How Do You Solve A Problem Like John Eastman?*

A much less vexing problem.

The State Bar of California announced this week that it had initiated a State Bar Investigation into John Eastman, former Champman University professor and a principal Trump legal advisor following the 2020 Presidential Election. The Chief Trial Counsel invoked his power under Business and Professions Code section 6086.1(b)(2) and State Bar Rule of Procedure 2302(d)(1) to disclose the existence of the otherwise confidential information “when warranted for the protection of the public.” The announcement followed the closing of a number of complaints made by individuals that raised questions about whether the State Bar of California was going to take a serious look at allegations that Eastman violated his duties as a California lawyer in advising Trump on ways to overturn the 2020 Presidential Election (see The SBI Mystery.) Coincidentally (?) the announcement occurred just a day before a new court filing by the House Select Committee that Eastman sued in an attempt to avoid providing documents Eastman contends are subject to lawyer-client privilege (https://www.documentcloud.org/documents/21321582-house-select-committee-filing.) That filing revealed email exchanges between Eastman and Vice President Pence’s counsel Gregory Jacob that, in the words of the Committee’s counsel, show Eastman “used his Chapman University email account to email Greg Jacob… on January 5 and 6 urging the Vice President to take illegal action and refuse to count electoral votes.” House Select Committee brief at page 16. The House brief refers to State Bar’s press release and investigation in footnote 8 at pages 4-5.

The Chief Trial Counsel’s decision to invoke a little used exception to confidentiality rules to publicize the Eastman investigation was bound to provoke controversy, as the spirited conversation that ensued on the APRL listserve demonstrated. Not least because the State Bar has invoked those same confidential rules in resisting efforts to learn more about the State Bar’s lack of action against Tom Girardi (see The Secret Girardi Investigation.) Is the Eastman announcement a cynical attempt to play politics by throwing red meat to the anti-Trump mob? Or is it an attempt to address well-founded concerns about State Bar accountability to address lawyer conduct that posed a serious threat to our democracy? Reasonable (and unreasonable) minds can differ.

But there can be little disagreement that the Eastman investigation poses a serious challenge to the Office of Chief Trial Counsel. While it enforces ethical rules, it operates more as a government consumer protection agency than as the ethics police, a fact not well understood by the general public and even a large segment of the legal profession. The political context of the Eastman investigation is not familiar ground; this is far removed from the failures to perform, failures to communicate, client trust account misconduct and dishonesty that are basis of most of discipline. Tools exist, relatively prosaic ones such as California Rule of Professional Conduct 1.2.1, which provides that a California lawyer shall not counsel a client to engage, or assist a client in conduct that the lawyer knows is criminal, fraudulent, or a violation of any law, rule, or ruling of a tribunal” or more exotic ones such as California Business & Professions Code section 6106.1, a McCarthy-era statute that says “Advocating the overthrow of the Government of the United States or of this State by force, violence, or other unconstitutional means, constitutes a cause for disbarment or suspension.” The Rule of Professional Conduct is seldom enforced and the Business and Professions Code section has never been enforced, as far as I can tell.

In matters like Eastman, the State Bar might be expected to act only after a civil or criminal court has made findings that clears a path to discipline. But it is unknown if this will happen and now the State Bar raised expectations that it will do something about Eastman conduct. Doing something means filing some set of charges in State Bar Court where it might lose, given its high burden of proof, clear and convincing evidence. The Chief Trial Counsel move to publicize the Eastman investigation was a gutsy one. It would have been a lot safer to allow the investigation to proceed in secret.

* Apologies to Oscar Hammerstein.

No Rest for the Wicked: Discipline Rules of Limitation

Statutes of limitation are a familiar concept for both lawyers and regular people. Sometimes referred to as statutes of repose, these are rules that impose time limits on the filing of an action in court, for instance, California Code of Civil Procedure section 340, which provides for two year period from the time of injury for filing an action. Lawyers, especially lawyers who deal with the law of lawyering, know that these statutes can be complex to apply, as shown by the statute of limitation for legal malpractice, section 340.6, which has spawned hundreds of judicial opinions interpreting it (476 at last count, according to Westlaw.) The reasons for statutes of repose are several as articulated by Aaron Larson:

Fairness: Legislators recognize that after the passage of a certain amount of time it can become difficult to defend against a lawsuit, due to fading memories, unavailable witnesses, the loss of evidence, and similar factors.

Judicial Efficiency: Both statutes of limitation and statutes of repose reduce the number of cases that are filed in court, and dispose of an additional subset of claims without the need for complicated hearings or trials.

Finality: For certain types of claim, such as claims against an estate, it makes sense to provide for a final date after which no further claims can be made. If there were no cut-off date for claims against an estate it would become difficult for a court to approve a final settlement and distribution of its assets, and heirs would be at risk of being ordered to return part or all of their inheritances to the estate in order to cover its liability for a late claim.

Attorney discipline is a type of specialized litigation in every state but very few states have a statute or rule of repose in the discipline arena. California does, modeled after its complex cousin, CCP section 340.6, and contained in State Bar Rule of Procedure 5.21(reproduced below).

The provenance of the Rule of limitation lies in one of the innumerable studies of the discipline system that have occurred over the last four decades. This is one that actually had some impact. In 1993, State Bar President Margaret Morrow created a commission to evaluate the extensive reforms enacted in the late 1980s under the leadership of State Senator Robert Presley and Robert Fellmeth, of the Center for Public Interest Law (CPIL) at the University of San Diego School of Law. The Commission was chaired by Justice Arthur Alarcon and known as the Alarcon Commission. The Alarcon Commission interviewed numerous individuals involved in the California discipline system (including me) and made a number of recommendations for changes, including the creation of a five-year rule of limitation on the filing of formal discipline charges. At the time, an oft-quoted observation was that only murder and attorney discipline did not have some rule or statute of repose.

Like most rules, the text reflects a number of limitations on the limitation. Primarily, the Rule only applies to a disciplinary proceeding based “solely” on a complainant’s allegations. All the other possible ways a discipline proceeding can come about, via a criminal conviction (Bus. & Prof. Code section 6101), via a reportable action (Bus. & Prof. Code section 6068(o) or section 6086.1), via an investigation initiated by the Office of Chief Trial Counsel (OCTC) (SBI), none of these trigger the five year period of limitation. The clock just keeps running. In one notable case, the Office of Chief Trial Counsel initiated a disciplinary proceeding in 2017 based on a Federal judge’s findings in a habeas proceeding of protection misconduct that occurred in 1984.

Second, the Rule contains many tolling provisions, some similar to the statute of limitations governing legal malpractice. Code Civ. Proc. section 340.6. It is tolled while the lawyer continues to represent the client. It is tolled while parallel proceedings occur in civil, criminal, or administrative tribunals. It is tolled if the attorney conceals facts about the violation until the State Bar or the victim discovers the true facts. The tolling provisions eat most of the rule.

Third, the Rule of Limitations does not apply to “continuing offense”, in which case in does not begin to run until “the offensive conduct ends.” In the Matter of Saxon (Review Dept. 2020) 5 Cal. State Bar Ct. Rptr. ___, slip opinion filed 6/26/20, 2020 WL 3485821) involved a lawyer who did not represent the victim as a lawyer but who was involved in a fiduciary relationship that required him to hold funds in trust as part of a motion picture deal. The hearing judge dismissed the proceeding under Rule 5.21. The Review Department revived it on appeal by construing (although “contorting” may be more accurate) “representation” to include the fiduciary duty of holding funds in trust outside of legal representation:

Based on the facts as alleged, we find that Saxon was acting as a fiduciary by holding funds in escrow, having been given precise instructions by the Financing Agreement. He remained in the capacity of a fiduciary with an obligation to hold the escrowed funds “in trust” until the Fandango production was completed and the purpose of the escrow fulfilled. As such, contrary to Saxon’s argument, the extension of the period of limitations was not endless—it ended when its purpose ended, and its purpose was the production. The [amended notice of discipline charges] states that the film was released in 2014, which would indicate that Saxon’s escrow responsibilities would be terminated at that time.

Saxon, slip opinion filed 6/26/20, at page 7.

Between the complainant limitation, the tolling provisions, and the continuing violation doctrine, there are few cases the Office of Chief Trial Counsel cannot prosecute, no matter how old. Yet, occasionally, motions to dismiss based on Rule 5.21 are sometimes granted. Therefore, OCTC has proposed additional reform of Rule 5.21, intended to ensure that there is truly no rest for the wicked. The proposed “reforms” would, among other things enshrine the Saxon rule, extend the time for filing by another two years if the investigation was subject to review by the Office of General Counsel and gut the complainant limitation by providing that even such a proceeding is not barred from prosecution if OCTC receives information from an independent source, even if that independent source was brought to OCTC’s attention by the complainant.

As an example, the OCTC has received complaints against prosecutors submitted by academic researchers premised on their review of public source materials including newspaper reports and judicial opinions. The OCTC believes that disciplinary proceedings arising from complaints of this type should be treated as independent source proceedings given that the complainant is simply a conduit for identifying independent source information, but the rule is unclear. Accordingly, proposed amendments: (1) provide examples of what constitutes independent source information, including court orders or opinions, a judge’s report, or a media report; and (2) make clear that the independent source exception applies regardless of how the State Bar learns of independent source information, even if the State Bar is notified of the information by a complainant. 

This is the scenario discussed in a prior post The SBI Mystery and it refers to complaints filed against Trump legal strategist John Eastman.  The implications of this statement are incredible. OCTC is saying that even with information from public sources, it may take them more than five years to investigate and make a decision as to whether to pursue formal discipline charges.

Public protection zealots sometimes ask why the discipline process is so slow, especially as the numbers of cases in the once-dreaded backlog have grown. Part of the answer now seems to lie in Parkinson’s law, the familiar adage that work expands to fill the time allotted. This was the original impetus for the widely reviled backlog statute, section 6094.5, originally enacted after the backlog scandal of the mid-1980s. As a result of recent growth of the backlog, this section was recently amended to require the State Bar to propose case processing standards no later than October 31, 2022 “for competently, accurately, and timely resolving cases within the Office of Chief Trial Counsel” …. “that reflect the goal of resolving attorney discipline cases in a timely, effective, and efficient manner while having small backlogs of attorney discipline cases and best protecting the public.” The amended legislation is careful to say that nothing in these standards creates a jurisdictional bar in any particular case.

An informal survey revealed that most states’ discipline systems do not have any rule of limitation. The text of Rule 5.21 reflects the inherent confusion about the nature to attorney discipline: does it exist to address the attorney’s fitness to practice or does it exist to vindicate a righteous grievance by a victim of misconduct. The Legislature has often seemed to tack in the second direction, with legislation giving complainants various rights in the discipline system (see sections 6092.5 and 6093.5.) If a Rule were truly to be written addressing fairness, judicial efficiency, and finality, it would be something much different than current Rule 5.21, perhaps a three-year period of limitation from the time the State Bar learns of the facts constituting the misconduct, with appropriate tolling provisions. But that isn’t going to happen.

Rule 5.21, Rules of Procedure of the State Bar of California

(A) Time Limit for Complaint. If a disciplinary proceeding is based solely on a complainant’s allegations of a violation of the State Bar Act or Rules of Professional Conduct, the proceeding must begin within five years from the date of the violation.

(B) When Violation Occurs. The State Bar Act or a Rule of Professional Conduct is violated when every element of a violation has occurred. But if the violation is a continuing offense, the violation occurs when the offensive conduct ends.

(C) Tolling. The five-year limit is tolled:

(1) while the attorney represents the complainant, the complainant’s family member, or the complainant’s business or employer;

(2) while the complainant is a minor, insane, or physically or mentally incapacitated;

(3) while civil, criminal, or administrative investigations or proceedings based on the same acts or circumstances as the violation are pending with any governmental agency, court, or tribunal;

(4) from the time the attorney conceals facts about the violation until the State Bar or the victim discovers the true facts;

(5) from the time the attorney fails to cooperate with an investigation of the violation until the attorney provides substantial cooperation;

(6) from the time the attorney makes false or misleading statements to the State Bar concerning the violation until the State Bar discovers the true facts;

(7) while the disciplinary investigation or proceeding is abated under rule 5.50;

(8) while the attorney is participating in an Alternative Dispute Resolution Mediation Discipline program, Agreement in Lieu of Discipline Prosecution program, or other authorized diversion program;

(9) while the investigation is ended by admonition; or

(10) while the complaint or investigation is pending before the Office of General Counsel Complaint Review Unit; or

(11) while the attorney is on inactive status pursuant to Business and Professions Code section 6007, subdivision (a) or (b).

(D) Authorized Diversion Program. If the attorney successfully completes an Alternative Dispute Resolution Mediation Discipline program, Agreement in Lieu of Discipline Prosecution program, or other authorized diversion program, the underlying allegations are barred.

(E) Office of General Counsel Complaint Review Unit. The State Bar must begin disciplinary proceedings within two years after proceedings before the Complaint Review Unit concludes.

(F) Death of Complainant. If a prospective complainant dies before the time to begin a disciplinary procedure expires, a surviving family member or the estate’s executor or administrator may file a complaint with the State Bar within two years after the complainant’s death.

(G) Independent Source. The five-year limit does not apply to disciplinary proceedings that were investigated and initiated by the State Bar based on information received from an independent source other than a complainant.

(H) Waiver. The attorney and State Bar may agree in writing to waive or extend the limitations in this rule.

(I) Reinstatement Proceedings. This rule does not apply to reinstatement proceedings

The Secret Girardi Investigation

Thomas Girardi

The Recorder reports that the State Bar of California has hired a law firm to investigate its handling of the complaints made against Tom Girardi.

It also announced that the details of the investigation would remain confidential. Ruben Duran, Chair of the Board of Trustees, is quoted thus: “Details of the investigation, including details of past closed complaints and investigations, must remain confidential to comply with the law and to give this investigation the greatest chance of success.”

The law referred to by Chair Duran is Business and Professions Code section 6086.1(b). It provides that

All disciplinary investigations are confidential until the time that formal charges are filed, and all investigations of matters identified in paragraph (2) of subdivision (a) are confidential until the formal proceeding identified in paragraph (2) of subdivision (a) is instituted. These investigations shall not be disclosed pursuant to any state law, including, but not limited to, the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code). This confidentiality requirement may be waived under any of the following exceptions:

(1) The licensee whose conduct is being investigated may waive confidentiality.

(2) The Chief Trial Counsel or Chair of the State Bar may waive confidentiality, but only when warranted for protection of the public. Under those circumstances, after private notice to the licensee, the Chief Trial Counsel or Chair of the State Bar may issue, if appropriate, one or more public announcements or make information public confirming the fact of an investigation or proceeding, clarifying the procedural aspects and current status, and defending the right of the licensee to a fair hearing. If the Chief Trial Counsel or Chair of the State Bar for any reason declines to exercise the authority provided by this paragraph or disqualifies himself or herself from acting under this paragraph, he or she shall designate someone to act in his or her behalf. Conduct of a licensee that is being inquired into by the State Bar but that is not the subject of a formal investigation shall not be disclosed to the public.

Section 6086.1(c) provides that the Chief Trial Counsel may disclose confidential information as provided by section 6044.5(b): The Chief Trial Counsel or designee may disclose, in confidence, information not otherwise public under this chapter to “government agencies responsible for enforcement of civil and criminal laws.”

Under this statutory scheme, it seems the contents of any report completed by the law firm hired by the State Bar, Halpern May Ybarra Gelberg LLP, would remain confidential even from the State Legislature unless the Legislature amended to confidentiality statutes to exempt itself for this particular instance.

The Supreme Court is another matter. Because of their plenary power in the regulation of the legal profession (see Bus. & Prof. Code section 6100) and the State Bar’s status as their administrative arm in the exercise of that power, they would have access to the investigation. The Los Angeles Times filed a petition in the Supreme Court in June 2021 seeking an order that the State Bar disclose information regarding the Girardi complaints. The petition invokes the Supreme Court’s inherent authority and argues that disclosure is necessary to maintain public confidence in the judicial system:

“This Petition presents precisely the kind of circumstances in which the “maintenance of public confidence in the discipline system’s exercise of self-regulation” requires maximum transparency. [State Bar Rule of Procedure} 2302(d)(1)(A)(i). Given Girardi’s close ties to State Bar officials, and the influential positions he had in the state legal system, the agency’s failure to take any action against him for decades — despite rampant accusations of wrongdoing — raises serious questions. It is imperative that the public be fully apprised about the nature and extent of the State Bar’s prior disciplinary investigations into Girardi’s conduct. Indeed, public scrutiny would be warranted based solely on Girardi’s prominence in the legal establishment; over his years of practice, he and his colleagues held a number of powerful positions that gave him substantial influence over the state’s legal community. In particular, he served as one of the few private attorneys on the California Judicial Council, and he also served on a committee advising Governor Gavin Newsom on judicial appointments in Southern California. But as detailed in The Times’ investigative report of March 6, 2021, Girardi cultivated particularly deep connections at the State Bar. He had long-standing personal and professional relationships with State Bar executives, as well as officials who were directly involved in disciplinary investigations. . Howard Miller, who was president of the State Bar from 2009 to 2010, was an attorney at Girardi Keese for sixteen years, from 2002 to 2018. Girardi also had a close relationship with the Bar’s former executive director, Joe Dunn, and at one point Girardi’s firm reimbursed the agency for $5,000 in travel expenses by Dunn and State Bar investigator Tom Layton, which were the subject of an internal review. Girardi also provided free legal work to Bar investigator Tom Layton, and employed two of Layton’s children; Girardi also treated Layton to expensive meals, and flew him on his private jet. He also had a close relationship with Bar investigator John Noonen, as well as other personal and professional connections with State Bar attorneys. Both State Bar attorneys and judges attended Girardi’s lavish parties. More than once, Girardi invoked his connections with State Bar officials in legal proceedings where he had been accused of improper conduct. A former State Bar prosecutor even submitted a declaration supporting Girardi’s firm when it was sued by a former client, who alleged that Girardi mishandled settlement funds. On another occasion, Girardi referenced his relationship with a State Bar Court judge, when he was summoned to federal court in Philadelphia to respond to a judge’s concerns about Girardi sending litigation-related correspondence that was described as so “unprofessional” that the judge said it “possibly will lead … to disciplinary action.”

The LA Times petition states a compelling case. The case has been fully briefed and awaits a decision.

In its June 10, 2021, press release, the State Bar stated:

The audit, commissioned by Interim Chief Trial Counsel Melanie Lawrence, revealed mistakes made in some investigations over the many decades of Mr. Girardi’s career going back some 40 years and spanning the tenure of many Chief Trial Counsels. In particular, the audit identified significant issues regarding the Office of Chief Trial Counsel’s investigation and evaluation of high-dollar, high-volume trust accounts.

The Special Audit Committee Report dated November 19, 2021, painted those “mistakes” as simply a matter of the State Bar lacking adequate tools to detect client trust account misconduct and proposed a number of rule and regulatory fixes to correct that deficiency. Now, we are told an outside investigation is necessary to examine how the State Bar handled the Girardi investigations.

And so it is. But how can the State Bar maintain public confidence if the results remain a secret? Somebody at a high level, the Chief Justice or the Chairs of the Judiciary Committees in the Assembly and Senate, Mr. Umberg and Mr. Stone, who recently took the State Bar to task for its lack of focus on discipline, have to take action to clear the air.

Or, they can stall and hope that everyone forgets. Which course of action is the most likely?

The SBI Mystery

There are State Bar investigations. And there are State Bar Investigations. A capital letter can make a big difference. And so it does in this case.

Complainants Are Special

Most State Bar investigations (small “i”) result from a complaint that the State Bar of California receives from a person who is referred to as the “complainant” or the “complaining witness.” That status comes within certain rights. State Bar Rule of Procedure 2403 describes them:

Rule 2403. COMPLAINT
The Complainant is entitled to receive relevant information pursuant to the provisions of the State Bar Act or the Rules of Procedure of the State Bar of California. In matters where communications from more than one person concern the same or substantially the same underlying conduct of the attorney, there may be more than one complainant. The complainant may be, but is not limited to:
(a) a current or former client;
(b) one complaining on behalf of a current or former client;
(c) one owed or was owed a fiduciary duty and an alleged breach of the fiduciary duty is or should be a subject of the investigation;
(d) member of the judiciary or legal professions who alleged misconduct by the attorney which is or should be the subject of an investigation;
(e) a person who has significant new information about an alleged ethical violation committed by the attorney affecting the professions, the administration of justice, or the public.
Eff. January 1, 1996. Revised: January 25, 2019. Source: New.

As the Rule indicates, the State Bar Act requires that a complainant receive relevant information. Business and Professions Code section 6092.5 provides that the State Bar must “[p]romptly notify the complainant of the disposition of each matter.” It also provides that the State Bar must [p]rovide information to prospective complainants regarding the nature and procedures of the disciplinary system, the criteria for prosecution of disciplinary complaints, the client security fund, and fee arbitration procedures.” Emphasis added. Business and Professions Code section 6093.5 further provides that “Upon request, the State Bar shall notify a complainant of the status of his or her complaint and shall provide him or her with a written summary of any response by the attorney to his or her complaint if the response was the basis for dismissal of the complaint. A complainant shall be notified in writing of the disposition of his or her complaint, and of the reasons for the disposition.” Emphasis added.

Sections 6092.5 and 6093.5 were added in 1986, part of the great wave of reform spearheaded by State Senator Robert Presley and largely designed by Robert Fellmeth. This reform followed in the wake of the extensive negative publicity concerning the state of the discipline system that resulted from a series of newspaper stories in the San Francisco Chronicle. Among other things, those stories described a backlog of about 4400 discipline complaints that had been languishing, some for years, memorably captured by the description of “the TNT Room” so-called because it was stuffed so full of files that it was about to explode.

Another significant reform was creating a statutory right to have investigation closing decisions reviewed by a seven-member panel known as the Complainants’ Grievance Panel (CGP), composed of four attorneys and three non-attorneys. My first job at the State Bar was serving as a staff attorney for the CGP. The CGP statute “sunsetted” in 2000, but the “second look” function continues to be performed by the Office of General Counsel. The intent of the legislation was to impose a degree of accountability on the State Bar’s Office of Chief Trial Counsel (OCTC) in the exercise of its broad discretion to pick and choose what cases to prosecute. In more concrete terms, to prevent OCTC from dealing with the backlog by just dumping cases.

The status of complainant also comes with certain costs, most prominent being that the complainant waives the attorney-client privilege and any other applicable privilege to the extent necessary to investigate the complaint (Rule of Procedure 2406.)

State Bar Investigations (SBI) Are Different

But within the set of State Bar investigations, there is a subset called State Bar Investigations (SBI). They are specifically authorized by State Bar Rule of Procedure 2402:

Rule 2402. INITIATION OF INQUIRY OR INVESTIGATION
The State Bar may open an inquiry or investigation on its own accord or upon receipt of a communication concerning the conduct of an attorney of the State Bar.
Eff. January 1, 1996. Revised: January 25, 2019.

An SBI is not subject to the duties that come with investigations triggered by a complaint. They are also not subject to the five-year Rule of limitation set forth in State Bar Rule of Procedure 5.21. SBIs are separated tallied in the statistics contained in the State Bar’s Annual Discipline Report. In 2020:

The numbers of SBIs, like many other types of discipline cases, have declined over the last few years.

An SBI is often opened in response to information the State Bar receives through public sources, such as media accounts or judicial decisions. Judges who complain to the State Bar are sometimes given the option not to choose the status of “complainant” but have their complaint closed with the option of it being reincarnated as an SBI. Cases involving allegations or findings of prosecutor misconduct are often opened as SBIs (see 2020 Annual Discipline Report, footnote 33 at page SR-7.)

SBIs, like all State Bar investigations, are confidential. But when an SBI is closed, there is no reporting to anyone (that we know of) as to the closure of the matter and reasons for the disposition. SBIs are purely within the zone of OCTC’s prosecutorial discretion. They are born, live and die within that zone, unless the decision is taken to pursue formal discipline charges. Only in that event is there accountability to the wider world.

Much ink has been spilled on the disconnect between court findings of prosecutorial misconduct and ultimate State Bar discipline. I won’t add to it but to ask the question: does the fact the disciplinary process typically addresses prosecution misconduct in the accountability-free SBI zone contribute to that disconnect?

The potential for abuse of discretion arises when the State Bar closes a complaint and then opens an SBI based on the same facts. I don’t know how often that happens but I know that it has happened. That action removes the “matter” from the accountability-rich zone of “complaint” to the murky realm of SBI. It is no longer subject to five-year limitation of Rule 5.21, the necessity of explaining the closing decision or the availability of “second look” review by the Office of General Counsel.

This has implications for recent complaints made against lawyers arising from activities connected with the 2020 Presidential election. Recently some complainants who had lodged complaints against such an attorney who had been the subject of extensive news coverage received a closing letter that told them their complaints were being closed because they did not claim to have “personal knowledge” of the conduct complained of or to represent any “party directly involved” with that conduct. This seems at odds with Rule 2403 which broadly defines complainant to exclude an explicit standing requirement and to include a “member of the judiciary or legal professions who alleged misconduct by the attorney which is or should be the subject of an investigation.” Is part of the reason these complaints were closed because an SBI exists, based on the same facts, opened in response to media coverage? If so, shouldn’t that be explained as a basis for closure? Shouldn’t the complainant and maybe the public at large know that the State Bar is looking into this conduct? Many people are looking to the discipline system to hold these lawyers accountable. The “secret investigation” of an SBI makes it possible that these concerns may never be addressed for reasons that we may never know.

Rule 2302 allows the Chief Trial Counsel to waive confidentiality after notice to the lawyer “for the protection of the public when the necessity for disclosing information outweighs the necessity for preserving confidentiality, including but not limited to the following circumstances: (A) An attorney has caused, or is likely to cause, harm to client(s), the public, or to the administration of justice, such that the public or specific individuals should be advised of the nature of the allegations. The following additional factors shall be considered in making this determination: (i) The maintenance of public confidence in the discipline system’s exercise of self-regulation” (emphasis added.) When the allegations include conduct intended to subvert our democratic system of government, it seems that the maintenance of public confidence requires disclosure that the State Bar is at least looking into it.

The problem of course is that if the State Bar announces that it is looking into it and does nothing, explanations will be demanded. SBIs are a convenient mechanism to examine “hot potato” allegations without accountability.

Maybe it is time to build some accountability into the SBI, perhaps through a CGP like panel charged with auditing SBIs and making those findings known to the public and legislature. As with prosecutorial misconduct, public confidence in the discipline system may require it.

Discipline Theatre Enjoys a Revival

Revivals are a time-honored show business tradition. Stephen Spielberg is in the spotlight with his remake of “West Side Story.” Another Sondheim creation, “Company,” has returned to Broadway to positive reviews. And Hugh Jackman is stirring anticipation with his return this year in “The Music Man.”

Not to be outdone, the State Bar of California is reviving Discipline Theatre. It’s not exactly a new production of a classic property but a return to tradition nonetheless: appearing to aggressively address the elusive goal of public protection with proposals that are more aligned with rehabilitating the State Bar’s public image than any demonstrated need.

The genesis is the worst public relations disaster in the State Bar’s history, the Tom Girardi scandal. It follows from the incendiary series of stories in the Los Angeles Times which implied that the well-connected Girardi had managed to influence the State Bar’s discipline process and allow him to steal millions from his clients. The Times never really connected the dots, but it did shed light on the curious career of former State Bar investigator Tom Layton, a Girardi confidente who also enjoyed a close relationship with the last great impresario of discipline theatre, former executive director Joe Dunn.

Shutterstock

Dunn, in his time, provided much grist for the Kafkaeq mill, including this nugget from June 2012: “When we brought Jayne [Kim] back to the bar last year, we said there was a new discipline sheriff in town. As everyone can now clearly see, it wasn’t just hyperbole.” Slightly more than two years later, Dunn was fired by the State Bar; his protege Kim, who later turned on him, resigned in April 2016.

Ancient history now. But what the State Bar is going through may make it seem like good times.

Following the Los Angeles Times stories, the Office of Chief Trial Counsel (OCTC) conducted an audit of the closed Girardi investigation files. That audit resulted in the unprecedented admission in June 2021 that the State Bar had “made mistakes” in its investigations of complaints against Girardi going back decades. Beyond this cryptic commentary, the results of the case audit are not public. Digging deeper, the Board of Trustees “established a special committee of the Board, the Committee on Special Discipline Case Audit, to further analyze the audit report on closed discipline cases against Thomas Girardi and to develop a proposed corrective action plan to be approved by the Regulation and Discipline Committee (RAD) or the Board of Trustees.”

The Board Committee has now made their first public report recommending “corrective action.” As you would expect, it doesn’t comment on the explosive innuendo that Girardi was able to exercise influence over the State Bar’s discipline process. It also doesn’t discuss the “mistakes” made by the State Bar. Instead it offers a grab bag of various proposals under the label Client Trust Account Protection Program, described as “an interrelated set of steps that build accountability and oversight.” Specifically, it proposes:

The recommended program begins with requiring registration of trust accounts, annual certifications of compliance as well as self-assessment and compliance review. Self-assessment and compliance review will allow the State Bar to conduct risk assessment and management through a graduated set of corrective actions, including audits and formal discipline. Each element in combination results in a comprehensive program of education, deterrence, detection, and enforcement. These proposed changes are designed both to improve trust accounting practices in general and help avoid and detect negligence in that respect and also, particularly through risk assessment and audit, better detect those attorneys who engage in intentional misconduct regarding entrusted funds.

The report also contains this rather wishy-washy mea culpa:

Up to now, the State Bar has not had a comprehensive and proactive program for education about and enforcement of the provisions of rule 1.15. While the Handbook is an effective tool when it is used, more is needed to ensure that attorneys are fully educated in how to manage their trust accounts and are deterred from engaging in misconduct regarding entrusted property. Rather than leading in this area of regulation, California has allowed itself to fall behind. The program proposed by the Committee is designed to correct this failure.

Standing alone, it is hard to fault these steps. More than ten years ago, I appeared before the Board of Governors (as they were then known) in my capacity as President of the Association of Discipline Defense Counsel and urged similar steps when the Board was considering a proposal from ED Dunn for random trust accounts. I pointed out that most client trust account misconduct was a result of ignorance of the client trust accounting rules and that education would be a lot cheaper than expensive random client trust accounts auditing. I suggested that attending the State Bar’s excellent Client Trust Account School be made a requirement before an attorney was even allowed to open a client trust account. The Board made positive noises, shelved the random client trust account proposal, and did nothing.

Unfortunately, the first step in the new CTAPP program is some poorly thought out changes to Rule 1.15 that would remove the requirement that the client direct the payment of funds from the trust account and would impose an artificial deadline of 60 days for paying money out of the client trust account. These proposed rule changes would enormously complicate the attorney’s ability to compromise statutory and contractual liens for the benefit of the client.

But the bigger picture is that we know very little except the murky picture painted in the press about exactly what Girardi did to evade State Bar scrutiny. We don’t know anything at all about what the “mistakes” were that were made by the State Bar in investigating the complaints. The Committee’s report suggests that it simply lacks adequate tools, that California merely “fell behind” in its cutting edge approach to discipline. Without a public airing of what those mistakes were, we don’t know if CTAPP is just a well-intentioned band-aid covering up a more severe wound. Such an airing is necessary to restore confidence in the discipline system. CTAPP appears intended to distract us from that necessity.

But we know this about CTAPP: it is proof the State Bar is Doing Something, and that is what Discipline Theatre is all about. Now sit back and enjoy the show!

The Guild Strikes Back

The Story So Far….

The current monopoly on the provision of legal services held by lawyers has sometimes been analogized to the guilds of the middle ages. Like those organizations, the legal profession consists of skilled craftsmen who were given a monopoly by the state to practice their particular craft under the supervision and control of their fellow tradesmen. A member of the guild who was found to have cheated a customer faced banishment from the guild and the resulting loss of livelihood. The guild members chose who could be members of the guild and guild rules typically excluded women, immigrants, and non-Christians from being members of the guild. In the words of Wikipedia, the guild’s monopoly on the provision of services “reduced competition but sometimes resulted in good quality of work.”

The guild model for the provision of legal services has been under a sustained attack for several years from reformers who blame it for the high cost of legal services and “the justice gap,” the unmet need for legal services that the reformers ascribe to that high cost. The solution, according to these reformers, is the open up the traditional rules that preserve the monopoly enjoyed by lawyers, including rules that limit the ability of non-lawyers to provide those services or to have ownership interests in entities that provide those services.

The response from the lawyers is these rules are necessary to implement “core values” of the lawyer profession, including the independence of lawyers from the baleful influence of non-lawyers who might be only interested in making money and not interested in what is in the best interest of the clients. Lawyers, this argument goes, are not just providers of legal service but agents of justice itself, officers of the justice system who are are ultimately responsible to the courts, despite intervening layers of guild-like organization. In California, this view was supported by the “dis-unification of” the State Bar of California in 2018, when the guild-ish “trade association” functions were spun off from the regulatory functions into the new California Lawyer Association.

As has often happened in the history of the State Bar of California, proposed reforms followed in the wake of de-unification. Liberated from the “trade association” functions that were seen as too beneficial to lawyers for a regulatory agency, the State Bar looked for ways to expand its mission beyond mere regulation, ways consistent with new Business and Professions Code section 6001.1, effective January 1, 2019. which prioritized the State Bar’s mission:

Protection of the public, which includes support for greater access to, and inclusion in, the legal system, shall be the highest priority for the State Bar of California and the board of trustees in exercising their licensing, regulatory, and disciplinary functions. Whenever the protection of the public is inconsistent with other interests sought to be promoted, the protection of the public shall be paramount.

Emphasis added. Discipline is, after all, tedious law enforcement work, scut work best left to staff. The old pre-disunifcation State Bar was not particularly interested in it, except when it was criticized for being too lenient. For 30 and more years, the old State Bar Board of Governors was more interested in a succession of brighter and shinier objects, interest fueled by the annual ritual of electing a President from among the Governors, a President who would usually propose some sort of initiative to memorialize the glory of the tenure. These initiatives were typically forgotten by the time the next State Bar President was elected. One of the best parts of the recent wave of reform was replacing the elected Board members with appointed Board members, replacing the President with a Chair, and replacing the silly annual Board elections, including the election of the President.

But the wording of section 6001.1 opened the door to what might have been the brightest and shiniest object of them all: addressing the justice gap by deconstructing the guild.

Even before the section was enshrined in State Bar Act, the Board of Trustees had commissioned the Legal Market Landscape Report from Professor William Henderson of the Indiana University School of Law. His July 2018 report summarized the case for deconstructing the guild that many academics had been advocating for years:

From the report:

  • “Ethics rules and the unauthorized practice of law are the primary determinants of how the current legal market is structured. Under ethics rules, any business engaged in the practice of law must be owned and controlled by lawyers. This prohibition limits both the opportunity and incentive for nonlegal entrepreneurs to enter the legal market.” 
  • “By modifying the ethics rules to facilitate this close collaboration [of lawyers and nonlawyers], the legal profession will accelerate the development of one-to-many productized legal solutions that will drive down overall costs; improve access for the poor, working and middle class; improve the predictability and transparency of legal services; aid the growth of new businesses; and elevate the stature and reputation of the legal profession as one serving the broader needs of society.” 

Fired up with revolutionary zeal and unfettered by the need to continue to pretend to be a “bar association”, the Trustee created the Task Force on Access Through Innovation of Legal Services (ATILS) in July 2018.

Delacroix Liberty Leading the People By Eugène Delacroix (1830) Erich Lessing Culture and Fine Arts Archives via artsy.net, Public Domain, https://commons.wikimedia.org/w/index.php?curid=27539198

In due course, ATILS produced its final series of recommendations in March 2020, including:

4. Direct the anticipated State Bar Paraprofessional Working Group to consider the key
principles of a licensing program that authorizes eligible nonlawyers to provide limited
legal services developed by the Task Force.

5. Form and appoint a new working group to explore the development of a regulatory
sandbox that can provide data on any potential benefits to access to legal services as well
as the potential for consumer harm if prohibitions on unauthorized practice of law, fee
sharing, nonlawyer ownership, and other legal restrictions are modified or completely
suspended for authorized sandbox participants.

“Sandbox” is computer programing jargon for a security protocol for testing unproven or untrusted software code. The use of the word emphasizes the tech-heavy orientation of ATILS. It also emphasizes the lack of empirical data showing that non-lawyer ownership would have any significant impact on the “justice gap.” It confirmed the fears of ATILS critics that the tech entrepreneurs were more interested in applying their disruptive business models to the legal services marketplace to make a lot of money, not to advance the cause of justice.

The ATILS recommendations were relatively cautious compared to some other states. Utah, not known for revolutionary zeal, forged ahead with its own regulatory “sandbox” in August 2020. That same month, Arizona eschewed the “sandbox” approach entirely, making radical changes endorsing non-attorney ownership of law firms through the “Alternative Business Structure” (ABS) model. Utah and Arizona are relatively “small lawyer” states with only 8,468 and 15,926 respectively (California has about 170,000 active lawyers.) These changes were adopted by the Supreme Courts in their respective states with no involvement by the Legislatures in either state.

To further study the ATILS recommendations, the Board of Trustees established the Closing the Justice Gap Working Group (CJGWP) in March 2020 with a long timeline: the final report not due until September 2022. At the same time, the Board charged its already existing Paraprofessional Program Working Group (PPWG) to come with a plan to license new classes of non-lawyer legal service providers by September 2021.

In light of events in Utah and Arizona, momentum seemed on the side of the reformers. PPWG reported to the Board in September 2021 and its plan was put out for an unusually long public comment period, until January 12, 2022. CJGWG continued to meet and work on its proposals in the fall of 2021. And then, abruptly, in December 2021, the wheels came off.

The Girardi Effect

On December 7, 2021, the Chairs of California Senate and California Assembly Judiciary Committees sent a letter to the Chair of the Board of Trustees Ruben Duran expressing “legislative concerns over regarding the Closing the Gap Justice Working Group.” The letter must be read in full to be truly appreciated.

Not mentioned in the letter but certainly lurking in the background is the State Bar’s unprecedented admission that it made “mistakes” in its handling of the many complaints against Tom Girardi going back 40 years.

Specifically mentioned is a critical State Auditor’s report issued in April 2021 that found the number of cases in the discipline backlog, defined as cases that have been pending more than six months. The same auditor’s report noted that the State Bar, while employing more staff than anytime in its history, is actually disciplining fewer lawyers than ever before. While the reasons for this are not known, it seems unlikely that lawyers are becoming less likely to commit misconduct.

Especially telling in the Stone/Umberg letter is the statement that any proposal that would alter “sacrosanct” principles of the attorney-client relationship would be closely scrutinized and the suggestion that the State Bar would do better to examine “proven” approaches to improving access to justice. The guild’s “core values” argument in a nutshell, now repeated through the most powerful megaphone around.

Some guy once those “who cannot remember the past are condemned to repeat it.” This latest fiasco shows that the State Bar, perhaps because cannot remember its own history, including the fundamental fact that the State Legislature created it in the first place. We are not Utah or Arizona, where the lawyers are scarce and the Supreme Court calls the shots. Any path to reform must go through the Legislature.

In the wake of the Stone/Umberg letter, all work on the CJGWP has come to halt while the State Bar re-assesses. The PPWG proposal remains out for public comment but its future doesn’t look bright. The cause wasn’t helped by comments from State Bar Executive Director Leah Wilson blatantly lobbying for the proposal. The PPWG proposal would impose new responsibilities on the State Bar’s discipline prosecutor, the Office of Chief Trial Counsel (OCTC) to regulate the non-lawyer providers, at a time when the Girardi fiasco and low discipline numbers have some critics questioning whether OCTC can do the job it already has.

Now comes word that the Florida Bar Board of Governors has halted work on its version of the sandbox, {mercifully referred to as a “legal lab”, instead of a sandbox) citing ethics concerns about lawyer independence, as well as disparate treatment of lawyers participating in the “lab”. Florida, like California, is a “big lawyer” state with about 72,000 lawyers.

The reformers are not going to go away. But the current disenchantment with the tech entrepreneurs is going to make it tougher for them. Organized opposition from lawyers in the “big lawyer” states is not going to go away either. It may be that the deconstruction of guild will have to await another day, long hence, to go forward.