President Kelly Explains it All To You…Almost

For years I have been trying to correct the misapprehension, held by both lawyers and civilians, that there is some entity called the “State Bar Association” that acts as an advocate for California lawyers and to inform them that The State Bar of California is not that but a government consumer protection agency.

So it is gratifying to read State Bar President Patrick Kelly’s monthly opinion piece in the California Bar Journal  making exactly the same point.  As President Kelly explains

The Legislature created the State Bar of California as a unified bar in 1927, dissolving the California State Bar Association the same year. Since then, the State Bar of California has been a governmental agency whose core function is to admit, regulate, discipline and license lawyers. All California attorneys are compelled to be “members” of the State Bar. There are also some professional association characteristics that are noted below.

Yes, “some professional association characteristics” remain, kind of like the vestigal tails that some people are born with.

Unfortunately, the President goes off the rails when he tries to explain what California lawyers get for the bar dues. “The first benefit is that in California we are one of very few states where lawyers are allowed to regulate themselves.  That is a significant benefit…”

A  more accurate statement would be that part of what California lawyers pay for with their dues is participating in the sham that lawyers regulate themselves.  The regulation, admissions and discipline functions of the State Bar are now completely dictated  by the California Legislature and the Supreme Court.  The State Bar Board of Governors…oops, I mean Board of Trustees…puts on a good front but in fact the input of California lawyers matters little or none when evaluating any proposed rule change that is packaged as “necessary for public protection.”

Still it is gratifying that the man at the top of the pyramid, if not exactly in charge, concedes this much.  Reading between the lines of President’s piece, you must come to the conclusion that if California lawyers want effective voices to advocate for them, they should look to their local bar associations or the State Bar sections, voluntarily funded entities that are not constrained by the need to function as a government regulator.  Those entities are divided by subject matter and geography.

One other inaccuracy in President Kelly’s article here deserves note.  The California State Bar Association did cease to exist when the integrated bar was created in 1927 but it wasn’t dissolved by the Legislature, which could not dissolve a private organization.  It ceased existence because it wasn’t deemed necessary.   President Kelly has very cogently explained, without meaning to, why a California State Bar Association, an entity that can advocate for the interests of all California lawyers is needed now more than ever.

Another Brick in the Wall

On the agenda for the Regulation, Admissions and Discipline Oversight Committee (RAD) of the Board of Trustees of the State Bar of California is the Chief Trial Counsel’s proposal to change Rule 5.41 of the State Bar Rules of Procedure.  That rule governs the charging document that initiates a disciplinary proceeding in State Bar Court, the notice of discipline charges (NDC).   The proposed change would make it clear that  “notice pleading” is the standard in State Bar Court by requiring facts “in ordinary and concise language” without requiring “technical  averments or … allegations of  matters not essential to be proved.”

On the face, this seems innocuous enough.  But then you read the rationale for the rule change and you start to understand.

First,  the modification doesn’t change the applicable law in any way, a fact acknowledged by the Chief.   Applicable Supreme Court and Review Department precedent  require the discipline prosecutor to provide a level of detail necessary to prepare a defense, consistent with due process.  But those same cases, especially Baker v. State Bar discuss another important purpose served by a specific pleading

 While petitioner here does not complain of any due process violation in lack of notice, this specificity is also essential to meaningful review of the recommendation of the State Bar Court.

Baker v. State Bar (1989) 49 Cal.3d 804 (emphasis added).

The Supreme Court has told us that more than the minimum required by due process is essential.  There is no acknowledgment or discussion of this important purpose in the memorandum supporting the rule change.   It’s as if this inconvenient part of Baker just faded away.

Second, the Chief Trial Counsel, in her selective review of the history of  disciplinary pleading,  ignores the seminal event that put her office on the path to its current pleading practices.   I know it well because I was there at the time and participated in the office’s response to it.   That event is the Review Department decision In the Matter of Varakin (Review Dept.  1994)  3 Cal. State Bar Ct. Rptr. 179.   Not only is Varakin ignored but the memorandum contains this misleading statement:

Since and in response to these opinions, OCTC has overcompensated in its factual allegations in its NDCs. Although Maltaman, Guzetta, and Glasser involved criticisms of  individual charging documents, not an indictment of OCTC’s broader charging practices, OCTC responded to these cases by informally adopting a custom and practice of  pleading virtually every fact that it intended to present at trial, including those not  material to proving the elements of the charged offense.

Misleading in two ways.  First, because it was Varakin that prompted the change in pleading practices, not those earlier cases, and second, because Varakin was very much an indictment of OCTC’s broader charging practices.  An extended excerpt from Varakin shows the extent of the deception:

The State Bar still appears to be following its historic pleading practice of reciting all of the factual allegations separately from a catch-all charging paragraph which gives no explanation for the citation of any particular statute or rule allegedly violated. No justification has been offered for the continuation of this practice which was severely criticized several years ago in two Supreme Court opinions—Maltaman v. State Bar (1987) 43 Cal.3d 924, 931 and Guzzetta v. State Bar (1987) 43 Cal.3d 962, 968—and criticized again by the Supreme Court two years later in Baker v. State Bar (1989) 49 Cal.3d 804, 816.  Although the opinions in Maltaman and Guzzetta are best known for their criticism of the inadequacy of the volunteer referees’ written decisions, in both Maltaman and Guzzetta the Supreme Court specified that the charges were just as problematic as the volunteer referees’ conclusory findings, noting that, “Not only does this failure make the work of this court more difficult …, but it also brings into question the adequacy of the notice given to an attorney of the basis for the disciplinary charges.” (Guzzetta v. State Bar, supra, 43 Cal.3d at p. 968, fn. 1 (citations omitted); accord, Maltaman v. State Bar, supra, 43 Cal.3d at p. 931, fn. 1.)  In Baker v. State Bar, supra, the Supreme Court again pointed to the vexing problem created when the State Bar did not identify “with specificity both the rule or statutory provision that underlies each charge and the manner in which the conduct allegedly violated that rule or statutory provision.” (49 Cal.3d at p. 816 (emphasis added).) Again in In the Matter of Glasser (Review Dept.1990) 1 Cal. State Bar Ct.Rptr. 163, 172 the State Bar was reminded of the three prior Supreme Court admonitions. This review department then noted “It is not only incumbent upon the Office of Trial Counsel to determine which specific conduct of the respondent is at issue, but to articulate the nature of the conduct with particularity in the notice to show cause, correlating the alleged misconduct with the rule or statute allegedly violated thereby.” (Ibid.; emphasis added.) It is disturbing that the same pleading problems persist despite three Supreme Court opinions and a review department opinion on the subject in the past seven years.

Varakin  3 Cal. State Bar Ct. Rptr. 179 at 185 (emphasis added, except where noted.)

 
Then Chief Trial Counsel Judy Johnson’s  reaction to the acidic criticism in Varakin was to order a complete revision of its pleading practices, and the adoption of a new pleading format that married the factual allegations with the specific section or rule allegedly violated in a separate count.   I helped devise it.  It strains belief that the current Chief Trial Counsel could be unaware of Varakin and its significance.  Varakin, like Baker, is apparently too inconvenient for the narrative the Chief Trial Counsel wants to sell to RAD.

The pleading format that we devised, the one the Chief labels “exaggerated fact pleading”  has been used for almost 18 years without question.   Never has there been suggestion that it was leading to undue delays in the disciplinary process until now.

The Chief Trial Counsel makes the argument that less notice of permissible in the charging document because the respondent has, at the point charges are filed, been given notice three times, first, in the initial letter from the investigator, second, in the letter notifying the respondent that OCTC intends to file charges and finally, in the early neutral evaluation conference process, where OCTC is required by rule to provide the court with a draft NDC.

Those familiar with the process will be bemused.  Despite the language of Rule 2409,  OCTC doesn’t always contact a respondent in the investigation process before filing the NDC based on that investigation.  I have a case with a pending motion to dismiss a number of counts based on this failure.   The investigation letters that OCTC does send usually restate the complainant’s allegations in broad language, allegations that may or may not be related to the misconduct that is ultimately charged.  The notice of intent letter usually contains a recitation of citations to statutes and rules allegedly violated with the lawyerly caveat “including but not limited to”.   Often one of the purposes of the ENEC is to “smoke out” the factual basis for charging a certain rule or section because it just isn’t clear what OCTC’s theory of culpability is.   Despite the rule requiring a draft NDC or summary of facts supporting each violation, it isn’t always done.   And if the charging document for discussion at the ENEC is now going to be the “short form” NDC, the notice problem isn’t cured.

The articulated aim is to reduce the pleading standard to barest minimum level of notice to that “consistent with criminal procedure”.   Those who have read the charging documents typical in criminal cases will know just how minimal that can be.   This is apparently OK because “a member’s duties and oaths vis a vis the Rules of Professional Conduct and the State Bar Act are also presumed” just like every person is presumed to know the criminal law.   In other words, we don’t have to tell you what you did wrong; you already know.

Brick by brick, procedural protections for  respondents in the discipline system are being dismantled.   The protections of the Evidence Code in State Bar proceedings are no longer available;  the right to discovery has been cut back.   Now the right to adequate notice, a fundamental part of due process, is threatened by this proposal, a proposal freighted with deception.

Runaway Train: Civil Code Section 2944.7 and the State Bar

For the second time in the last two years, the Review Department of the State Bar Court has issued a published decision, i.e. a decision that it citeable precedent in the Court, where attorney discipline cases are adjudicated.  Strangely, more than month after filing, it still is not listed among recent published cases on the State Bar Court’s website.  The name of the case is In the Matter of Swazi Taylor.  You can find the decision here and on Westlaw (2012 WL 5489045).

Taylor deals with the issue of the appropriate discipline for violation of Civil Code section 2944.7, conduct which is disciplinable through the gateway statute, Business and Professions Code section 6106.3.  It isn’t the first decision that interprets section 2944.7 but it is the first published decision to do so, as footnote 8 reminds us.

Section 2944.7 regulates when an attorney may be paid for certain services related to obtaining a loan modification for a client.  It says:

(a) Notwithstanding any other provision of law, it shall be unlawful for any person who negotiates, attempts to negotiate, arranges, attempts to arrange, or otherwise offers to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other compensation paid by the borrower, to do any of the following:(1) Claim, demand, charge, collect, or receive any compensation until after the person has fully performed each and every service the person contracted to perform or represented that he or she would perform.

The statute was enacted in 2009 as part of SB 94, urgency legislation meant  to protect the public from unscrupulous loan modification operations that had sprung up after the collapse of the housing market in 2008, during the early days of the Great Recession:

Although some loan modification consulting companies are reportedly acting in a reputable manner and providing significant value to their customers, there is significant anecdotal evidence that others are preying on borrowers’ fears of losing their homes and their ignorance of the options available to them, and charging these borrowers fees (often up-front, nonrefundable fees) for services the borrowers could obtain elsewhere, free-of charge.

Words like “reportedly” and “anectodal”  convey the care with which this legislation was crafted, in contrast to the Federal Trade Commission’s exhaustive process that went into creating the MARS rule.   While it was clearly recognized that some “loan modification”  consultants were providing significant value to their clients,  SB 94 promulgated a solution that penalized both scammers and attorneys seeking to provide legitimate and necessary services to mortgage borrowers:  making it economically impossible to operate.   Part of the background was the belief in 2009 that the banks, the recipients of large amounts of Federal assistance, would be cooperative the Federal programs designed to assist beleaguered borrowers, thus obviating the need for lawyer assistance.  We now know how delusional that was.  Instead of cooperating, the lenders engaged in obstructive tactics to make if as difficult as possible for borrowers to obtain relief .   Paperwork was routinely lost, borrowers were shuffled around to different offices of the lender, conflicting information was given, a process that lasted many months and sometimes years.

The demand for assistance was great and the first rule of a market based economy is that where there is demand for something, someone will supply it.  Upon studying SB 94, it became apparent that the section 2944.7 , the catch-all section intended to regulate attorneys did not contain the explicit ban on dividing up loan modification services into sections or phases ( a practice that became known somewhat colloquially as “unbundling”)  that the sections regulating real estate licensees did.  Clearly, the Legislature could have used that explicit language.   Instead the statute banned payment until services “contracted for” or services  as “represented would be performed” were provided.  The difference persuaded many attorneys that they could provide loan modification services on an “unbundled” basis consistent with the statute, if the contract with the consumer, the document setting forth the attorney’s representations as to what services would be provided and when, was appropriate structured.

Three years and more down the road, Taylor now says that that this is incorrect.  Adopting the construction of the statute urged by the State Bar of California, the first published decision interpreting the law says that you don’t get paid until the end of the process if the client is seeking a loan modification.  Preliminary steps undertaken before actual negotiation with the lender are part of the entire process and cannot be paid for separately (Taylor, opinion at page 16.)

While Taylor is first published (and thus precedential) decision to interpret the statute, it is not the first decision to interpret the statute.    Duenas v. Brown was a United States District Court case filed in 2010 seeking a determination that section 2944.7 was unconstitutional.   Former Chief Trial Counsel James Towery was a defendant in that case, in his capacity as the State Bar’s top disciplinary enforcer.  He was defended by both the State Bar’s Office of General Counsel and outside counsel, the respected law firm of Kerr & Wagstaffe.  As part of his motion seeking to dismiss the complaint for lack of jurisdiction,  Mr. Towery’s lawyers took a position directly at odds with the Taylor case in March 2011:

The fundamental flaw with this argument, and the reason there is no case or controversy and thus no federal jurisdiction, is that section 2944.7(a)(1) is not nearly as broad as Plaintiff contends. Rather, in order to address the proliferation of businesses and individuals which prey on vulnerable homeowners by promising to obtain a loan modification on the homeowner’s behalf for a fee, the statute restricts the timing of payments to any person for negotiating, arranging or otherwise performing a loan modification, that is, the timing of payments to a person for dealing directly with a lender on the homeowner’s behalf.  It does not restrict or even regulate the fee an attorney charges for representing a homeowner in litigation or providing advice to a homeowner regarding a mortgage or a lender’s proposed modification of a mortgage. It is thus unsurprising that Plaintiff cannot identify any instance in which the statute has been enforced, or even threatened to be enforced, in the broad manner Plaintiff urges.

(Emphasis added).  United States District Court Judge Richard Seeborg was persuaded.  As part of his order dismissing Mr. Duenas’s challenge to the statute, his order issued in August 2011 stated:

Section 2944.7, in contrast, only regulates the timing of payment for modification work. It would not, therefore, seem to require delayed payment for at least four of the six services Duenas requested. As to the timing delay, it is true that section 2944.7 prohibits payment until “each and every” modification service promised is completed, but it does not say that payment must be delayed for all “mortgage related services” until all such services are complete. In other words, the fact that Duenas was not able to hire Olender to help him with his three loans appears to have more to do with that attorney’s subjective, expansive reading of the statute.

Complaint dismissed.  But by August 2011 the landscape had changed.  Mr. Towery and four of his top managers had been purged from the State Bar in June 2011, a move that most knowledgeable observers attribute to the newly installed, politically connected Executive Director of the State Bar, Jim Dunn.  Part of the impetus for the purge was almost certainly Mr.  Towery’s  candid report to the State Bar’s Board of Trustees in April 2011 that relatively few “loan modification” attorneys had been disciplined, despite the many hundreds of complaints.  By August 2011, Mr. Dunn’s candidate for Chief Trial Counsel,  “zero tolerance” Jayne Kim had been installed as interim Chief Trial Counsel.  The stage was  being set for an aggressive campaign against lawyers offering loan modification services on an unbundled basis, exactly the kind of broad enforcement of the statute that Mr. Duenas could not point to in March 2011.

But first, Mr. Dunn and Ms. Kim had other fish to fry.  While disciplinary charges had been filed against Mr. Taylor in May 2011, the Office of Chief Trial Counsel’s principal theory was that that the services offered in each phase were unconscionable, because the amount of work being done in each stage was not commensurate with the fees paid at each stage.  Through the end of 2011, complaints against loan modification attorneys offering services on a “unbundled” basis or as part of potential litigation against the lenders, continued to be closed, in the service of Mr. Dunn’s stated goal of reducing the investigation backlog to zero.  Once that goal was achieved, the time had come to proceed against loan modification attorneys, hammer and tong.   The return of a number of  stipulated dispositions from the California Supreme Court in May 2012 stoked the boilers even more.  And now the Taylor decision, a decision completely at odds with State Bar’s prior position in Duenas, has the State Bar discipline moving at full speed toward eliminating any chance that distressed homeowners might obtain the help they need in dealing with their lenders.

So here we are a year later.  Like a runaway train, the State Bar is moving full speed toward a unstated goal that is inconsistent with the public interest: no lawyers available for borrowers who need assistance.  No one at the Office of Chief Trial Counsel evinces the slightest interest in ameliorating the situation, for fear that the political powers that be in Sacramento will use that as an excuse for taking further action against the State Bar.   Politics is driving this train and while everyone knows it,  everyone knows that it will not change, at least not while the State Bar is on the political hotseat.

State Bar Court Precedent: Rumors of Demise Greatly Exaggerated

Billy Joel sang that “only the good die young”, a sentiment some say Joel has been proving for decades.   Not too long ago, it looked like we were witnessing yet another premature death:  published Review Department decisions that count as precedent in State Bar Court.   Coming up on two years since the last published decision (In the Matter of Allen, published in November 2010)  44 Review Department opinions had issued with not one deemed worthy of publication.  This blog post was originally going to be titled “RIP Review Department Precedent: 1989-2010?”

On October 3, 2012, with the publication of In the Matter of Reiss,  rumors of this youngster’s demise proved to be greatly exaggerated.  The Review Department had found something that was worth giving the hearing judges, State Bar trial counsel, defense counsel and respondents, a topic worthy of setting in stone along the path.

On first reading, though, its not obvious what that guidance is.  Reiss’s disbarment recommendation seems straightforward given the culpability findings.  There is a helpful discussion in the footnote on page 20, that clarifies the circumstances under which a lack of prior discipline over many years of practice will have  no mitigating effect.    On the surface there is nothing especially groundbreaking here, legally or factually.

On deeper reflection, though, you realize that the fact that there is nothing groundbreaking here is exactly the point.    The opinion’s written analysis begins by reaffirming the traditional “case by case” examination of all relevant factors, beginning with the Standards for Attorney Sanctions for Professional Misconduct (let’s just call them the Standards, capital “S”), whose guidance will be followed “whenever possible” (page 22).  But it made it clear that it doesn’t end there; at the end of rather short trip the Court tells us that they reached their opinion “After carefully considering all relevant factors, the aggravation, the mitigation, and the guiding case law.” (Page 23.)

The one legal issue that they really addressed is contained in just a footnote on page 20.  Significantly, it is an issue where case law is at odds with the Standards.  Standard 1.2(e)(i) only provides that no prior discipline is mitigating if the conduct is “not deemed serious”, while Supreme Court case law has given attorneys mitigation on this ground in cases that are certainly serious, like misappropriation of client funds.  The Review Department might have decided to go with the Standard on this issue, perhaps believing the idea that the Supreme Court’s action in sending 42 cases back to the State Bar was message that not to rely on “pre-Silverton case law.”    Instead, the Court’s analysis found the common thread among that “pre-Silverton” case law and articulated a helpful rule of law (no mitigation for lack of discipline if conduct prolonged) that doesn’t slavishly follow the Standard, the Standard that is not true to the Supreme Court case law.

The message of Reiss is that precedent still counts in the discipline system.   And maybe more importantly that the Review Department will exercise its power to make precedent to guide the disciplinary process where it deems appropriate.  The Court did the same thing four years ago with its decision four years ago in In the Matter of Van Sickle (Review Dept. 2006) 4 State Bar Ct. Rptr.  980, 2006 WL 2465633 , at the height of the first Silverton-mania.  The Supreme Court  denied the Office of Chief Trial Counsel’s petition for review of that decision, which set out in depth why the Standards can’t be taken at face value.

Reiss is a disbarment recommendation, so an appeal by the discipline prosecutors seems unlikely, but these days, who knows?  The Supreme Court, of course, could take the case up on their own motion if they really want to re-visit the issue of how we come to disciplinary recommendations.   Or they can simply order Reiss depublished and leave us all completely confused.   Will OCTC ask the Supreme Court to depublish Reiss?  We will see.

The Ethos of a Discipline Defense Lawyer

A few months ago,  I was involved in a very ugly deposition while defending a lawyer in a discipline matter.  The deponent was herself a lawyer, and while not technically  the complainant, the moving force behind the State Bar complaint.  Each of my questions were met with a string of silly objections by her counsel, a former law school buddy clearly appearing as a favor, followed by the two of them grinning at each other as if they had just done well on a law school examination.  After a few hours of this, I thought I had enough to completely destroy her credibility at trial, so I ended the deposition.  As we left, she hissed at me “How do you sleep at night, doing what you do?”.  “Just what is it that you think I do?”  I asked.  “You get bad lawyers off!” she sneered.   I shouldn’t have done it, but my professional thick skin had been worn thin by this point, so I replied “Your ignorance is showing.”

It’s  a common perception.  I have been told that my opinions and observations may be discounted because of the people I represent.  It is certainly true that representing a certain type of client will influence your perception.  That is one reason why every lawyer needs to have not only ethics but also an ethos.

What is the ethos of a discipline defense lawyer? Not getting bad lawyers off but:

  • Insuring that the process is fair.
  • Making sure the Respondent’s voice is heard.
  • Achieving a result that is just.
  • Helping the client to rehabilitate themselves from their misconduct, if they have committed it.
  • Educating the profession and public about attorney misconduct and legal ethics.
  • Working to change misguided law.

You can’t truly have ethics unless you have an ethos, even if you can’t always live up to it.   Without it, you are just an animal in a cage of external regulation, responding to a fear of punishment.  I once heard a fellow law student say that the purpose of our legal ethics class was to teach us how to get around the rules.  With an ethos like that, I wonder where he is to today.  Perhaps I will get a call from him tomorrow.

Complacency and ignorance about legal ethics are widespread.  Ignorance is more easily remedied.  Complacency is the tough nut to crack, in part of because legal ethics is often taught as that cage of external regulation rather than internalized principles to live your professional life by.  No one likes being in a cage, so we resist.

So it turned out that the lawyer that I deposed informed the State Bar that she would not show up at trial despite my subpoena.  We settled the case for what it was really worth.  What sort of ethos do you suppose she has?

Through a Glass Darkly: the State Bar’s Lack of Transparency On Loan Mod Lawyers

Sometimes you know when you have hit a nerve.  The podcast that I did with Martin Andelman discussing the State Bar of California and the loan modification crsis produced an interesting communication to Mr.  Andelman from the State Bar:

FROM THE STATE BAR PRESS OFFICE: (Laura Ernde, Acting Communications Director)
For the record, since February 2009, the Office of Chief Trial Counsel has pursued disciplinary charges related to loan modification services in approximately 1,186 cases involving about 153 licensed California attorneys. Of those, approximately 581 cases have resulted in discipline (involving 69 attorneys) and 18 cases have resulted in disbarment. Approximately 720 cases are still pending before the State Bar Court, with another 291 matters under active investigation.

This was reaction to our discussion about the low numbers of loan modification lawyers disciplined by the State Bar through April 2011.  In a report dated April 26, 2011, former Chief Trial Counsel James Towery reported:

Since 2009, OCTC has filed 15 notices of disciplinary charges against attorneys for loan modification misconduct, some of which relate to the same attorneys against whom section 6007(c) petitions were filed involving the same cases.  The other avenue-and one used by the Bar’s Loan Modification Team-is seeking the attorney’s inactive status based on the threat of public harm, pending the resolution of disciplinary charges. Business & Professions Code section 6007(c) (1) provides “[T]he involuntary inactive enrollment of an attorney may be ordered upon a finding that the attorney’s conduct poses a substantial threat of harm to the interests of the attorney’s clients or to the public….” Because OCTC must file a verified accusation showing that there is a substantial threat of harm to clients or the public, these petitions typically rely on a multitude of investigated complaints. However, some attorneys pose a substantial threat of harm to the public despite only a few pending loan modification misconduct complaints. Since mid-2009, the Loan Modification Team has filed eleven section 6007(c) petitions, ten of which have been granted by the State Bar Court. One matter is currently pending.

Any student of modern public relations will admire the artfulness of Ms. Ernde’s press release. 1,186 cases seems to be an impressive number; as does the number of attorneys involved in those cases, 153.  It almost seems to confirm Howard Miller’s statement in October 2009 about “hundreds, perhaps thousands” of attorneys being  involved in loan modification misconduct until you read on discover that only 69 attorneys have been disciplined, and only 18 disbarred.

Questions then arise:  if 153 lawyers have been “pursued” and 69 disciplined, what has happened to the other 84?  Were cases against them dismissed? Did they resign?  Were some of these lawyers given warning letters or agreements in lieu of discipline (ALD) ?, dispositions typically merited for extremely low level misconduct.  Are there pending disciplinary prosecutions against some of the 84?  How many? The information that 720 cases are pending before the State Bar Court is interesting but we are not told how many attorneys those 720 cases represent.  One could speculate that since 1186 cases resulted in discipline of 69 attorneys, 720 cases may mean pending prosecutions against  41.  If so, what happened to the other 43?  Does that mean that the remaining 291 cases that are pending in investigation represent about 17 attorneys? Also, since we know that recidivism occurs among disciplined attorneys, are any of the 69 disciplined attorneys also among the the unknown number of the 84 that may be the subject of current discipline proceedings?

Part of the problem is the use of the vague term “pursued”.  It seems to mean that a notice of discipline charges (NDC) has been filed in State Bar Court against the attorney.  Is so, why not be precise and say that, as Mr. Towery did in his April 2011 report?  Another is use of the “cases” instead of identifying numbers of attorneys.  720 cases pending in State Bar Court might mean 43 attorneys or it might mean 21, or even less, depending on the number of cases filed against each attorney.  A few attorneys with 40 or 50 cases “cases” could skew the really important number, the number of attorneys involved in this type of misconduct pretty low.  I know of several Respondents with numbers of “cases” in this range.

And, at risk as being identified as a real nitpicker, how exactly is “loan modification misconduct” defined?  At one end of the spectrum, consider an attorney of 30 years unblemished record in an established real estate practice who takes on the representation of a single client with a pending foreclosure sale, and neglects to take any steps to stop the foreclosure, and his failure to perform doesn’t harm to client because there was no real basis to stop it.  This would probably be resolved with a public reproval (see Standard 2.6(b), Standards for Attorney Sanctions for Professional Misconduct, Title IV, State Bar Rules of Procedure.)  At the other end, an attorney with record of prior discipline who lends his name to non-attorneys who run a loan mod shop and take money from dozens of clients without doing anything.  Certain disbarment.  Both are “loan modification misconduct” but the first example is not what Howard Miller was talking about.  The fact that only 18 lawyers out of the 69 have been disbarred means that the activity that so exorcised Miller was far less widespread than advertised.   As the State Bar has taken aggressive action in the loan modification area in the last year (as a comparison of the press release numbers with the April 2011 numbers shows), it is likely that almost all of the real scammers, the ones that inspired SB94, have already been taken out.

What the State Bar is left with now may largely be attorneys who did some volume of loan modification work, failed in a certain number of cases to obtain the loan modification the client wanted, perhaps because of lender intransigence or client cupidity, and took a fee before the work was “complete”, allegedly in violation of SB 94.  Not the lawyers that SB94 was intended to address but a target nonetheless because of SB 94’s overbroad  and possibly unconstitutional remedy.  Lawyers caught up in the loan mod dragnet.

But the biggest issue is that the State Bar could have produced informative numbers and chose not to.  I was curious as to whether more comprehensive information loan modification misconduct had been provided in any public report to the State Bar Board of Trustees.  So I plumbed the Board meeting archives.  Lots of interesting stuff there but nothing in the Chief Trial Counsel’s public status reports since last July but the tantalizing statistic that there had been 4,451 “allegations” of loan modification misconduct made at the Intake stage in 2011 (OCTC Status Report dated January 25, 2012).  “Allegations”, if anything, is a more opaque category than cases but the number is impressive.  At least until it is compared with the other numbers discussed above and you realize that it is largely sizzle and not steak.

Ms. Ehrde’s artful email confirms that reasons for the State Bar to inflate the threat presented by loan modification attorneys remain in play.  As an organization, the State Bar has been criticized in the past for a lack of transparency in the information that it provides.  This is one tradition that doesn’t seem to have changed.