The hallmark of that peculiar institution known as The State Bar of California* is perpetual change.
We now have the “Sandbox” which is going to experiment in new ways to deliver legal services at lower cost, sheltered from the impact of traditional rules about who gets to do that.
We also have the “Blue Ribbon” Commission that is looking at how to change the bar examination to make a better test of what we need in the lawyers of the 21st Century.
But there is one State Bar initiative that hasn’t garnered much attention whose impact may be just as dramatic. On May 15, 2020, the State Bar Governance in the Public Interest Task Force (affectionately known as GITPIT) issued its final report.
GITPIT was a driving force behind the legislative reforms that “de-unified” the State Bar of California in 2017, spinning off the trade association functions, including the State Bar sections, into the new California Lawyers Association, and leaving behind a (now mis-named) State Bar as a purely regulatory agency. GITPIT has now sunsetted but its final report moves beyond the relatively narrow issue of the organizational structure of the State Bar into the broader field of how the profession itself is regulated. Its subject is revolutionary; risk-based regulation.
The essence of risk-based regulation is moving beyond a regulation system, such as the current California discipline system, that reacts after problems arise to a system that actively works to prevent problems before they happen. In the words of the final report (at page 5):
“For the State Bar of California, a risk-based regulatory approach may be usefully contrasted with the most common source of work for the attorney discipline system: the client-based complaint. The vast majority of the work of California’s attorney discipline system is driven by responding to complaints of attorney misconduct filed by clients. As a result, by definition, the discipline system is typically reactive, seeking to address misconduct—whether through discipline or, in the work of the Client Security Fund, through compensation of clients—only after harm has been done.6 A risk-based approach, however, focuses on the prevention and mitigation of harm. More specifically, and for purposes of this report, risk-based regulation may be distinguished by the following features:
•Using data to inform regulatory decision making;
•Focusing on caseloads in addition to cases; and
•Prioritizing regulation and enforcement based on risk.”
As part of its work, GITPIT looked at risk-based regulation in the Australian legal system. Australia, also a leader in reforming rules related to the ownership of legal service providers, conducted qualitative research on lawyers who were discipline in Australia. The results won’t be a surprise to anyone who has worked in the California discipline system:
The qualitative research also revealed patterns that had not been uncovered in the quantitative analysis. The complaint-prone lawyers appeared to be “ill-equipped generalists” whose efforts to be a “Jack or Jill of all trades” led to difficulties for one quarter of this group. The complaint-prone lawyers also appeared frequently to have both personal and professional relationships with clients resulting in “blurred professional boundaries.” Finally, they were professionally isolated. Although they insisted on the quality of their work and their character in their defense, they were unable to provide references to support those assertions. What emerges from the qualitative portion of the research is a profile of attorneys who work on the edge. Personal and professional problems contribute to one another and multiply. Over half of the sample of 32 complaint-prone attorneys had some form of health impairment (mostly depression). [footnote 18: Surprisingly, substance abuse was rare, with only one of the 32 attorneys exhibiting it.] Half of the lawyers in the sample were in financial distress, and one third had recently experienced either a death or serious illness in the family. When a complaint is lodged against a lawyer, it appears to compound the stress already weighing on the subject attorney. Citing a discipline case from 2013, one Legal Services Commissioner noted: It is all too common for misconduct to arise from a failure to deal effectively with the disciplinary complaint and the investigation process, rather than the subject matter of the complaint itself……
Emphasis added. Part of the stigma of discipline is the moral judgment that accompanies it: it is something that only happens to “bad lawyers” who by extension are “bad people.” The over-reliance in the California discipline system on the “moral turpitude” (see, e.g., Bus. & Prof. Code section 6106) concept, a concept rejected as too vague by the drafters the ABA Model Rules, is part of the problem. (Now that California has a robust Rules of Professional Conduct, based on the ABA Model Rules, including Rule 8.4, we should eliminate the 19th century Field Code junk that litters the Business & Professions Code.) Ir is true that are there are evil lawyers and that they are sometimes disciplined. But the vast majority of disciplined lawyers are troubled human beings, with depression being a major problem.
The essence of risk-based regulation is regulating legal practice before it is necessary to sanction behavior. This is a controversial point, as GITPIT points out at page 14 in a reference to Philip K. Dick’s 1956 science fiction story “Minority Report”, later made into a pretty good movie. For those unfamiliar with either, the premise is a future police force utilizing psychics to apprehend criminals before they commit their crimes. Interventions based on predictive models are a more intrusive form of regulation than discipline after the fact. But we are spending $80 million a year such a system and it isn’t at all clear how imposing this punishment (yes, punishment) is really helping to protect the public.
Traditional lawyer independence is a very attractive part of the legal profession. It is already under assault by market forces, including private investors who now have their Sandbox to play in. Effective risk-based regulation might require the lawyers of the future to do much more than just hang up their shingle if they want to practice law. What if every lawyer was wanted to open a client trust account was required to be educated on the client trust accounting rules and procedures before a bank could open the account? What if every lawyer or group of lawyers were to file a comprehensive written risk management protocol before they began to operate at all, including protocols for dealing with impairment? What is every lawyer, even ostensible solo practitioners, were required to establish some kind of association with other lawyers to deal with professional isolation and lack of support? Some of these ideas look a lot like what the early 20th-century idea called the “integrated bar” was supposed to accomplish and perhaps did successfully until the bar became too big and too specialized (and the conflict of interest too apparent) to support the quasi-public, quasi-private nature of the model. The idea that helping lawyers helps to protect the public is still a good idea, but a little ironic given the State Bar’s recent transformation into a pure police agency. Perhaps there was a baby in that bathwater after all.
For now, GITPIT recommends more study and some modest moves toward increased use of warning letters by the Office of Chief Trial Counsel.
For all it’s hazards, risk-based regulation deserves further study. Let us hope that GITPIT’s final report doesn’t join the legions of studies and reports that have been gathering dust for decades on the shelves of the State Bar’s library.
* isn’t it about time we changed the name?