State BarThe California State Bar is supposed to protect consumers from bad attorneys…..but does it really?   Not according to its recently sacked Executive Director and to a California State Auditor’s report.  And not according to a number of  highly reputable consumer watchdog groups.   And not according to this commentator who has seen close-up how the Bar works.   It’s not pretty.   But, then again, the State Bar may be no more dysfunctional than the justice system it serves.    Still, the allegations made by former Executive Director Joe Dunn are noteworthy and sobering.  (Editor’s note:  Dunn is a former California State Senator and Director of the California Medical Board.  In our dealings with him, we’ve found him to be a straight-shooting, honorable and truly public-minded individual.   So his allegations should be given serious consideration).    It is very likely that Dunn’s claims will figure prominently in State Bar reforms to be deliberated by the California legislature in 2015.

Dunn filed a legal complaint against the California State Bar in November 2014.  In his complaint (subsequently amended), he made the following allegations:

  • That when he was hired in 2010, he sought to implement reforms that were overdue and compelled by 2009 government audit  which concluded that the State Bar was not effectively investigating consumer complaints about attorneys and required greater transparency in its process;
  • He discovered that the Bar’s chief trial counsel, Jayne Kim, had removed a category of discipline cases from reports to conceal the true backlog of disciplinary cases.   He claims that Kim’s conduct did not involve a few isolated cases but was “shockingly rampant”;
  • The effect of this concealment of discipline cases was to undermine the Bar’s effort to crack down on shady lawyers who exploit California’s large immigrant community;
  • The head of the State Bar’s Board of Directors (elected by state attorneys) sought to take over “unprecedented” control of the regulatory agency;
  • Dunn opposed a secret plan by the Bar’s Board of Directors to lien its San Francisco headquarters, under false pretenses, so as to undermine Dunn’s plan to sell some State Bard property and, thus,  defray membership costs and to support its core functions.
  • The State Bar spent over $300,000 by hiring a law firm charging $800 per hour to write a report about Dunn.  The report was never reviewed by Dunn and it was surreptitiously leaked to the media after Dunn’s termination.

In mid-2015, the California State Auditor issued a scathing report on the State Bar’s poor record of attorney discipline as well as some concerns about the financing of Bar’s new offices.   For anyone interested in learning more about State Bar operations, this is a must-read.

Throughout 2015, the Dunn case will play out in the courts…..slowly but surely.   In the meantime, a February decision by the U.S. Supreme Court involving a state dental board and state-action antitrust immunity adds pressure for State Bar Reforms.   Three highly regarded public interest groups are pointing to state bars as an example of state licensing boards that are not complying with the Supreme Court’s February decision finding that a North Carolina dental regulatory board didn’t have state-action antitrust immunity in a challenge to its authority over nondentists who perform teeth whitening.  (North Carolina State Board of Dental Examiners v. Federal Trade Commission)  The Supreme Court decision said that when a state board is controlled by active market participants in the market it regulates, state-action antitrust immunity can’t be invoked unless the challenged restraint of trade is affirmatively expressed by state policy, and the policy is actively supervised by the state.

The three groups that wrote to state attorneys general are the Consumers Union, the Citizen Advocacy Center and University of San Diego School of Law’s Center for Public Interest Law.  To comply with the decision, their letter said, regulatory boards controlled by active market participants will have to change in structure so that a supermajority are public members, or the board will have to be subject to active supervision by the state. The groups’ letter to California Attorney General Kamala Harris can be found here.

The groups letter notes that while members of regulatory boards believe they are serving the public interest, they are necessarily part of the “tribal grouping that our occupational associations have fostered.”  It goes on to point out that state bars are controlled by attorneys and rarely discipline for excessive billing or intellectual dishonesty. Few require any demonstration whatever of competence in the actual practice area of law relied upon by clients. Few require malpractice insurance, or in any way ameliorate the harm from attorney incompetence.   Essentially, these state-sanctioned oversight agencies “carve out momentous exceptions from federal antitrust law” without the level of independence from the implicit focus of current practitioners.

Regulatory oversight of the legal profession has not served the public’s interest.   Dunn’s complaint and the consumer watchdog groups’ letter should serve as preludes to legislative action to reform the State Bar’s oversight and, ideally, to restore Dunn to the Executive Director’s position.