State Bar Gets Into the Punishment Business

Effective April 1, 2020,  new State Bar Rule of Procedure 5.137 enables the State Bar Court to recommend to the California Supreme Court that a monetary sanction be imposed in an order imposing actual suspension, disbarment or accepting resignation wit charges pending.  The new Rule is authorized by Business & Professions Code section 6068.13, a statute originally passed in 1992.  The State Bar did nothing to implement section 6086.13 until 2018 (see 25 Years Later State Bar Heeds Legislative Call to Punish Lawyers.)  The impetus for using this dormant statutory authority was the financial crisis that the State Bar has suffered over the last few years.  When the Bar went to Sacramento asking for money, someone seems to have pointed out that the Bar had a tool it could use to help fund the Client Security Fund (CSF), a fund that pays restitution to victims of lawyer misconduct.  CSF had been in financial straits for a number of years since what was (then) known as the Great Recession occurred, an event that triggered large numbers of complaints against lawyers and increased the number of applications to the CSF.

The myth that disciplined lawyers are sitting on mountains of gold just waiting to be collected is a cherished one at the State Bar ever since it was given authority to collect its costs from those lawyers.  Collecting money from individuals whose ability to earn a a living has been taken away from them would seem to be dubious proposition.  Experience has born this out.  Despite strenuous efforts to collect discipline costs, the State Bar is owed millions – $236,777,027 as of January 2019. Yet the hope that more blood can be squeezed from this turnip never dies.


Perhaps the motto needs amendment

The punitive nature of the sanctions raises a separation of powers issue.  The punitive nature of the sanctions authorized by the Legislature is incompatible with the California Supreme Court’s bedrock authority that tells us the discipline isn’t punishment but public protection (see  25 Years Later…)  California is perhaps unique among states in that both the Legislature and the California Supreme Court exercise co-equal authority in lawyer regulation; “In the field of attorney-client conduct, we recognize that the judiciary and the Legislature are in some sense partners in regulation.”.)  In re Attorney Discipline System, (1998) 19 Cal. 4th 582, 602.

Attorney Discipline System was a case where the Legslature had failed to act in its traditional role in authorizing the State Bar to collect its licensing fees (quaintly called “dues” in those days.)  The Supreme Court concluded that it had authority to act in the Legislature’s stead and order a special assessment on California lawyers to fund the system.  The passage of the State Bar Act in 1927 did not diminish the Court’s plenary authority that existed at that time.   But the California Supreme Court went on in Attorney Discipline System to discuss its authority to ignore the Legislature when it acted in manner that “materially impaired our inherent power over admission and discipline (at 603.)

The High Court soon got the chance to deal with that second principle.   Incumbent State Bar Court judges filed an petition for a writ of mandate in January 2000 challenging changes in the statutes regarding appointment  of State Bar Court judges, changes taking some of those appointments away from the Supreme Court and giving them to the Legislature and Governor and also eliminating requirement that one Review Department judge be a non-lawyer.  It was widely speculated that the Legislation resulted from the Supreme Court’s decision in an admissions case, In Re Gossage (2000) 23 Cal.4th 1080, where the Supreme Court declined to admit a protege of the Speaker of the Assembly to membership in the State Bar.   The petition resulted in the Court’s opinion in Obrien v. Jones (2000) 23 Cal.4th 40, where the Court (Justice Kennard dissenting) found those statutory changes did not “defeat or materially impair our authority over the practice of law, and thus does not violate the separation of powers (at 44.)  Many, including me, bolstered by the Court’s assertive discussion of its own powers in Attorney Discipline System and dismayed by the Legislature’s action, were disappointed.  But the Court avoided the disruptive effect of the legislation by adding its own layer of judicial supervision on top by amending California Rule of Court 966 (now 9.11) shortly after the Obrien opinion.

Business and Professions Code section 6086.13 is careful to say that the Supreme Court may impose sanctions, not that it must.  Moreover, the Calfornia Supreme Court’s input led to major changes in the wording of new Rule of Procedure 5.137 and approved the Rule, as required by the statute.   But the separation of powers argument has not yet been placed squarely before them in terms of what action they should take.


But the mere existence sanctions rule is creating confusion and uncertainty in the discipline process now.   Possible sanctions are one more issue to be fought over between the Office of Chief Trial Counsel and Respondents and their counsel.  Everyone believes that sanctions will have to be addressed in stipulations resolving cases and it will make such stipulations harder to reach, increasing the number of cases that will go to trial.   Even some discipline prosecutors recognize that dealing with sanctions in a system that is not supposed to be punitive is just wrong.

The California Supreme Court will be confronted with a sanctions recommendation soon   We should hope that the Supreme Court will have enough integrity to reject the imposition of punitive sanctions at odds with its own often stated principles.  But we should also hope that some litigant in the discipline system will raise these issues so the Court will be compelled to deal with them.




25 Years Later, State Bar Heeds Legislative Call to Punish Lawyers

Early in my career as a staff attorney at the StateBar, I telephoned a complainant to relay the happy news that the attorney she had complained of had been disbarred in another matter.  “What? Is that all you are going to do to him?” was her angry reaction.

One of the most firmly established shibboleths of the attorney discipline proceedings is that they exist solely to protect the public, the justice system, confidence in profession and high professional standards (Standard 1.1 Standards for Attorney Sanctions of Professional Misconduct; In re Vaughan (1922) 189 Cal. 491, 496; Marsh v. State Bar of Cal., (1934) 2 Cal. 2d 75, 78: “It must first be noted that although the word ‘punishment’ is frequently used, the discipline of an attorney is not punitive in character.

The Legislature recently reinforced at least part of this bedrock principle by amending Business and Professions Code section 6001.1 to provide that “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.”

25 years ago the Legislature gave the State Bar a different direction in the form of Business and Professions Code section 6086.13:

(a) Any order of the Supreme Court imposing suspension or disbarment of a member of the State Bar, or accepting a resignation with a disciplinary matter pending may include an order that the member pay a monetary sanction not to exceed five thousand dollars ($5,000) for each violation, subject to a total limit of fifty thousand dollars ($50,000). (b) Monetary sanctions collected under subdivision (a) shall be deposited into the Client Security Fund. (c) The State Bar shall, with the approval of the Supreme Court, adopt rules setting forth guidelines for the imposition and collection of monetary sanctions under this section. (d) The authority granted under this section is in addition to the provisions of Section 6086.10 and any other authority to impose costs or monetary sanctions. (e) Monetary sanctions imposed under this section shall not be collected to the extent that the collection would impair the collection of criminal penalties or civil judgments arising out of transactions connected with the discipline of the attorney. In the event monetary sanctions are collected under this section and criminal penalties or civil judgments arising out of transactions connected with the discipline of the attorney are otherwise uncollectible, those penalties or judgments may be reimbursed from the Client Security Fund to the extent of the monetary sanctions collected under this section.

The source of this Legislative direction is lost in the mists of State Bar history but probably originated in the report of the Discipline Evaluation Committee aka the Alarcon Committee, a blue-ribbon panel headed by former Federal Judge Richard Alarcon that issued its report in 1994.  Or maybe some other commission, report or State Bar study; there have so many that they begin to blur with the the passing years.  Many of the Alarcon Commissions recommendations were acted on, and this is probably one of them.

The incredible part of the story is that some perfunctory work was done to promulgate regulations pursuant to 6068.13(c), the effort was abandoned sometime in 1995 after negative public comment to the first version and never resumed until this year. No one seemed to notice until recently.  The reasons why the State Bar ignored this seeming Legislative mandate are unknown, at least to the authors of the current proposal.

I don’t know the reasons either, but my own reaction, as a prosecutor in the Office of Chief Trial Counsel in 1994  was that the imposition of monetary sanctions, even for the noble purpose of funding the Client Security Fund, was punitive and incompatible with the principle that discipline is not intended to be punitive.  Discipline is not intended to be pain-free, quite the opposite, but if discipline, with all its consequences, is greater than necessary to protect the public, it is unfair and improper.

That is the principle and the ease with which we lapse into describing it as “punishment” (as the Marsh court noted) shows the difficulty in drawing that line.  One State Bar Court Judge, in a moment of candor, dismissed the idea that it was anything but punishment.  In the name of protecting the public, we have embraced inflicting much pain on disciplined attorneys, including the imposition of ruinous costs, especially if you seek to defend yourself, and the prospect of perpetual public professional ignominy.   There has to be a point where discipline becomes so onerous that even the broadest definition of public protection doesn’t cover it.  But a discipline system that is constantly being prodded to be more aggressive in protecting the public might not see it.

Early case law referred to the discipline process as being quasi-criminal (Vaughan, at 496;  In re Ruffalo (1968) 390 U.S. 544, 551). But the judicial response to attempts to apply criminal law concepts, like double jeopardy and restrictions on search and seizure,  to discipline was to emphasize its limited nature as public protection  “The purpose of disbarment proceedings is not to punish the individual but to determine whether the attorney should continue in that capacity’ [citation] ‘in short, to reform the offender or else remove him from practice’ [citation] Emslie v. State Bar (1974)11 Cal. 3d 210, 225.)


What makes a sanction punitive? The Ninth Circuit had this to say in In Re Dyer:

We recently explained the difference between civil sanctions and criminal sanctions: Civil penalties must either be compensatory or designed to coerce compliance [citation]. In contrast, “a flat unconditional fine totaling even as little as $50” could be criminal “if the contemnor has no subsequent opportunity to reduce or avoid the fine through compliance,” and the fine is not compensatory. [citation]  This is so regardless of whether the non-compensatory fine is payable to the court or to the complainant. [citation].  Whether the fine is payable to the complainant may, however, be one relevant factor in determining whether the fine is compensatory or punitive

In re Dyer, 322 F.3d 1178, 1192 (9th Cir. 2003).  Dyer, as you might guess, is a bankruptcy case the Ninth Circuit was tasked with reviewing an order imposing punitive damages under 11 U.S.C. section 105(a).  The Dyer court, noting that the court’s power under the statute was limited to measures necessary and appropriate to carry out the provision of title 11, held that the Bankruptcy Court’s were limited to imposing civil remedies appropriate for civil contempt, compensatory or compliance-inducing but not punishment for bad conduct.
Section 6086.13 provides that monies collected pursuant to the statute shall be paid to Client Security Fund but that they shall not be collected if that would affect criminal penalities or civil judgment and could even be used to satisfy those penalities or judgments.  The purpose outlined in the statute is neither compensatory or compliance-inducing;  it is fine, levied as punishment, in most cases to be used to pay the claims of individuals who have no connection to the misconduct.  Moreover, proposed Rule  of Procedure 5.137 provides that the amount of the fine increases with the degree of discipline and suggests a list of factors to be considered in setting the recommended fine, including:
1. Whether there was an intentional misappropriation of money;
2. The amount of the direct or indirect monetary loss to any victim(s);
3. Whether the misconduct was against a vulnerable victim, including but not limited to the aged, incapacitated, infirm, disabled, incarcerated, an immigrant, or a minor;
4.The seriousness of the conduct underlying the discipline;
5. Any prior discipline of the attorney;
6. The number of victims affected by the conduct in this matter (sic);
7. Whether the respondent has abandoned a client or the entire law practice;
8. Whether the respondent has been judicially sanctioned for engaging in abusive or frivolous conduct;
9. Whether the respondent has engaged in the unauthorized practice of law, or aided
others in the unauthorized practice of law;and/or (sic)
10. Whether an underlying criminal conviction resulted in a significant jail sentence.
Every factor on this list shows that the intent to the statute and underlying rule is to punish bad people, and the badder, the more punishment.  So how do you square this with the new State Bar’s limited public protection?
The Legislature, of course, can enact a statute directing the State Bar to expand the purposes of discipline to include punishing bad people, even if for the ostensible purpose of funding the Client Security Fund.  That goal is chimerical, anyway,  given the very difficult time the State Bar has had collecting its costs from disciplined attorneys.   Even if these monetary sanctions are approved, they will never make a significant dent in the amounts of money needed to keep the Fund operating in a timely way.  But raising the $40 per year that each licensee pays into the fund seems politically impossible for some reasons.
The Supreme Court does not have to go along with it.  There is no indication that the Supreme Court was pushing the State Bar to implement section 6068.13,  at least not for the last 25 years.  The statute requires the Supreme Court to approve new Rule of Procedure 5.137.  Whether it does or not will let us know if the Supreme Court continues to view discipline as solely a matter of public protection or sees it as not incompatible with the State Bar’s ostensibly newfound zeal.













California Lawyers Association: Separating the Fun From the Dysfunctional

It is still news to many lawyers, even to a number of lawyers who attended a reception at San Diego’s Hotel Republic this week to help kick off the new California Lawyers Association (CLA).  The fact of that the State Bar of California has spun off its trade association function to a voluntary lawyers organization, principally composed of the former State Bar sections, groups of lawyers who practice in similar areas of law,  and some other functions,  and the California Young Lawyers Association, has not sunk in deeply.  That itself is telling about the current Balkanized state of the legal profession, with almost everybody, ethics lawyers included, deeply occupied with their own particular bubble (ethics lawyers of course deal other lawyers’ bubbles on a daily basis.)  We have come a long way from 1927, when the “unified bar” was an accurate descriptor, with consequences both good and bad.   The legislation creating the CLA created a the largest bar association in the United States, with 100,000 members, literally overnight when it became effective January 1.

The now misnamed State Bar of California is  left to struggle  with performing its government regulatory function under its exclusive role as a consumer protection agency.  One axis of State Bar dysfunction– trade association v. government agency– has been dealt with.  The other axis — Legislature v. Supreme Court– continues, although the successful  enactment of  Senate Bill 36 after earlier efforts failed, bespeaks a level of communication between the Legislature and Supreme Court that is encouraging.  The relatively smooth revision and enactment of the new Rules of Professional Conduct after the fiasco regarding the first attempt to revise the rules in this century.

Tonight we’re going to party like its 1927!

But big problems remain. The Office of Chief Trial Counsel has just gone through a painful restructuring only to lose its newly chosen Chief Trial Counsel for reasons that are not clear.  Adequate funding for the Client Security Fund remains an issue, to the point where the State Bar is considering actually enforcing a 25 year old law allowing it to recommend monetary sanctions in discipline matters.  Questions hover over the future of the Lawyers Assistance Program (LAP), mandated by statute (Bus. & Prof. Code sections 6230 et seq.), but viewed by some as a little too beneficial to lawyers to be part of the new regulatory mindset, at least outside its discipline side corollary, the Alternative Discipline Program.  Current problems can’t escape the shadow of 30+ years of State Bar dysfunction, even now that the trade association functions are not in the mix.

The CLA offers the promise of holding on something of the old State Bar that was not concerned with often dismal work of regulation.  It is planning an annual meeting in September 2018 that will include receptions and activities formerly conducted at State Bar annual meetings.  Those of us (like me) that enjoyed the camaraderie and fun of those meetings can participate but at a price.  Will CLA entice enough lawyers to make the voluntary commitment necessary to hold on to these associative activities?  Local bar associations have long feared that a statewide bar association would suck up too much of the oxygen fueling the volunteer spirit, oxygen that seems to be running out as younger lawyers don’t participate in voluntary associations as much as they used to.  CLA is off to a good start in the high caliber personnel who are helping to get the new organization off the ground.  But its ultimate success is in the hands of California lawyers who can participate or sit out the fun as they see fit.


Waiting for Godot? No, just for the revised Rules of Professional Conduct

 On November 2, 2017, the California Supreme Court approved new revised Rule of Professional Conduct 5-110, the first new Rule from the Second State Bar Commission for the Rules of Professional Conduct (RRC-2.) This was the Rule that the Supreme Court suggested be considered for “fast-track” consideration in early 2015.

The “fast-track” was not without speed bumps.  After an extensive writing process by RRC-2, including participation by a liaison from the Supreme Court, and two rounds of public comment, the Supreme Court returned the Rule for further consideration earlier this year.  Now, 30 months after the suggestion of fast-tracking, the new Rule, substantially similar to ABA Model Rule 3.8, is ready for implementation.

Following in its wake are more than 100 other new revised Rules of Professional Conduct, submitted to Supreme Court in March 2017.  And some in California’s legal ethics community are starting to wonder.

The previous experience of the first Rules Revision Committee (RRC-1) looms large.  Between 2001 and 2009,  RRC-1 went through an exhaustive process to generate a new set of revised Rules of Professional Conduct largely based (like the current Revised Rules) on the ABA Model Rules.  Those Rules were approved by the State Bar and fitfully transmitted to the Supreme Court, where they languished until being rejected by the high court in 2014.

The participation of a Supreme Court liaison in the current process raised hopes that the current set of Rules would be speedily approved by the Court.  Now, it looks like the Court will engage in a painstaking review process of its own that will probably take years, and could, conceivably, rejected as well.

So, we wait and wonder if the California will ever join the rest of the United States and adopt some version of the Model Rules.

Will Impaired Attorneys Lose In State Bar’s Shifting Priorities?

Senate Bill 36, our current State Bar fee bill, seems to be coasting to passage in the Assembly and the Governor’s signature.  It makes a number of significant changes to the governing structure of the State Bar that many (including me) have thought were overdue, including eliminating elected attorney trustees,  replacing the office of State Bar President with an appointed chairperson and vice chairperson and, perhaps most significant of all, spinning off the State Bar sections into something called the Association (not to the confused with the hitmakers of the ’60s.)  The kinds of changes that would be consistent with an organization slowly metamorphosizing from an unwieldy and confused hybrid of public and private to a pure governmental agency.   Ultimately these changes will pay off.  But part of how big they pay off depends on California lawyers react to a State Bar that no longer acts as their trade association in any particulars.

The fate of the State Bar’s Lawyer Assistance Program and its related diversion program in State Bar Court, the Alternative Discipline Program underline that challenges.  And SB 36 underlines that underline with a last minute amendment to the bill that passed the Assembly Judiciary Committee on July 18, 2017, making this change to Bus.  & Prof. Code section 6140.9:

 Monies for the support of the program established pursuant to Article 15 (commencing with Section 6230) and related programs approved by the committee established pursuant to Section 6231 shall be paid in whole or part by a fee of ten dollars ($10) per active member per year, and by a fee of five dollars ($5) per inactive member per year. The board may seek alternative sources for funding the program. To the extent that funds from alternative sources are obtained and used for the support of the program, and provided that at least ten dollars ($10) per active member and five dollars ($5) per inactive member is available for support of the program each year, funds provided by the fee established by this section may be applied to the costs of State Bar general fund programs. Any excess funds not needed to support the program, including reserve funds, may be transferred to fund the Client Security Fund established pursuant to Section 6140.5, provided there are sufficient funds available to fully support the program.
Section 6230 et seq. is the Attorney Diversion and Assistance Act, a law passed in 2001 that mandates that the State Bar do something about the big problem of substance abuse and mental health in the legal profession, a long standing problem that recently caught the attention of the mainstream press with the shocking pronouncement that 1 in 5 lawyers has a drinking problem.   Under the auspices of the Act, a $10 fee was levied on the active members of the State Bar ($5 for inactive members) to run the State Bar Lawyer Assistance Program, as stand-alone program to help all California lawyers and as an adjunct to State Bar Court’s Alternative Discipline Program, meant to incentivize lawyers facing discipline with  substance abuse and mental health issues to seek treatment.
The significant and troubling amendment to section 6140.9 authorizes the State Bar Board of Trustees to do the thing that it was taken to task for a few months ago for doing:  taking money for LAP and putting it into the Client Security Fund (CSF).  CSF is another program that California lawyers pay into, $40 a year, to reimburse clients who have been ripped off by their attorneys.   All that is needed is a determination that there are funds in excess of what is “sufficient” to run LAP and ADP.
Despite the Attorney Diversion and Assistance Act, there is uncertainty over whether the Lawyers Assistance Program belongs in the new enforcement-focused State Bar.   Even though the consensus is that substance abuse is a major problem in the profession,  LAP probably seems to some to be a little too lawyer-friendly to be run by a police agency.  The proposed amendment to section 6140.9 may the first move to get the State Bar completely out of the rehabilitation business. But if not the State Bar of California,  then who?
SB 36 creates a wholly new organization, the vaguely named Association, although the original name before amendment was the California Bar Sections Association.  The reasons for the name change is not apparent, but one could speculate that the prior name might be deemed too restrictive of an organization that could grow into a true bar association with programs beyond the mandated education mission set forth the legislation.   Might LAP find a home in the Association?
The answer will depend on whether California attorneys step up and support the Association with their voluntary contributions.  It will also depend on whether leaders within the Association perceive an opportunity to be of service to the bar beyond the valuable services the Sections have always provided.  If there is a worthier cause than the sickness in our profession, I don’t know what it would be.