the alternative business structures the provide for some degree of non-attorney ownership of legal service providers, regulators in Australia required those entities to engage in an active management approach; in Prof. Fortney’s words:

To address questions related to the effect of non-lawyer ownership and limited liability, the statute imposes a number of management safeguards. First, the incorporated legal practice (ILP) must appoint a legal practitioner director to be generally responsible for the management of legal services provided by the firm.  Second, the statute provides that the legal practitioner director must ensure that “appropriate management systems” are implemented and maintained to enable the provision of legal services in accordance with obligations imposed by law.  The failure to implement and maintain appropriate management systems may constitute professional misconduct and can result in legal practitioner directors losing their practicing certificates and liquidation of the legal practice.  Regardless of whether there are any non-lawyer owners, all incorporated legal practices must meet these requirements.

Ethics lawyers have long preached pro-active risk management approaches to lawyers to help them understand how to stay out of trouble.  Australia has gone a significant step beyond, requiring that lawyers and law firms designate a responsible risk manager, requiring that risk management assessment take place and requiring that appropriate risk management be put in place.  Moreover, the regulating authority helps practitioners and law firms to become compliant.

Punitive discipline would, of course, still be available to address misconduct like dishonesty but moving toward a Attorney Integrity System approach will discourage those types of practitioners as well.  In my experience, they don’t have a keen interest in practice management.  Those seeking an easy graft won’t go through the effort.   Similarly, those with psychological or health problems would probably have trouble maintaining those certifications before they could harm clients;  moreover, moving away from a punishment based system would encourage them to seek help early.

The State Bar of California is taking its first small steps in the direction of creating an Attorney Integrity System with its project to create a voluntary online Client Trust Account survey of members, an instrument designed to both gather information for the State Bar and to educate survey takers about client trust accounts.   The Board of Trustees considered the expensive approach of a creating a full bore client trust account auditing programs along the lines of those in several states, all much smaller than California but chose to follow the educational path as an inexpensive way to address one of biggest causes of client trust account misconduct, sheer ignorance of the requirements.

Implementing an Attorney Integrity System in the Bear Republic won’t be cheap but the cost of discipline system is already amazingly expensive, more than  $64 million in 2014, according a year to the State Bar’s Annual Discipline Report at page 56.  And there is every prospect that it will be more effective at protecting the public, promoting confidence in the legal system, and even helping lawyers be better, happier, more successful practitioners.   While Australia’s reforms occurred in the course of their adoption of alternative business structures, those aren’t necessary to begin moving toward an Attorney Integrity System, as Prof. Fortney observes.  It is a positive step that regulators and practitioners can begin moving toward now.

 

donkey gets carrot

The Man With the Heavy Heart

Little has been heard from Senator Joe Dunn, the former Executive Director of the State Bar of California since he was fired and filed his wrongful termination lawsuit.   That changed this week with the filing of his first amended complaint.  It is fascinating document, both for the insight it gives into the man himself and for the small window it opens into the “tripartite relationship” between the State Bar, the Legislature and the Supreme Court.

First of all, Senator Joseph Dunn’s name is actually Senator Joseph Dunn.  I was always under the impression that use of these titles, especially after leaving office, was a matter of respect, what is called an honorific,  but apparently it has become part of his actual name, to judge from the caption.

Second, Senator (if I can call him by his first name) is sad.  In paragraph 10, he tells us that he has filed his first amended complaint “with a continued heavy heart.”   It is easy to see why.  Senator has been the victim of a cabal apparently orchestrated by the California Supreme Court to engineer his removal as ED (paragraph 4.)   That would make anyone sad.  Moreover, other members of the cabal have moved to retaliate against other State Bar employees to cover up the misconduct Senator blew the whistle on (alleged manipulation of backlog numbers), leaked a report that said bad things about Senator, and blocked the sale of the State Bar’s San Francisco building, a cause that is very dear to Senator’s heavy, heavy heart because he wants to do good things with all those millions.

 

Sad

Sad

Typically, we move from the sublime to the ridiculous, but here we will reverse order and discuss the really interesting issue underlying all this khazeray.   This is about much more than personalities.  It goes right to heart of the State Bar’s peculiar place serving two different masters (see Obrien v. Jones.)  Senator got his job because of his Sacramento political connections.  In the words of former State Bar President Bill Hebert, he was the “right man at the right time” to fix the State Bar’s poor relationship with the Legislature, in the wake of the State Auditor’s negative 2009 report on State Bar transparency, Gov. Schwarzenegger’s veto of the dues bill, the Governance Crisis (caps seem justified)   And so he did.

But the State Bar serves another master, one located in San Francisco, not Sacramento.  If the Senator is correct, someone there decided he was the wrong man at the wrong time..  Article VI, section 6  of the California Constitution, enacted by voter initiative, makes the Legislatively created State Bar a part of the judicial branch, reflecting the long standing relationship of State Bar as the administrative arm of the California Supreme Court (see e.g. In Re Attorney Discipline System, where the Court decided it could independently assess attorneys a fee to run the discipline system without Legislative involvement.)  While the levers of control that the Legislature exercises over the State Bar are relatively transparent,  the Supreme Court’s are virtually opaque. No one really knows what the Supreme Court says to the State Bar and who says it beyond everyone’s understanding that this is in Beth Jay’s wheelhouse.  Senator’s allegation that Beth Jay has been deeply involved in State Bar affairs in her capacity as principal attorney to the Chief Justice (paragraph 4) is correct but his legal conclusion this “interference” is “without constitutional, statutory or other authority”  is hard to square with Article VI, section 6, and Business and Professions Code section 6100 where the Legislature, at least obliquely, acknowledges the Supreme Court’s authority in this matter.

If true, what was the source of the Supreme Court’s disaffection with Senator?  The idea of moving the State Bar’s headquarters from San Francisco to Sacramento  seems especially important to him.  The consequences of such a move, including the probability of many  staff leaving the State Bar, creating an opportunity to recruit new staff under the Executive Director’s leadership.  It would also amount to literally moving the State Bar from the Supreme Court’s orbit to the Legislature’s turf.  The Supreme Court was not in favor of the scheme.  The California Supreme Court may also have been less than happy with Senator’s inclination to move discipline in a more punitive direction.

We can’t fully understand Senator’s pain.  As Pete Townshend reminded us, no one knows what its like to be the sad man behind blue eyes.

But if it is any consolation to Senator, he already has a place to land if his lawsuit doesn’t work out,  returning to the practice of law with his fellow Senators at The Senators Firm.   While it must be confusing to have several law partners with the same name, the Senators have the marketing advantage of invoking their government services in their very name, despite  Rule of Professional Conduct 1-400, Standard 6.  Senator Dunn is already touted on the website as “recognized as one of the country’s preeminent complex personal injury and consumer rights lawyers” before he dedicated himself to public service.   If Standard 6 gives them any trouble, they can afford to hire a good discipline defense lawyer and argue that it the discipline investigation was orchestrated by the cabal.

State Bar Attempts to Exorcise Transparency Ghost

Boo

A specter has haunted the State Bar of California for thirty years.   I know him well.  He gave me my first job at the State Bar.   He has gone by many names but you might know him by a more modern handle, Transparency.

He came from the TNT room.  The TNT Room was the file room at the San Francisco office, so-called because it was so full of files that it was ready to explode.  During the mid 1980’s the State Bar had an investigation backlog of more than 4,000 files.  The TNT Room eventually made the news about thirty years ago and that press coverage launched a major reconstruction of the discipline machinery under the direction of Prof. Robert Fellmeth,

A small piece of the new machinery was a new entity called the Complainants Grievance Panel (former Bus. & Prof. Code section 6086.11.)  The Panel consisted of seven volunteers, four attorneys and three non-attorneys.  Their mission was to review closed investigations on request of a complainant, to randomly audit a sample of closed investigations and issue an annual report assessing the operations of the Office of Chief Trial Counsel (OCTC.)  The purpose was to keep OCTC honest as it went about clearing its massive investigation backlog,  making sure the investigation process was not given short shrift and to illuminate problems with the process, i.e, transparency.  A staff support unit was created within State Bar, burdened with the title Administrative Compliance Unit.  I went to work for it in March 1989. I helped draft three years of Panel reports that are now lost to history, along with untold numbers of other reports.  We documented serious deficiencies in the investigation processes of the State Bar that helped pave the way for the Alarcon Commission (1994) to recommend important changes to the operation of the State Bar.

The State Bar has been the target of a large numbers of studies through the years, yet can never rid itself of the Transparency Ghost.  No matter how closely it is studied, its core remains impenetrable.  Some of those studies have led in circles;  some of the recommendations of the Alarcon Commission were meant to fix recommendations of the Kroker Commission ten years prior.  The guiding principle seems to be if we study this institution closely enough we will eventually understand it and maybe eventually trust it.

But we always seem to meet with some new revelation that tells us we don’t really know what is going on.   Continue reading