The staff at the State Bar of California’s discipline prosecution office, the Office of Chief Trial Counsel (OCTC), are working like dogs to make the State Bar Executive Director’s promise of eliminating the backlog of cases by year’s end come true.

What is the backlog and why does it matter?

The answers have their origin in 1985.  That year the San Francisco Chronicle published a series of newspaper articles documenting the enormous number of cases that were slowing the discipline system to a glacial crawl.   One of the articles discussed what was nick-named the “TNT Room” in the Bar’s San Francisco office, so-called because it was so stuffed with files that it was about to explode.  In response to those articles,  the California Legislature reformed the discipline system, after briefly flirting with idea of taking discipline away from the State Bar.   With the assistance of Prof. Robert Fellmeth at the Center for Pubic Interest Law at the University of San Diego Law School, a new discipline system was designed, with a new full time professional State Bar Court as its centerpiece.  But OCTC was reformed as well, including the requirement that the State Bar adopt processing time goals for resolving complaints:

6094.5. (a) It shall be the goal and policy of the disciplinary agency to dismiss a complaint, admonish the attorney, or forward a completed investigation to the Office of Trial Counsel within six months after receipt of a written complaint. As to complaints designated as complicated matters by the Chief Trial Counsel, it shall be the goal and policy of the disciplinary agency to dismiss, terminate by admonition, or forward those complaints to the Office of Trial Counsel within 12 months.

Note that the statute refers to the “disciplinary agency”, not the State Bar of California,  just in case someone other agency was given the job of disciplining lawyers.

The last 25 years of OCTC’s existence have been haunted by the ghost of the TNT Room, the disciplinary backlog, the numbers of complaints that are not resolved within these guidelines, 6 months unless the case is complex, then 12 months.  Within the last few years, a new backlog number has become important as well, the numbers of completed investigations where the decision has been made to file a notice of disciplinary charges but charges have not yet been filed, the “notice open” backlog.  One reason for the attention is that the complaint backlog number can be manipulated by prematurely “completing” investigations, advancing to the case to “notice open” status, despite the adequacy of the investigation.  Another reason is the notice backlog dramatically grew beginning in the tenure of former Chief Trial Counsel, at one point reaching 1400 cases.

Some of the delays were striking.  One case where my client acknowledged minor misconduct early in the investigation stage languished in “notice open” status for over two years before finally being closed with a warning letter.  And it wasn’t only minor cases that waited years for resolution;  a State Bar prosecutor, lamenting the lack of prioritization in the office, told me of misappropriation cases with similar delays.

Prioritization has long been the subject of internal debate within OCTC.  The idea of creating special prosecution units, “strike teams”, to target the most serious misconduct by using the “involuntary inactive enrollment” remedy provided by Bus. & Prof. Code section 6007 has long be discussed and sometimes tried, but the remedy is labor intensive.  The Trevor Group prosecutions kept forty OCTC staff, including current Interim Chief Trial Counsel Jayne Kim, occupied for several months.  Former Chief Trial Counsel James Towery created a special prosecution unit to target major misappropriations in February 2011.   But, despite success in reducing the backlog in 2010, the backlog numbers moved dramatically upward in early 2011.  Three months later Towery resigned as Chief Trial Counsel after his confirmation hearing was cancelled.  Four senior managers in the office, including one who had long advocated the creation of “strike teams”, were fired.  The misappropriations unit was quietly disbanded as OCTC turned all its efforts to backlog reduction.

Allocating the State Bar’s resources to deal quickly with lawyers who are doing the most harm would seem to be common sense, a smart approach to getting the most bang for the buck.  But apparently is it bad politics.  As Richard Zitrin has observed, the State Bar is more interested in the appearance of public protection than the reality of it.  As a result, the State Bar must continue to play the numbers game, to propitiate the ghost of the TNT Room, the ghost that continues to exert its baleful influence through the backlog statute.   Repealing the backlog statute would make sense but that would require the Legislature to show some trust in the State Bar, something it has not done in the last 25 years.

The seizure of a several lawyers’ law practices made the news this week.   Not the lawyer news, but the mainstream media.   Except that you might have missed that detail if you read the LA Times story quickly.  Nevertheless, the raid conducted by the State Bar with the Attorney General puts a little light on just how much power the State Bar can exercise.   That is the power to assume jurisdiction of a lawyer’s practice with the approval of the Superior Court conferred by California Bus. & Prof. Code section 6180 et seq. and section 6190, et seq.  Not many lawyers, let alone members of the general public, know that the State Bar can obtain an ex parte order without notice to the attorney allowing them to seize most the assets of a law practice, including files, computers, records, bank accounts, as well as redirect telephone and mail intended for the lawyer to the State Bar.  There is little more I can say on this topic but that the existence and exercise is sobering reminder of just how much power the State Bar of California can exercise.

State Bar of California Executive Director Joe Dunn wasted no time exercising his new-found authority over the State Bar’s Office of Chief Trial Counsel (OCTC) following the surprising resignation of James Towery as Chief Trial Counsel.  A little more than a week later he fired four of the seven remaining managers in the State Bar’s discipline prosecution office

Its a little like the Mayor firing the fire chief and most of the fire captains in the middle of three alarm fire.   OCTC has been valiantly struggling to reduce its backlog of investigations for some time now.  OCTC staff have been working harder than I have ever seen to keep up with the influx of new matters (many complaints about loan modification attorneys) and reduce the backlog of old matters.  Figures from the State Bar’s 2010 Annual Discipline Report tell the tale:

• The Intake Unit received 17,904 written complaints in 2010. This is roughly equal to the 2009 level, but sharply higher than the levels experienced in 2007-8 (under 13,600 complaints per year). The unit closed 13,235 cases, a 30% increase over the prior year, and forwarded 6,028 complaints to the Investigations unit.
• The Investigations Unit, in turn, closed 3,024 cases – up almost 50% from the 2009 level. It forwarded 1,362 cases to the Trial Unit, an increase of more than one third from the prior year.
• The Trial Unit closed 719 cases in 2010, up from 238 cases the year before. The unit also formally filed 636 cases with State Bar Court, a 50% increase from the previous year’s level of 423.

Despite these efforts, Mr. Dunn felt it necessary to wield the ax.  In the process, he deprived OCTC of about a hundred years of collective experience, including all of the managers who had any experience running the Intake Unit.  Intake is the part of the State Bar iceberg that you don’t see.  It’s critical function is to filter the mountain of information coming to the State Bar to determine what the State Bar is truly interesting in pursuing.

Why he took this extraordinary step is not clear on its face.  No real explanation had been given by the Executive Director beyond vague statements about moving in a moving in a new direction.  But figures from the most recent OCTC report to the Regulation, Admissions and Discipline Committee show a sharp rise in the backlog numbers in the first six months of 2011, from 309 cases at the end of December 2010 to 894 in June 2011.  “Backlog” refers to investigations that have been pending longer than the guidelines given the State Bar by statute, Business and Professions Code section 6094.5, six months for a “simple” case and one year for a “complicated” case.   These guidelines were imposed by the Legislature as part of the complete restructuring of the discipline system in the late 1980’s.   That occurred after a series of stories in the San Francisco Chronicle described the massive backlog of investigations built up as the then woefully underfunded discipline system was faced with a huge increase in the number of lawyers in the early part of that decade.   Backlog is bad.

Mr. Dunn is a politician (as is every Executive Director) and the OCTC purge is surely intended as the a signal to the Legislature that the status quo will change.  He has been quoted as saying that the backlog will be at zero before the end of the year and there will be no “fire sale” in settling discipline cases.  It’s hard to see how that will happen without more liberal settlement authority or “relabeling”, that is, designating incomplete investigations as “notice open” cases prematurely to take them out of investigation status, a strategy used in the past.  In the short run, the departure of most of the experienced managers can only lead to a decrease in productivity.

As with Jim Towery, I can’t be neutral about the firing of the four OCTC managers.  I worked closely with them at the State Bar and I found them worthy opponents after I left.   They deserved better than to be unceremoniously booted out after devoting their professional lives to the discipline system.  I wish Mr. Dunn luck with his tenure at the State Bar but I suspect that this move will be counterproductive and that he will be gone before the backlog is.

I can’t be neutral about the resignation of James Towery as the Chief Trial Counsel of the State Bar of California.    I consider him a professional friend and colleague.  I thought his hiring was a welcome sign of a  return to sanity in the discipline system after the madness of the Drexel years.  His background, including his service as State Bar President during the plebiscite crisis of 1996, gave every indication that he had the leadership skills, the political savvy and the substantive knowledge to  solve the deep problems facing the discipline system, the most obvious being the enormous backlog of discipline cases leftover from the Drexel administration.  He sacrificed a lot to take the job and he came into it with a lot of zeal.  Now,  just a year later, that promising start is over.

Whether Mr. Towery’s departure was for personal reasons (as asserted in the press release announcing it) or political reasons, or some combination of both, it shows that this organization is deeply dysfunctional.   At the very least, it will have a very difficult time recruiting anyone of Mr. Towery’s calibre to run the Office of Chief Trial Counsel.  It also leaves an organization in chronic need of leadership leader-less at at time it when it under enormous stress.  Stress from the huge backlog of discipline cases, stress from uncertainly over the future of the State Bar itself and stress from the peculiar labor-management issues intrinsic to the State Bar (but similar to the issues facing other government agencies.)

Through it all the professionals at the State Bar persevere.  This organization has been more or less in a perpetual state of crisis for 30 years and they have learned to function through adversity.  In some ways, Towery’s resignation is just the latest chapter in an ongoing State Bar soap opera.

But there are disturbing overtones that suggest that this time may be different.

For one, it occurs against the backdrop of the contentious fight over “governance” reform that split the State Bar Board of Govenors (soon to be the “Board of Trustees“) in a way that has never happened before.  The recently amended fee bill in the Legislature embraces governance reform a little less than the minority advocated but a whole lot more than the majority wanted.  And the majority had the chutzpah to oppose the compromise.  This process is going a certain direction and even if it goes no further (unlikely in my view) it has effectively ended any legitimate support for the myth of lawyer self-regulation.

For another, there is the apparent interference by the Executive Director in the operations of the Office of the Chief  Trial Counsel.  The Recorder has reported that the Executive Director Joseph Dunn took the job of making the statutorily mandated State Bar Annual Discipline Report away from Mr. Towery and giving it to General Counsel Starr Babcock.   This is unprecedented, as far as I know.  A recent memo from Mr. Dunn to all State Bar employees states that Deputy Executive Director Robert Hawley was appointed to serve as the “interface” between the Chief Trial Counsel and the Board’s Regulation and Discipline Committee (RAD).  This appears to violate the spirit, if not the letter, of Business and Professions Code section 6079.5(a) which recites that the Chief Trial Counsel shall not serve under the direction of the Executive Director but will report directly to RAD.   The independence of the Chief Trial Counsel was one of the reforms enacted as part of the overhaul of the discipline system in the late 1980’s under the aegis of Prof. Robert Fellmeth, one of forces behind “governance” reform.

Clearly, the Executive Director has a concern with the information that was coming from the Office of Chief Trial Counsel.   Mr. Towery’s written reports have been exceptionally candid, for instance in acknowledging the paucity of discipline prosecutions of “loan mod” attorneys and it looks like that was a problem.  Was Jim Towery pressured to leave because he told some inconvenient truths?  We don’t know the answer, and will probably never know, but the question is squarely presented by Mr. Dunn’s actions.

The Legislature, for now, is content to move incrementally.  But it has put a mechanism in place to plan for a transition.   That transition should be to a new independent agency within the judicial branch to handle the government regulatory functions without the stigma of being run by those it regulates and a new voluntary California Bar Association that can function as a true trade organization and advocate for the profession without one hand tied behind its back.    Nothing short of this will cure the dysfunction of the State Bar of California.