103rd Installment. California State Bar: Toady to the foreclosing banks

The California State Bar is extending its helping hand to the banks—not protecting consumers—by making it impossible for homeowners to retain a lawyer to resist foreclosure. The State Bar intervened in the mortgage crisis under new bank-instigated legislation (October 2009) making it illegal for lawyers to charge for mortgage-relief services until all contracted services had been completed. (Civ. Code, § 2944.7; Bus. & Prof. Code, § 6106.3.) The law itself has been enthusiastically promoted by the State Bar, which vociferously reported that in each of two years consumer complaints had risen from 1,000 to over 3,000.

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.

Conclusion

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!

90th Installment. Behind the James Towery Ouster: California State Bar Gets Even Worse

Nobody quite knows why James Towery—the replacement for ousted extremist Scott Drexel—resigned on July 1, one year into his term as chief trial counsel for the California State Bar. Publicly, Towery blamed the resignation on the logistics of his commute from his San Jose residence, but the subsequent firing of four managers by the State Bar’s executive director, Joseph Dunn, convinced even David Cameron Carr, leader of the State Bar defense establishment, that the so-called resignation—precipitated by the California Senate’s failure to confirm after eleven months—was the beginning of a purge.

Yes, but who comprise the factions? Immediately following Drexel’s ouster, kanBARoo court surmised that the State Bar defense establishment spearheaded it. But the Towery purge wasn’t the prosecutory bar’s revenge. At issue—what to do about the huge backlog created by Drexel’s excesses (as well as some of Towery’s in the foreclosure arena).

Towery’s contention with the State Bar’s political leadership centered on the new rules, effectuated in January 2011. In his public comment on the proposals, Towery—while pretending a general sympathy with the rules—opposed all the major proposed changes:

• Eliminate most discovery from State Bar court proceedings
• Remove the Evidence Code in disciplinary proceedings, replacing it with the rules prevailing in administrative courts
• Automatically disbar defaulting respondents

Towery submitted (verbatim) the following criticisms in August 2010 after the Board of Governors allowed extra time for public comment to allow the new chief trial counsel to submit a response:

• As for discovery, each party should continue to be allowed at least one deposition of a nonexpert witness and without court approval;
• Unlimited depositions of expert witnesses;
• Parties should be allowed to take depositions of out-of-state witnesses;
• Parties should have the right to unlimited depositions in reinstatement and moral character cases;
• As for the evidence standard, reliability and predictability of evidence is best served employing the high standards and safeguards of the Evidence Code;
• The relaxed standard of evidence would permit parties to offer large quantities of hearsay testimony and documents
• APA hearsay objections can be lodged but not ruled upon until just prior to submission;
• Outside training for judges and OCTC counsel may help with the undue consumption of time pertaining to evidentiary objections.

But these comments don't address the backlog. Towery's alternative for cleaning it up might have been the "fire sale on settlements" disavowed by Executive Director Dunn, an alternative bound to be unpopular with the State Bar's prosecutory wing—and wildly popular with the State Bar defense establishment (the "respondent bar," who participate in deliberations.)

Interlude 10. California State Bar Decapitated

The State Bar board of governors fired Chief Trial Counsel Scott J. Drexel yesterday. The discharge is effective next Wednesday; Drexel's contract won't be renewed. State Bar opponents can celebrate Drexel's fall as partly due to their efforts, but they shouldn't expect fundamental change in State Bar practices, which are rooted in its structure, its rules, the provisions of the State Bar Act, and the outlook of the national state-bar establishment.

Scott Drexel fell in a rift between the California State Bar establishment's prosecutorial and defense wings. The various grades of bar trial counsel support Drexel because he allowed the junior prosecutors to run rampant over attorneys' rights, but Drexel's retributionism hurt business for the State Bar's defense wing. Attorneys specializing in State Bar defense are predominantly former state-bar trial counsel. They remain genial with their erstwhile colleagues, who favor these tainted defense counsel in plea bargaining. The State Bar trades lesser discipline — truly an irrelevant consideration for most respondents, whose careers are destroyed by any public discipline — for respondents coached against contention. Under Drexel the deals have been fewer, disadvantaging the State Bar defense establishment and propelling it into a separate professional organization.

Likely the breaking point for the board of governors — which decided in an undemocratic closed meeting — was Drexel's attack on some lawyers as mortgage scammers. Drexel without clear authority required dozens of attorneys to answer inquiries, although he charged few.

Drexel prosecuted more often, seldom settled significant cases, and investigated extravagantly to justify the State Bar's budget during this economic depression. Unfortunately, more than expressing concessions to opponents of State Bar oppression, the rift between Drexel and the State Bar staff, on the one side, and the state-bar defense establishment and other attorneys whose income Drexel crimps, on the other, expresses interests competing for California's diminished fortunes.