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.
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?