Focus returns to tighter
discipline with Supreme Court’s return of 24 cases
By Diane Karpman
Recent signs suggest that the discipline pendulum (which
shifts every decade or two) is about to radically switch once again. On Thursday,
June 21, in an unprecedented move, the Supreme Court of California, which by
law has the last word in attorney discipline, referred 24
(yes, twenty-four) cases back to the State Bar Court. These cases represent many hours
of heavily negotiated, fact-intensive, detailed stipulations, which were
signed, sealed and delivered to them. The ink was already dry on these
settlements, in which the respondents, trial counsel, and State Bar Court judges
had all signed off. In the past, some in the legal profession had assumed the
Supreme Court would merely "rubber stamp" these State Bar Court’s
determinations. Obviously, that’s not true anymore.
Every year, hundreds of disciplinary stipulations are
approved. This is a long, tedious process, involving the application of case
precedents and the balancing of mitigating and aggravating factors. “The 24”
were returned for "further consideration of the recommended discipline in
light of the applicable attorney discipline standards. See In
Re Silverton (2005) 36 Cal. 4th 81, 89‑94; and In
Re Brown (1995) 12 Cal. 4th 205, 220.)”
Both of those cases were returned for imposition of greater
discipline. Silverton is iconic as one of the very few double disbarment cases.
Inferentially, the sanctions in these 24 cases are insufficient. However, are
there some discernable trends we can glean from these rejects? Obviously,
because these cases are still “in play,” we can’t discuss the particulars, but
some overarching trends appear to be clear. About half of the cases involved
financial shenanigans or "loan modifications." This is to be expected
when you consider that the State Bar allocated vast resources to the Loan
Modification Task Force, and more importantly, that people were losing their
homes because of these
situations.
“The 24 cases” are sending a strong message that sharing fees with a non‑lawyer is not just going to be a slap
on the wrist. Quite a few involve this circumstance, prohibited by Rule 1‑320
(Financial Arrangements with Non‑lawyers). This rule codifies the
centuries-old concept that a lawyer’s independent judgment will be impaired if
there is fee splitting with a non‑lawyer.
This is a topic that is resonating all over the world. A few
years ago, Slater & Gordon (a plaintiffs’ class action firm in Australia)
was permitted to go public. Washington, D.C. has permitted non‑lawyer law
firm ownership for many years and, as far as I know, the sky has not fallen on
those attorneys. However, in those situations the lawyers maintained primary
control over the entity. This may have been lacking in the rejected “24 cases,”
in which it seemed the lawyers were receiving a small percentage of the
fees collected for loan modifications processed by non‑attorneys.
Another factor that appears in these cases is the failure to
make a refund to the clients (3‑700 (d)). When a member’s employment is
terminated, he or she must give back the file and promptly refund any part of
the fee paid in advance that remained unearned. This is another theme
repeatedly appearing in “the 24.”
By citing to Silverton, it seems that any repeat player must
be subject to substantial disciplinary sanction in a subsequent case (at least
half a dozen of the 24). There are attorney disciplinary standards which apply
and, according to standard 1.7(a), the degree of discipline imposed in a
subsequent proceeding must be greater than that imposed in the prior
proceeding unless it would be "manifestly unjust." (This is rarely
found.) Note that Standard 1.7(b) requires disbarment if a member has a record
of two prior impositions of discipline. (Yes, this is a three strikes rule,
which has existed for decades.)
In reviewing the actual papers for “the 24,” there is an
almost startling absence of case law in support of their deviations from the
standard discipline. The standards are similar to "sentencing
guidelines." “The 24 cases” all recite what would ordinarily be the
discipline, and then deviate, without much case support for the deviation.
A license to practice law cannot be loaned out or sold to
the highest bidder. While we were in school studying torts, some people were in
the streets studying crimes, and are often far more sophisticated than lawyers.
Some of them set up entire “law offices” staffed by non‑attorneys, then
retain newly admitted lawyers, or those tottering on the brink of retirement,
and run an entire “practice mill” around their license. These criminals find
lawyers on the margin, suffering from some type of impairment, an incest victim, or someone
with a seriously ill spouse. They would find some attorney suffering from some
circumstance that made it easy to dominate them and then simply use the attorney’s
name. This was widespread in the ‘80's and ‘90’s, especially in heavily urban
areas like the Wilshire Corridor and Ventura Boulevard, where no one knew their
neighbors. It would take them about two or three years to tarnish a lawyer’s
license, and then these operations would simply move in a "new
lawyer." Many of “the 24” suggest that type of operation, where lawyers
are fungible, just figureheads to give these criminals the ability to engage in
the unauthorized practice of law.
Another indication that disciplinary prosecution is becoming
more intense is that the State Bar has begun prosecuting lawyers for MCLE
violations. Please read the MCLE rules. There are some "bonanza units," like teaching a course,
that entitle you to four units for every one hour in class. Writing an article
is “one for one.” Many of the people who are being investigated by the State
Bar for MCLE issues just didn’t know how to accurately count their units. Be
sure that you get your units and keep track of them to protect yourself. Just
because "the 24 cases" were rejected does not mean that Jack Bauer is
going to be there to rescue you.
Legal ethics expert Diane
Karpman can be contacted at 310-887-3900 or karpethics@aol.com.