Interlude 15. Disbarring the State Bar

In an astonishing but deserved worsening of fortunes for the California State Bar, Governor Arnold Schwarzenegger vetoed the State Bar appropriations measure. (See http://tinyurl.com/yla9zlo.) Without funding the State Bar is dead, one of the most favorable potential outcomes. Schwarzenegger vaguely demanded reforms, his motives no doubt predominantly fiscal, but Schwarzenegger should be held to his commitment. Since no serious reforms will be forthcoming, Schwarzenegger should axe the State Bar, which is so broken it does much more harm than good.

The veto confirms that the political establishment repudiated Drexel's extremism by removing him, and it continues to punish this arrogant, out-of-control police agency. The themes Schwarzenegger sounded show that critics' attacks have gained foothold in public-opinion's mainstream. Schwarzenegger mainly objected that the State Bar has not proven itself above reproach, most blatantly in the Sharon Elyce Pearl case, where a clerk embezzled 6.75-hundred-thousand dollars over eight years while the State Bar recklessly disregarded its duty to secure entrusted funds. Publicizing the Office of Chief Trial Counsel's statutory responsibility for the embezzled funds, kanBARoo court uniquely argued that the case exposed the State Bar's ethical hypocrisy.

60th Installment. California State Bar becomes bar-establishment laughing stock

The California State Bar became laughing stock of the State Bar Establishment when the attorney general charged clerk Sharon Elyce Pearl with embezzling $675,000. She had persisted for eight years before the California State Bar noticed. (See http://tinyurl.com/ceydkh)

A Legal Ethics Forum blogger posted:

Sad Irony: State Bar victimized by (alleged) staff embezzler: We've all heard countless times about a solo practitioner facing disciplinary consequences because the lawyer's admin embezzled funds. (http://tinyurl.com/cz9rde)

The State Bar Establishment's embarrassment isn't misplaced. The California State Bar, which terms misappropriation by staff a supervising-attorney's willful act—casually adding charges of moral turpitude when any evidence of failure to supervise can be found—proved during an eight-year period that its moralistic stance is a pose. Although the clerk didn't embezzle clients' funds, the ethical culpability is the same because the State Bar held the money as fiduciary of the people and government of California. "All property of the State Bar is hereby declared to be held for essential public and governmental purposes in the judicial branch of the government..." (Bus. & Prof. Code, § 6008.) The Office of the Chief Trial Counsel, the prosecutorial entity, bears blame because that Office is charged with internal-oversight duties by the same law authorizing the State Bar's prosecution of disciplinary complaints. (Bus. & Prof. Code, § 6044.)

If the board of governors, which runs the State Bar, can't supervise ordinary commercial operations, how can it supervise the Office of the Chief Trial Counsel? The board of governors was designed to be ineffectual: consecutive (three-year) terms are prohibited, only annual meetings are mandated, and six members must not be lawyers. The Legislature disempowered the board of governors intending to empower the California Supreme Court, the State Bar's other supervisor, but since the Supreme Court has shown that its objectivity departs when the court hears allegations against its State Bar administrative arm, the feebleness of the board of governors unfetters the Chief Trial Counsel. (See Guarino v. Larsen (3rd Cir. 1993) 11 F.3d 1151, 1159 n.4.) Even the sycophantic State Bar Defense Establishment complains about the abrupt change in punitiveness and moralism when a new Chief Trial Counsel takes over.

This comedy isn't one of the gravest harms wreaked by the lawless State Bar, but its reckless failure to supervise public appropriations proves its ethical hypocrisy.

57th Installment. Against sentimentalizing misappropriation

Irate clients lambast the State Bar for laxity, I castigate it for oppression, and the uninformed might conclude that the truth lies between. But both criticisms apply, not only because the State Bar is incompetent. Rather than lax or severe, the State Bar is unconcerned about the most important wrongdoings and exaggeratedly concerned about the less important. More exactly, its concerns follow its pecuniary interest.

What's the worst harm an attorney can inflict on a client? If you listen to the State Bar, you'll think misappropriation of the client's money. No doubt, an attorney who embezzles client funds is unfit to practice law and should be disbarred, but the State Bar's Chief Trial Counsel advises attorneys of a different threat to their livelihood when he states the main risk they run for disbarment is misappropriation by staff. (See http://tinyurl.com/bhlbnf) Embezzlement justifies ejection from the profession because it is a crime of deceit. Courts comment that "willful misappropriation" encompasses a broad spectrum of acts (Edwards v. State Bar (1990) 52 Cal.3d 28, 38), yet the State Bar denominates them with a single term. Embezzlement and negligent misappropriation are essentially the same only to the State Bar, which has a financial interest in the client trust funds. The courteousness of the Chief Trial Counsel's recommendation shows he realizes attorneys who trust their staff excessively don't manifest the despicable traits of character justifying disbarment for embezzling client funds.

The public's impression that negligent misappropriation proves lack of fitness to practice law comes from the State Bar's misleading sanctimony tying mistakes in handling funds to disloyalty to client. Misappropriation can impose damaging delays on recovery, but, a well-kept secret, losses due to fraud are reimbursable by expedited Client Security Fund procedures: the clients' protection from office fraud is not, today, the attorney's primary duty. But, in an earlier day, the California State Bar balked at establishing a client security fund. In 1969, the Court of Appeal commented on the State Bar's procrastination and on the absurdity of relying on the attorney as guardian of client funds. The court pointed out that by 1967, twenty client security funds were established in twenty foreign jurisdictions, 28 states and eight local bar associations, but "the State Bar of California, instead of leading in this work, has been lagging. Although the State Bar has been studying the matter since 1961 [citation], it has yet to take action." (Blackmon v. Hale (1969) 78 Cal.Rptr. 569, 582 [withdrawn for other reasons].) The Court of Appeal parodied the State Bar's moral message:

Turn your money over to me and I'll take care of it, but if I steal it you will have no recourse against anyone but me. Not only that, but as your attorney I may claim offsets for fees earned and disbursements made on your behalf and prevent any accounting or audit of the money for years, during which time you will have no remedies against me except to usual ones of any creditor pressing a contested claim against a denying debtor.

(Id., at p. 580.)

The State Bar partly abolished client serfdom in 1972, and the Client Security Fund indemnifies for misappropriation up to $50,000. With indemnification's advent, misappropriation isn't the worst injury an attorney's office can inflict on clients. The actual worst commonly happens in the ordinary incompetent handling of cases, usually not constituting actionable malpractice. An attorney's fundamental ethical duty of client loyalty is undermined by the State Bar's disciplinary emphasis on misappropriation (and disobedience). A loyal attorney must prioritize effort based on client legal interest, but anachronistic rules assigning the attorney exclusive personal responsibility for safeguarding funds distract attorneys from attending to the client's real interests. The State Bar's sentimentalizing of the attorney-client relation diverts attorneys, distorts professional ethics, and blocks further improvements in client security, like the needed tenfold increase in Security Fund coverage.