It’s the fault of the State Bar—even more than the fault of the Legislature—that foreclosed homeowners can’t get lawyers, for these reasons: the State Bar failed to defend lawyers from unjust accusations and instead helped inflame anti-lawyer sentiment; the State Bar failed to use its discretion to enforce parts of the legislation; and the State Bar denied the law’s ambiguity.
1. The State Bar failed to defend California lawyers against slurs.
The State Bar publicly bewailed the extra consumer complaints and demonized the lawyers complained against, but the number convicted were a small percentage of complaints. It shrunk from the conclusion that the number of complaints mainly resulted not from the greed of lawyers but from the desperation of struggling homeowners. In desperate circumstances, some homeowners used threats of State Bar complaint as extortion against lawyers, a problem the State Bar never addresses.
2. The State Bar self-servingly abused its discretion to prosecute.
The State Bar recognizes its discretion to refrain from enforcing parts of the law, having closed all cases involving payment schedules while it had a backlog, prosecuting similar cases only when the backlog was resolved. The bar had better reasons to refrain from these prosecutions than the self-serving reduction of its backlog. First, legal precedent favored it, as the Bar had previously argued and a U.S. District Court held that the legislation doesn’t apply to all litigation. Second, bundling violations don’t constitute a violation of legal ethics but rather a violation of an administrative rule. The Legislature gave the Bar jurisdiction to discipline violations of the bundling provisions, but it also subjected violators to criminal penalties. Such technical prosecutions should be left to the criminal courts; they don’t bear on the lawyer’s ethical character.
3. The State Bar denied the law’s ambiguity.
In its published case law, the State Bar Review Department denied that the law was ambiguous—despite the contradicting interpretation the state bar’s chief prosecutor had himself urged in federal court and despite the law's patent ambiguity. (In the Matter of Swazi Taylor (2012 WL 5489045); the federal district court case is Duenas v. Brown [unreported].)
The law isn’t clear because the meaning of “each and every service the person contracted to perform or represented that he or she would perform” is ambiguous. (Civ. Code, § 2944.7, subd. (a)(1).) It does not unambiguously state that “unbundling” matters into separate contracts is illegal.
Only the banks benefit from preventing foreclosed homeowners from getting lawyers. Apart from the State Bar’s incompetence and the courts’ pro-bank favoritism (often eliminating every consideration other than “did you pay?”), there is the background moralistic bigotry of the whole national state-bar establishment against debtors.
kanBARoo court predicted the state bars would prevent lawyers from representing debtors against the banks, in State Bar Establishment: Pro Bono for the Banks:
As the economic depression deepens so does political oppression, as the police are the instrument forcing an adverse orderliness on the enraged and impoverished. When banks today mount a collections' offensive against the public that financed their rescue, what role will lawyers play in helping the poor and indebted resist the onslaught? None if the state bars, specialized branches of the police-prosecutor apparatus, have their way. In three jurisdictions, the state bars have already disbarred or denied admission to lawyers for carrying excessive debt. For the state bars, indebtedness is moral turpitude!