Supreme Court Steps From The Shadows in Battle Over the State Bar

Cal Supreme Court

Something truly unprecedented is going on now in Sacramento — a bare knuckle brawl over the future of the State Bar between the California Supreme Court, and its supporters in the State Senate, and the State Assembly.  The battleground for the brawl is the annual bill authorizing the State Bar to assess its operating fees from the members of the State Bar — this year it is AB 2878.  Originally rejected by Assembly by a vote of 50-10, it was amended to provide for a public member majority Board of Trustees and the appointment of a Commission to look yet again at the question,  So amended, it was reported out of the Assembly on a vote of 79 to 0.

Only to meet a buzzsaw in State Senate, in the person of Senator Hannah Beth-Jackson, who stripped out these two key provisions from AB 2878.  Just to make things more confusing, the State Assembly then conjured up a competing bill from the shell of SB 846, which also dropped the provision for a majority public member Board and the idea of new governance commission. As widely reported, these were provisions opposed by the Chief Justice (and presumably) the Court as a whole.

All this remarkable enough.  But extraordinary in my view is very public role played by the Chief Justice in speaking out against AB 2878.  The California Supreme Court is highly involved in the discipline system;  the State Bar is, after all, its administrative arm for discipline and admissions.  In the past, it has always worked behind the curtain, obscuring its role, unbound, as a co-equal branch of government, to the open meeting laws, the Legislature has decreed for itself, and its creatures, most recently he Legislatively-created State Bar of California.  Now, in the person of our formidable Chief Justice Tani Cantil Sakauye, the Supreme Court is stepping up to battle in a way so public as to garner a very grateful “thank you” from the State Bar’s Executive Director Elizabeth Parker.

How will the Assembly react to SB 846?  Plans are underway for the real possibility that there will be no dues bill this year and the Supreme Court will have to order members of the State Bar to pay a fee to the State Bar to continue its operations, just as it did in 1998 with its decision in In Re Attorney Discipline System.  In 1998, the Court dithered even after State Bar staff was laid off and even after the Legislature adjourned without passing a dues bill at the end of August 1998.  That will not happen this time.  And in asserting its independence from at least one house of the Legislature, what other avenues might the Court explore with its plenary power in this area?

TaniCantilSakauye

Cantil- Sakauye

Quoting Senator Joe Dunn is probably not the most politic of moves, but right now, it looks like we really do have a new sheriff in town:  our Chief Justice.

GITPITF Confronts The Gordian Knot and Flinches

Alexander cuts the Gordian Knot, by Jean-Simon Berthélemy (1743–1811)

Alexander cuts the Gordian Knot, by Jean-Simon Berthélemy (1743–1811)

The State Bar’s Governance in the Public Interest Task Force (GITPITF) has issued its final report on the state of the State Bar.

Two reports actually, a majority report and minority report.  And they could not be more different.

The majority report is an encyclopedic survey of State Bar history and culture that contains enough State Bar arcana to satisfy even the most inside of  insiders.  The overall effect is to confirm that the State Bar is a complicated mess of separate programs, separate funding mechanisms, different management and support structures and a governing structure that is not up to managing this tangled mess.

The  majority report asks the  right question (at page 6):  “what explains the inability over many years to resolve clearly identified on-going concerns? ”  But it doesn’t really try to answer it beyond outlining the dimensions of this Gordian knot. The majority (and the minority) recognize that the real change at the State Bar involves political determinations that can only be made by the Legislature and the Supreme Court.  There is an useful compendium of issues that need to be considered but no final recommendations beyond some fairly incremental and revealing changes.

The minority report  is something else again, a cri de cœur that seeks the very heart of the problem in the fundemental conflict between the roles of the State Bar as trade association and  as government regulator.  This conflict can only be solved by dis-unification.  The minority advocates for this solution and doing it in blunt and emotional terms.

In part that might be because  the majority are,  in their dry way, advocating against disunification, even as they acknowledge (at page 25) that “a gowing body of thought posits that coupling regulatory and trade associational functions in one organization weakens both and serves neither the public nor the legal profession well.” The majority then spends a couple pages throwing as much cold  water as it can on the dis-unification concept before concluding that the “new approaches now underway a chance to bear fruit first before deciding whether to embark on the large and uncertain change that de-unification would represent”  at the bottom of page  27.

Of course, it is appropriate to look at the downside of disunification.  But the cold water that the majority seeks to use to douse disunification fever is cool at best.  The majority seems to imply that the Calfornia bar’s large size and uniquely complicated structure make disunification problematical.  In fact, it is that uniquely complicated structure,  the result of decades of “missions creep” as various “stakeholders” grafted their causes on to the State Bar (see page 15) that compels disunification.   Indeed, the majority itself makes the case for disunification:

Successful mission execution depends on clarity of structure, function and governance; unless these three are well-aligned, routine business operations, let alone organizational reform efforts, are difficult if not impossible to achieve. Historically the State Bar has been a blend of two very different business models: an independent government regulatory body and a professional membership association. There is an inherent tension manifested in this duality which can be seen in a number of ways.

The measures proposed by the majority acknowledge this truth but back away from the obvious implication that, in light of decades of  dysfunction and decades of  discussion of that dysfunction, only disunification can bring about necessary clarity to this mess.

One recommendation adopted with only a dissenting vote is for the appointment of limited term discipline monitor.  This concept was tried before when Prof. Robert Fellmeth of  the Center for Public Interest Law (CPIL) served the Legislatively appointed discipline monitor between 1987 and 1993.  Prof. Fellmeth’s job was both to make recommendations and monitor the  implementation of those recommendations.  It is unclear from the majority’s recommendation exactly how broad the powers of this monitor would be.   The recommendation itself is a frank acknowledgement of the lack of trust the Legislature and others have in both the State Bar’s management of the discipline system and the information reported by the State Bar about the discipline system.  Presumbly, the discipline monitor would verify that the “new approaches” are working.

The other big change is yet another governance change to the Board of Trustees to  eliminate Trustees elected by the members of the  State Bar, and move to a Board  entirely appointed by the three branches of  government.  The hope  is that eliminating elections will finalize send the message that this  is not a “bar association” but a government agency and bolster public  confidence in the State Bar.  It is step long overdue.  Bar “democracy” has long been a joke anyway  because of low turnout in Trustee elections,  with the concommitant problem that small factions of local lawyers, like the notorious “Breakfast Club” more or less control who gets elected.  As inside  the State Bar as the majority report is,  the minority report goes even more inside in  decrying the baleful influence of “the Los Angeles delegation” (Minority report at page 11.)   Appointed members and other governance changes are intended to remove State Bar  politics from the Trustees agenda.

The concept of a public member majority, as proposed in the Assembly version of the fee bill currently stewing in the Senate, is no where in sight.  And given the Supreme Court’ recently announced opposition to  a majority public member board, that certainly seems politic.

Beyond this we have common sense management reforms (pages 28-30) and the perennial call for better Trustee orientation and training.  The majority understand (at page 29) that “here is a need for the Bar to operate as a coherent, consistent organization” but they place their hope for that in incremental solutions.

The majority is content to  continue to pull at the threads of the Gordian knot in the hopes that we can make it somewhat less confused and more focused.   The minority emotionally advocates striking directly at the root of the problem.  The two reports roughly mirror the current discussion that must be going on even now among the Assembly, the Senate, the Supreme Court and the Governor.   My sympathies are with the minority;  nothing less than major surgery is going to create the “coherent consistent organization” capable of discharging the public protection mission of the discipline system to the degree the citizens of California deserve.

But just as importantly, nothing but major surgery to separate these conjoined twins will free California lawyers to advocate in their own interest.  This important point isn’t addressed by the majority, except peripherally in referencing the idea that a unified bar is necessary to keep California lawyers interested in providing legal services to the disadvantaged.

GITPITF’s final gasp is comes as we  have reached the endpoint of State Bar’s naval gazing, that now the battle has shifted the other significant axis of dysfunction, divided responsibility of lawyer regulation, the conflict between the California Supreme Court and the Legislature, a battle that has  now come out into the open.  Important political decisions have to be made about who is in control.  There is no indication that those  decisions will be made anytime soon.

 

 

Remembering Michael Wine

The small world of California discipline lost one of its most liked and respected members with the untimely death of Michael Wine this last weekend.Scan160607112915Many of us met Michael when he served as a judge pro tem of the State Bar Court in the early 1990s.  Michael left the Court and became a discipline defense lawyer and a founding member of the Association of Discipline Defense Counsel.  Later, his leadership skills would lead him to become President of that organization. He was smart,  funny and worked hard for his clients.  Michael got along with everybody, even Deputy Trial Counsel.  A graduate of UCLA Law School, he was a lifelong Bruin and attended UCLA sporting events with Bruins from both sides of the discipline world.   He was also a truly devoted to his home team, the LA Dodgers.  Michael was my colleague and my friend, and I (and many others) will miss him dearly.

Supreme Court Rides to State Bar’s Rescue — Again

The axis of  dysfunction that  had received the most attention in the recent discussion of The State Bar of California and its future is the “Regulator v. Trade Association” axis.

But there is another axis of dysfunction the State Bar spins upon.  That one got its turn in the spotlight this week.  It’s the “Legislature v. Supreme Court” axis.  Unlike the lawyer regulation planets in other solar systems, ours follows a tortured  orbit between the gravitational fields of double star, the Legislature and the high Court.   That orbit has never been as tortured as it was this week.

On Tuesday the Assembly overwhelmingly rejected an amended version of the State Bar fee  bill AB 2878 by a vote  of 88 to  7.  That bill would have made only modest changes in the governing structure of the Board of Trustees by eliminating the six Trustee positions that are currently elected by the lawyers of California.  This weak bill  came after the Chief Justice publicly warned against placing the State Bar on a path to disunification before the Supreme Court got to weigh in on the issue and reportedly much  discussion between the Court and Legislature.

Just two days later, with major amendments, the re-tooled AB 2878 passed the Assembly 75 to 0.

The Supreme Court very clearly would like to maintain the unified bar structure that we have now.  The stated reason is concern that disunification would lead to less robust efforts to  address access to justice issues.

But another reason may be that Supreme Court reluctance to take on a more direct, active and visible role in managing the discipline machinery.  This would seem to be a natural corollary of disunification;  as proof, consider Bar Trustee Dennis Mangers proposal that Supreme Court assume the task  of assessing fees for operation of the discipline system, as it  did the last time the Legislature was unable to pass a fee bill.

It’s safe to assume that this suggestion was met with less than enthusiasm by the Chief Justice.  We can speculate about the discussions between the Mark Stone and the High Court, as the judicial branch is not subject to the open meeting laws but the weak bill almost certainly reflected the Court’s desire to preserve the status quo as much as possible.

A desire that was decisively rejected by an Assembly that is all riled up by the most recent State Auditor’s report, a rejection that briefly raised the possibility that no fee bill might be passed due to deadline for bills originating in Assembly to be approved.   The scramble that followed to amend the bill (oh, to be proverbial fly!) have produced something that Assembly member John Chiu describes as the “bare minimum” needed to avoid committment to a path to disunification. According to The Recorder, these amendments will:

  1. Reconstitute the bar’s board of trustees to include a majority of non-lawyer members. All actions taken by the board would have to be approved by a majority of those so-called public members. eferring the most controversial issue (disunification) to blue-ribbon committee is a classic way to compromise.
  2. Create a nine-member Bar Governance Committee, appointed by the chief justice, the governor and legislative leaders, charged with reviewing possible additional governance changes, including de-unification. The committee would report back to the Legislature with recommendations by April 2017.
  3. Authorize the chief justice to appoint an enforcement program monitor who “shall make his or her highest priority the reform and reengineering of the State Bar’s enforcement program and operations and the improvement of the overall efficiency of the State Bar’s disciplinary system so that the State Bar is successfully and consistently protecting the public.”
  4. Set new requirements for the bar to pursue complaints about so-called notarios and others accused of practicing law without a license.
  5. Require the bar to submit to an annual state audit of its financial affairs.

Moving to a majority public member board has been a goal of consumer advocates, including the Center For  Public Interest Law.  One of surprising aspects of the bll rejected by Assembly was that it left a majority lawyer member board intact and this was probably the principal reason why it was rejected.   Like all other professions, lawyers will now regulated by a board with a non-profession majority. The Case of the Rogue Teeth Whiteners  fortunately came along at just the right time to provide a convenient hook to hang this change on. Whether this new structure makes a substantial difference in  the way discipline operates is open to question but, however optical this change may be, it can only be a good thing.  Perhaps it will finally kill off the Fox Guarding the Henhouse meme.

Goodbye!

Goodbye!

Punting a controversial issue to a blue-ribbon commission is a time honored way to  forge compromise.  So we will have yet another study of the State Bar, on top of the work now being performed by the last commission (GITPITF.)  At least it give us a less unwieldy acronym.  This is the comprehensive study that the Chief Justice called for.   It is also a firebreak to the prarie fire of disunification, one last chance to put the house in order, to demonstrate that dysfunction axis no. 1 is really a virtue.

UPL enforcment is a Legislative priority  that hints at the more expansive role that probably lies in any regulator’s future.   Annual audits seem to be obvious given the demonstrated financial mismanagement of recent years.

The appointment of a performance monitor by the California Supreme Court is the most puzzling new development.  It calls to mind Prof. Robert Fellmeth’s service as the Legislature’s discipline monitor and architect of the current discipline system in the late 1980’s.  It also brings to mind Justice Lui’s service as special master to oversee the spending of Supreme Court special assessment money in 1999. On its face, it seems to fly in the face of the idea that the Supreme Court wants less supervisorial responsibility over the discipline system.  The actual extent of the Supreme Court’s direct interaction with the discipline system is unknown  because of its exemption from the open meeting laws.

But it may be that what the Court really wants is just less visible supervisorial responsibility. There are contradictions involved in the exercise of its inherent power in this area.  Within it sphere the Court exercises all the three familiar functions of the government at large, executive, legislative and judicial.  The Court needs to have some distance from the discipline process to carry off that balancing act.  But having been thrust more directly into the process by the Supreme Court appointees to the Board created by the last round of governance reform. perhaps the Court realizes that it needs to have a direct role in the discipline system, especially given the structure of the new Board, with its majority of public members.  This new position, even temporary as it is, might be a counterweight to what might be seen as a significant shift of power to public members appointed by the political branches.

Cal Supreme Court

The Legislation also gives the Supreme Court another significant plum, the power to appoint the President and Vice President of the Board of Trustees from among their appointed members.  This will end the elections and associated rituals that eat up about half of an average year for the Board.  A most welcome development that moves the State Bar even further away from the appearance of a trade association.

The most significant aspect of the new and improved AB 2878 is that State Bar has avoided disunification, at least for now.  And it has because the California Supreme Court doesn’t want it disunified, at least for now.  The Court rescued the State Bar,  just as did in 1998 with its decision in In Re Attorney Discipline System.  But the battle for the shape  of legal service regulation now moves to a new phase.

 

 

 

 

 

 

 

 

 

 

 

 

State Bar Management Lost at Sea

Allusions to the sinking of the Titanic were prominent in our last post on the Assembly Judiciary Committee’s hearing on the State Bar’s annual fee bill.   But it may be that allusions to the Lusitania are more apt.

The latest torpedo to hit the State Bar mid-ships comes in the form of the latest State Auditor’s report.  The aggressive criticism of  this report was so bleak as to make the wider world take notice (“Audit Rips California’s State Bar for Shady Finances and Bloated Salaries” — LA Times May 13, 2016.)  Even unflappable State Bar Executive Director Elizabeth Parker was moved to complain about the tone of the report.   She hinted at the Committee hearing meeting that she might not have taken the job had she known the parlous  state of the vessel she was shipping out on.   Now it is looking more and more like she might be the last executive director, tasked with the grim mission of overseeing the dissolution of the State Bar into two different entities.

Perhaps the tone is a bit nasty but the substance of the State Auditor’s  report is damning.   It suggests that even the arrival of the hyper-competent executive team has made little or no difference in the strange way the State Bar operates.  The creation of a non-profit foundation, the nobly titled State Bar Access and Education Foundation, by the former ED, Senator Joe Dunn, seems like the kind of too-clever-by-half move that we might have expected from him, especially when we learn that the Foundation did little or nothing to advance its stated purpose.  Most of its funds were spent on unrelated purposes, including $4,800 Sacramento on a dinner related to a California State Fair (we have a State Fair? who knew?) project called A Conversation With Abraham Lincoln, which ate up another $17,300.  It is the kind of feel-good project that would naturally appeal to some set of “stakeholders” or another.  So much more attractive than the gritty work of actually regulating the profession.

Lusitania

Can the Andria Doria be far behind?

But the news that $14,800 was used to bail out the Foundation in  December 2015 without the knowledge or approval of the Board of Trustees deals a serious blow to the idea that the State Bar’s new Executive Team or the Board  of Trustees now has a handle on what is going on.  Perusing the many charts and diagrams of the State Auditor’s  report leads to a well supported impression that the State Bar is Rube Goldberg machine of Byzantine complexity.  Figuring out how this organization works (or doesn’t work)  is a challenge even for those in charge.  That is a natural result of an organizational philosophy devoted to placating “stakeholders” rather the focusing on the core mission.

A Conversation With Abraham Lincoln seems even more galling when we read about the plight of the State Bar’s Client Security Fund,  one of the most important public protection programs that the State Bar administers.  Every lawyer in California pays $40 to the Fund which compensates clients who have been ripped off by dishonest attorneys.  While the party was in full swing at the Citizen’s Hotel, the Fund was running out of money to pay the enormous amount of claims that had been accumulated during the Great Recession, leading to a potential liability of almost $19 million.   This had  been obvious since 2011 when the number of claims against the  Fund began to skyrocket.  I recall listening to a fraught appeal from members the Client Security Fund Commission and staff to take action to remedy the problem.  But the Board of Trustees did nothing.

Well, not exactly nothing.  What they did do is cover up the problem by omitting any mention of it in the State Bar’s financial reports beginning in 2012.  What they should have  done was go the State Legislature and ask for a greater contribution from the lawyers of California to pay those claims.  But they were afraid to do that, afraid of the consequences if they should bring the problem to attention of the Legislature.

A sea change is necessary.   Changing the Board governance  structure is a good first step but not enough.  Will the Legislature rise to the challenge?