96th Installment. Challenge the California State Bar Court Fee Schedule in Federal Court

A legal-ethics hypothetical

Attorney charges client $17,000 for a $2,500 matter. When astounded client inquires, attorney’s billing office explains that attorney bills in $15,000 increments.

Hypothetical question on the California Rules of Professional Conduct:

Has attorney committed an ethics violation?

Answer:

Attorney has gravely violated Rules of Professional Conduct, rule 4 –200(A), which prohibits charging an “unconscionable fee.”

The fee is unconscionable because when fees are based on work done, they must be based on the work done on the particular case. The fee must be based on “all the facts and circumstances” of the particular case. (Rules Prof. Conduct, rule 4 –200(B) [emphasis added].) Equivalence classes are allowed for work of equal expected amount but not when the work is highly variable within the range.

What discipline for the routine use of this despicable practice? I don’t have access to the State Bar Review Department’s deliberately inaccessible case law, but I’d estimate a one-year suspension. Other opinions?

The California State Bar’s outrageously unconscionable fee structure

In another manifestation of its ethical villainy, the State Bar charges respondents’ legal costs and fees in exactly this shameful manner, brazenly defending its prerogative to save administrative costs by overcharging. Defense attorney D.C. Carr (Kafkaesq) provides a much-needed exposure of this fee structure. Some examples. 1) A simple challenge before the Review Department costs about $15,000 if taken during the first 120 days. 2) If a trial lasts a fraction of a second day, the cost rises about $6,000.

The California State Bar Court’s state and federal vulnerabilities

There are at least two bases for challenging the fee structure—one at the state level, directed to the fees alone; the other federal level, directed against the whole action because the fee structure denies due process. The state-level challenge is based on the State Bar’s having exceeded its jurisdiction. Since the averaging method the State Bar uses is unethical under the Rules of Professional Conduct as well as under ordinary morality, Business & Professions Code section 6086.10, which provides the right to levee fees, isn’t plausibly interpreted as giving the State Bar the right to impose fees unrelated to costs. The statute allows the State Bar “reasonable costs,” a term of art in California civil procedure, requiring an account of actual costs in the particular case.

The federal challenge is based on the federal standards for due process, which focus on the right to be heard, apply to state courts, and are offended by arbitrary fees. Business & Professions Code section 6086.13 permits waiver for hardship but doesn’t compel it, where the threat of huge, disproportionate fees typically leverages settlement terms and routinely prevents respondents from being heard.

I plan future Installments to consider the procedural issues in mounting a state or federal defense based on the theory that the fee structure denies respondents the right to be heard.

Interlude 25. California Supreme Court weighs in for state-bar extremists: Time to turn to the federal courts

The California Supreme Court has taken the unprecedented step of returning 24 cases for harsher discipline. The Supreme Court would exceed its jurisdiction by expressly demanding an outcome, so it must order the bar court to “reconsider” the discipline or itself impose the harsher sentence. But the Supreme Court’s terse message was clear for all who could read, for two reasons: the Supreme Court cited the infamous Silverton decision; and most tellingly, the Supreme Court returned no cases in which the Bar Court had recommended disbarment. The Supreme Court wasn’t interested in reversing disbarments; it wanted a greater number.

Why didn’t the Supreme Court impose the disbarments itself? This way, it sent a clear message to the State Bar: we want you to do the dirty work; that’s the reason you exist! The State Bar immediately took the hint by petitioning to recall 24 additional cases, despite the patent illegality of this move. (State Bar Court Rules of Procedure, Rule 807(b)(2).) The one-sidedness of the Supreme Court’s intervention—tacitly urging greater harshness rather than justice—reassured the State Bar the Supreme Court would let it run untrammeled.

Only the patsies in the state-bar defense establishment contrived to construe the Supreme Court’s message as ambiguous. The state-bar-court system is their playground and their livelihood. Never do official bar-defense attorneys appeal to the federal courts. That would violate their silent contract with the Office of Chief Trial Counsel.

California lawyers should take the Supreme Court’s order—especially its omissions—as an official announcement that it will overlook unjust prosecutions and excessive verdicts. If there is any legal remedy for unjust treatment by the California State Bar, it lies in the federal courts—where official bar-defense counsel will never tread.

95th Installment. The Stephen R. Glass Matter and the Core Values of Legal Ethics

2^nd in Stephen R. Glass series

Even status-quo ethicists universally reject the California State Bar Court’s decision to admit compulsive liar Stephen R. Glass, who wrote scores of fabricated stories for the New Republic news magazine while he financed his law education from the booty. Many of these ethicists are guarded in their conclusions, but attorney Brian Ketterer, who is not an ethicist, deals with the problem directly to advocate a per se rule against the admission of serious repeat transgressors. The Bar Court’s incompetence warrants taking the proposal seriously, although the official ethicists are too insular even to comment. Whereas the proposal expresses the near-universal distrust of State Bar discretion, blameworthiness for character-and-fitness purposes must be measured by standards relevant to the practice of law; some misdeeds—such as drug offenses—may even be entirely irrelevant.

A few core values and moral capacities are indispensable for the ethical practice of law. Prefiguring the all-important loyalty to client, the central value for law practice is loyalty to those in whose interest the profession properly functions, and the expression of loyalty most relevant to law practice is honesty within the essential professional commitment. Loyalty and honesty together add up to more than the sum of the two parts. Neither loyalty nor honesty alone is an unconditional virtue for attorneys, who aren’t completely forthright with opponents or even judges and who inevitably have conflicting commitments—attorneys’ commitments to family, for example, will conflict with devoting their whole time for client benefit. What distinguishes the ethical requirements befitting attorneys’ exercise of agency on clients’ behalf is the duty to be completely honest in the context of the agency, telling their clients the whole truth and honoring the promises accompanying the representation.

Prior conduct expressing disloyal dishonesty should be the lynchpin of character-and-fitness screening. Glass’s twofold dishonesty illustrates how different forms of dishonesty should bear different weights in character-and-fitness hearings: Glass lied to his editors and he lied to his readers, but deceiving readers is by far the more important dereliction, a distinction going far to clarify the crux of the ethics fundamental to practicable legal representation. Glass’s relationship with his editor was just another business relationship, but his relationship with his readers goes to the heart of the ethics proper to journalism—the ethics required for practicable journalism. The chart below (click to expand) depicts the parallels between journalists and attorneys.

Glass was forced to admit performing acts of disloyal dishonesty impugning fundamental journalistic ideals. A journalist doesn’t lie to his readers for the reason an attorney doesn’t lie to his clients. That conduct is doubly disloyal: disloyal to readers (or clients) and disloyal to the profession’s essential ideals.

94th Installment. Esteemed Legal Ethicist Richard Zitrin Lambasts California State Bar

Convergence

Incredibly, though, the Bar's Office of Trial Counsel (OTC) has a history of both under-prosecuting cases, such as those I cited, while at the same time over-prosecuting others. (“Why Bar Sometimes Overreaches on Discipline,” The Recorder, Sept. 30, 2011.)

So says respected legal ethicist Richard Zitrin, law professor at University of California, Hastings. (HT: Kafkaesq.) Does the message sound familiar? In the Second Installment to kanBARoo court in 2007, I wrote:

These Installments cannot directly prove the State Bar's penchant for unjust prosecution, even in a single case. They do not target injustice as such because, in truth, injustice is not the basic problem. From what I have learned through dealing with the State Bar, failure to prosecute and insufficiency of charges are as likely as over-zealousness to define the State Bar's performance. These Installments should not convince readers that State Bar biases produce harsh outcomes but rather that the incompetence of the State Bar is so extreme that the Bar machinery will necessarily produce the wrong outcome. Incompetence more than over-zealousness is the defining trait of the California State Bar, and such incompetence benefits no one except the guiltiest.

Synopsis

In a three-part series in The Recorder running in September and November 2011 (most unfortunately, subscription only), Zitrin explains the incompetence, insularity, and self-protective mindset that induces the State Bar to suffer disloyal attorneys while it prosecutes vulnerable nonconformists.

Zitrin’s first explanation is that the State Bar prefers the easy way. It is too incompetent to prosecute many of the more important cases (Ronald N. Gottschalk comes to mind), so it picks cases based on their probative triviality.

Prosecutions of lawyers who have seriously and serially harmed clients, while hardly daunting, can be fact-intensive. Prosecutors must prove that a manifestly unfair transaction with a client was “really” theft or embezzlement, or that apparent abandonment of the client was not something else—an uncooperative client, miscommunication or change of address. None of these proofs involves rocket science, but they do require competent trial lawyers [which, as Zitrin documented earlier, the State Bar lacks]. And they are far more difficult than technical trust-fund violations, where the rules are applied strictly and the proof is readily at hand through bank records. No wonder OTC loves prosecuting those slam-dunk violations.

Zitrin’s second explanation resembles my polemic against the State Bar’s appearance-of-impropriety doctrine. Zitrin writes:

The Bar has always been highly sensitive to how it’s perceived. Or, more accurately, how it perceives it’s being perceived. So if a judge complains about a lawyer, even if OTC doesn’t see a violation it will likely examine the case closely. If there is political pressure—or lots of publicity—then even more scrutiny is likely.

Zitrin’s third explanation corresponds to what I call bureaucratic reflex, not judging the case on its facts but on a moralistic archetype of wrongdoing.

The highly insular State Bar does not like it when lawyers act outside the box—or, more accurately, outside their box. It has long been primed to go after people it considers outliers. Too often, OTC resorts to the “catch-all” discipline provided not in the ethics rules but in the State Bar Act, originally enacted in the 1930s. Particularly appealing to prosecutors are Business & Professions Code § 6106 (“The commission of any act involving moral turpitude, dishonesty, or corruption, whether the act is committed in the course of his relations as an attorney or otherwise, and whether the act is a [crime] or not, constitutes a cause for disbarment or suspension”) and § 6068, subd. (a) (“It is the duty of an attorney to do all of the following: (a) To support the Constitution and laws of the United States and of this state.”)

Zitrin illustrates the prosecution of outliers with matters involving famous attorneys in two cases where the State Bar was reversed by the California Supreme Court: Belli v. State Bar (1974) 10 Cal.3d 824 and Jacoby v. State Bar (1977) 19 Cal.3d 359. The recent prosecution of Philip E. Kay is the current version—after the Supreme Court stopped reviewing State Bar matters.

Zitrin assesses the current state of affairs:

The State Bar has a proven track record of mediocrity in dealing with discipline. Even with the advent of the professionalized State Bar Court, OTC’s modus operandi has not appreciably changed: too many serious cases falling through the cracks; too many “easy” prosecutions resulting in harsh discipline; too many of the worst offenders still in practice.

And Zitrin offers a bleak prognosis:

Even assuming that staff can be improved and professionalized from within, changing OTC’s law firm culture will be far more daunting. There’s no reason  to think that the State Bar’s insularity and opacity will change; no one I talk to within the Bar showed the slightest interest in that.

 Limitations

Although Zitrin’s critique shows that even some official ethicists are catching on, Zitrin’s is less thoroughgoing than kanBARoo court’s; he's dismayed by the prosecution of outliers but seems more concerned about expenses than attorney victims. Regarding one case, where a prosecutor was ordered to investigate whether a state lawyer could be disciplined for exposing the fraud of a nonclient state boss, Zitrin comments, “What a waste of time.” But intimidation, not time, is the main issue.

Zitrin is overly impressed with some prosecutors, such as Jeffrey DalCerro (head of the San Francisco Office of Trial Counsel), whom Zitrin terms “long committed to busting bad guys.” Zitrin fails to grasp that self-righteous moralism encapsulates State Bar "insularity and opacity."

Most importantly, Zitrin places excessive confidence in the California Supreme Court. He proposes abolishing capital punishment to save professional self-regulation by dramatically reducing the Supreme Court's caseload, so it can effectively supervise the Bar. A worthy proposal in itself, abolition of capital punishment, but Zitrin doesn’t understand that the Supreme Court’s special relationship to the State Bar (which functions as its administrative arm) creates a conflict of interest which incapacitates scrutiny. (Guarino v. Larsen (3rd Cir. 1993) 11 F.3d 1151, 1159 n.4 ["when a court makes a decision concerning the legality of its own actions, it may be too biased to justify abstention by the federal courts even if its actions are considered adjudicative"]; Friedman & Gaylord (1999) Rooker-Feldman, From the Ground Up, 74 Notre Dame L. Rev. 1129, 1132 ["there is sufficient basis for questioning whether a state's highest court can provide the dispassionate resolution that ought to be required when no other judicial review commonly occurs"].)

Interlude 24. What would poor, helpless Westlaw and Lexis do without the Utah State Bar's solicitude?

Some law firms require that student law clerks misappropriate their academic Westlaw and Lexis accounts for business use, and the Utah State Bar has issued an opinion condemning this theft as violating professional ethics. (HT: Legal Skills Prof Blog.) But such misappropriation isn’t new, and it isn’t confined to Utah. Why was any state-bar response to this scandalous practice so delayed? Why haven’t other state bars acted? Why has the Utah Bar issued only a warning? The Utah State Bar opinion answers: while the state bars are recognizing, only now, that these hirers commit disciplinable offenses, the state bar censures them for the wrong reasons. The Utah Bar’s reasoning showcases state-bar authoritarianism: fawning over the powerful, with only omissive contempt for the weak.

The criminal law on their side, Westlaw and Lexis can defend their commercial interests without the state bar’s help. The research services have acquiesced because they find advantage in the law firms’ unacknowledged use of student accounts—another way to offer a free trial. The Utah opinion is indifferent to the truly despicable. The students are offered clerking jobs, then subjected to a bait and switch. The firm asks for their time, then demands their souls. The state bars never wax indignant about deceitful acts and exploitative practices victimizing law clerks and associate attorneys.