The State Bar of
California’s Attorney
Discipline Process
Weak Policies Limit Its Ability to Protect the
Public From Attorney Misconduct
April 2022
REPORT 2022-030
For questions regarding the contents of this report, please contact our Public Affairs Office at 916.445.0255
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CALIFORNIA STATE AUDITOR
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Michael S. Tilden Acting State Auditor
621 Capitol Mall, Suite 1200 | Sacramento, CA 95814 | 916.445.0255 | 916.327.0019 fax | www.auditor.ca.gov
April 14, 2022
2022‑030
e Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814
Dear Governor and Legislative Leaders:
e StateBar of California (StateBar) is responsible for protecting the public from attorneys who fail
to fulfill their professional duties, and it works to meet this obligation by administering a disciplinary
system that investigates and prosecutes complaints. However, our audit of the StateBar found that it
failed to effectively deter or prevent some attorneys from repeatedly violating professional standards.
We found that the StateBar prematurely closed some cases that warranted further investigation and
potential discipline. We reviewed files for one attorney who was the subject of 165 complaints over
seven years, many of which the StateBar dismissed outright or closed after sending private letters to the
attorney. Although the volume of complaints against the attorney has increased over time, the StateBar
has imposed no discipline, and the attorney maintains an active license. e StateBar dismisses about
10 percent of all complaints using nonpublic measures such as private letters, which did not deter some
attorneys we reviewed from continuing to engage in similar misconduct.
e StateBar failed to adequately investigate some attorneys, despite lengthy patterns of complaints
against them. In one example, it closed multiple complaints alleging that an attorney failed to pay clients
their settlement funds. When the StateBar finally examined the attorney’s bank records, it found that
the attorney had misappropriated nearly $41,000 from several clients. In another example, the StateBar
closed 87 complaints spanning 20 years before it sought disbarment of an attorney due to a federal
conviction for money laundering. Had the StateBar taken the pattern of complaints into account when
deciding whether to request additional evidence, it might have discovered the misconduct sooner and
mitigated harm to clients.
Finally, the State Bar has not consistently identified or addressed the conflicts of interest that exist
between its own staff members and the attorneys they investigate. In more than one-third of the cases
we reviewed, the StateBar did not document its consideration of conflicts before it closed these cases.
To remedy these weaknesses, the StateBar needs to make significant improvements to the safeguards
that help ensure its staff conduct thorough investigations, and the Legislature should take additional
steps to ensure the StateBar’s compliance with its revised policies and procedures.
Respectfully submitted,
MICHAEL S. TILDEN, CPA
Acting California State Auditor
iv California State Auditor Report 2022-030
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vCalifornia State Auditor Report 2022-030
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Contents
Summary 1
Recommendations 5
Introduction 9
Audit Results
Weaknesses in the StateBar’s Attorney Discipline System Have Resulted
in Some Attorneys Not Being Held Accountable for Misconduct 13
The StateBar Failed to Accurately Track or Document Its Consideration
of Some Staff Members’ Potential Conflicts of Interest 26
The StateBar’s Weak Safeguards Have Hampered Its Ability to Prevent
Repeated Client Trust Account Violations 27
Weaknesses in the StateBar’s Monitoring of Its Attorney Discipline
System Limit the Independence of That Monitoring 36
Appendix A
Demographic Data Pertaining to Complaints Against Attorneys 43
Appendix B
Scope and Methodology 51
Response to the Audit
The StateBar of California 53
California State Auditor’s Comments on the Response From
the StateBar of California 65
vi California State Auditor Report 2022-030
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1California State Auditor Report 2022-030
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Summary
Results in Brief
Attorneys hold significant responsibility as representatives and
advisers of their clients. Clients often seek an attorney during
times of crisis when they are in a particularly vulnerable situation.
To protect the public from attorneys who fail to fulfill their
professional responsibilities competently, the StateBar of California
(StateBar) administers a disciplinary system that investigates and
prosecutes complaints of professional misconduct against the more
than 250,000 lawyers licensed in California. After investigating
complaints, it may bring a case to the StateBar Court of California
seeking discipline against an attorney. A case may be closed for
reasons such as insufficient evidence; it may be resolved through a
nondisciplinary measure, such as a warning letter; or it may result
in discipline. To ensure that complaints of attorney misconduct
are reviewed consistently, the StateBar establishes policies and
processes for its staff to follow.
e StateBar closes many cases without notice to the public
through certain methods, such as warning letters—which we
describe as nonpublic measures—but it lacks clear policies on
when staff should use these nonpublic measures. Cases that
are confidential and not made public may not deter attorney
misconduct because current and potential clients cannot find out
about the behavior. Similarly, the StateBar lacks clear policies on
what its staff should do when a complainant withdraws from a case,
which can result in cases being closed without determining whether
misconduct occurred. For example, we identified an attorney for
whom the StateBar closed four cases when the clients withdrew
their complaints. ese cases demonstrated that the StateBar knew
that multiple clients had similar complaints about the attorney not
promptly distributing funds to which the clients were entitled. Had
the StateBar investigated these cases, it might have found sufficient
grounds for discipline and thus might have prevented further harm
to the attorney’s clients.
e StateBar does not proactively seek out information regarding
disciplinary actions against attorneys in other jurisdictions; instead
it relies on the attorneys themselves or the other jurisdictions to
report the discipline to the StateBar. However, we found several
examples of discipline imposed by other jurisdictions that were not
communicated to the StateBar for one year or more. e American
Bar Association maintains a National Lawyer Regulatory Data Bank
(data bank) of discipline imposed in other jurisdictions, but the
StateBar has not used it on any regular basis to proactively identify
California-licensed attorneys disciplined in other jurisdictions,
thereby increasing the risk that attorneys who have committed
Audit Highlights . . .
Our audit of the State Bar’s attorney discipline
process found that it failed to effectively
prevent attorneys from repeatedly violating
professional standards.
» The State Bar prematurely closed some
cases that may have warranted further
investigation and potential discipline.
» It lacks clear policies on the use of nonpublic
measures for closing complaints.
• It dismissed many investigations by
nonpublic measures, such as private
warning letters to attorneys.
» It did not adequately investigate some
attorneys with lengthy patterns of complaints.
• It closed multiple complaints alleging
that an attorney failed to pay clients
their settlement funds because the
clients withdrew their complaints,
which allowed the attorney to continue
misappropriating client funds.
» It has not consistently identified or
addressed the conflicts of interest that may
exist between its own staff members and
the attorneys they investigate.
• In more than one-third of the cases we
reviewed, the State Bar did not document
its consideration of conflicts before it
closed complaint cases.
» These issues are illustrated in the State Bar’s
handling of client trust account violations,
in which it repeatedly used nonpublic
measures to close complaints.
2 California State Auditor Report 2022-030
April 2022
misconduct in other jurisdictions will continue to practice in
California. Further, the StateBar’s ability to analyze patterns of
similar complaints is hampered because its case management
system has 672 types of allegations but does not group these
complaints into similar categories. Without more general categories
of allegations, it can be difficult for StateBar staff to identify
patterns of complaints alleging similar behavior.
Additionally, the StateBar requires its employees to complete an
annual questionnaire in which they disclose personal, financial,
and professional relationships they have with licensed California
attorneys. However, in 11 of 30 cases we reviewed, the StateBar did
not document its consideration of conflicts of interest. It is critical
that the StateBar objectively assess and document its consideration
of conflicts of interest when closing a case, particularly at the
intake stage. e chief trial counsel agreed with our findings and
indicated that management of conflicts of interest is an area where
the StateBar needs much improvement. He further noted that
conflict-of-interest information has not been consistently updated
in its current case management system, and he is working with his
staff to correct the issue.
e issues we identified are illustrated in the StateBar’s handling
of many complaints related to client trust accounts. ese
accounts hold funds paid to attorneys on behalf of a client, such
as an advance fee for future services or funds received as the
result of a settlement. Our review identified that the StateBar
closed many client trust account complaints using nonpublic
measures, sometimes without even notifying the attorney about
the complaint, and that an attorney’s prior history of allegations did
not appear to affect the StateBar’s decision to close certain client
trust account cases. For example, for one attorney we reviewed, the
StateBar closed 87 complaints spanning 20 years, some through
nonpublic measures and some through a policy that allowed it to
close certain cases without contacting the attorney for additional
information because the monetary amounts involved were relatively
low (a deminimis closing). However, the StateBar eventually
sought disbarment based on this attorney’s conviction in federal
court for money laundering through client trust accounts.
Finally, weaknesses in the StateBar’s monitoring processes diminish
the value of those processes in ensuring that it is closing attorney
discipline cases appropriately. It closes the majority of cases without
discipline. Although it allows complainants to appeal its decisions
to close complaints, relatively few complainants do so. us, it
appears that individuals may need additional assistance in filing
complaints and appeals. One option for assisting complainants with
these actions would be to establish an independent ombudsperson
for attorney discipline. Moreover, the StateBar uses an external
3California State Auditor Report 2022-030
April 2022
reviewer to conduct a semiannual review of a selection of its closed
cases to identify errors and areas for staff improvement. However,
several flaws in the design of the external review process limit its
independence, such as not alternating among different reviewers;
having the reviewer submit its report to StateBar management
instead of directly to the Board of Trustees of the StateBar; and not
having the external reviewer select cases for review. All of these
factors increase the risk that the review is notobjective.
Agency Comments
e StateBar generally agreed with our findings and
recommendations, with one exception. However, it asserted
that it would need significant additional resources to implement
therecommendations.
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5California State Auditor Report 2022-030
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Recommendations
e following are the recommendations we made as a result of our
audit. Descriptions of the findings and conclusions that led to these
recommendations can be found in the Audit Results section of
thisreport.
Legislature
To improve the independence and objectivity of the semiannual
review of the State Bar of California (StateBar) case files, the
Legislature should require the StateBar to do the following:
• Regularly change its external reviewer.
• Have its external reviewer present its findings and
recommendations, with all confidential information redacted,
directly to the Board of Trustees of the State Bar (board).
• Require the StateBar to report periodically to the
board on the actions it takes to address the external
reviewer’srecommendations.
To ensure that the StateBar implements the policy and procedure
changes identified in this audit, the Legislature should require
an assessment by no later than December 2023 of the StateBar’s
compliance with those policies and procedures.
StateBar
To ensure that it uses nonpublic measures to close complaints only
when such use is consistent and appropriate, the StateBar should
revise its policies by October 2022 to define specific criteria that
describe which cases are eligible to be closed using nonpublic
measures and which are not eligible.
To ensure that it fulfills its duties to investigate attorney
misconduct, by April 2023, the StateBar should begin monitoring
compliance with its new policy for identifying the circumstances
in which investigators should continue to investigate even if the
complainant withdraws the complaint.
e StateBar should notify the public on its website when other
jurisdictions have determined that an attorney who is also licensed
in California presents a substantial threat of harm to the public.
6 California State Auditor Report 2022-030
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To ensure that it identifies discipline imposed on California
attorneys in other jurisdictions, the StateBar should use the
American Bar Association’s data bank to identify attorneys
disciplined in other jurisdictions who have not reported that
discipline to the StateBar.
To allow its staff to more easily identify patterns of similar
complaints made against attorneys, by July 2022, the StateBar
should begin using its general complaint type categorizations when
determining whether to investigate a complaint.
To improve its ability to identify and prevent conflicts of interest
that its staff may have with attorneys who are subjects of
complaints, the StateBar should develop a process by July 2022 for
monitoring the accuracy of the information in its case management
system used to flag attorneys with whom its staff have declared a
conflict of interest.
To ensure that StateBar staff do not inappropriately close cases
against attorneys on the conflict list, the StateBar should create
a formal process by October 2022 for determining whether it is
able to objectively assess whether such a complaint should be
closed or whether the decision should be made by an independent
administrator. e StateBar should document this assessment in its
case files for each case against an attorney on the conflict list.
To increase the independence and objectivity of the external review
of its case files, the StateBar should amend its policies by July 2022
to do the following:
• Require its external reviewer to select the cases for the
semiannual review.
• Establish formal oversight to ensure that it follows up and
addresses the external reviewer’s findings.
To ensure that it appropriately reviews complaints involving
overdrafts and alleged misappropriations from client trust accounts,
the StateBar should perform the following by July 2022:
• Discontinue its use of informal guidance for review of bank
reportable actions and direct all staff to follow the policies
established in its intake procedures manual (intake manual).
• Revise its intake manual to disallow deminimis closures if the
attorney has a pending or prior bank reportable action or case
alleging a client trust account violation.
7California State Auditor Report 2022-030
April 2022
• Establish a monitoring system to ensure staff are following its
policies for deminimis closures.
• When investigating client trust account-related cases and
bank reportable actions not closed deminimis, require its
staff to obtain both the bank statements and the attorney’s
contemporaneous reconciliations of the client trust account, and
determine if the relevant transactions are appropriate.
• Require a letter with client trust account resources be sent to the
attorney after the closure of every bank reportable action.
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Introduction
Background
e California Constitution establishes three branches of state
government: the executive, legislative, and judicial branches.
e judicial branch is responsible for interpreting the laws of
the State and, among other functions, providing access to the
courts for individuals to defend their personal and property
rights, determining the guilt or innocence of those accused
of violating laws, and protecting the rights of individuals. e
Supreme Court of California (Supreme Court) holds the power
to admit, disbar, and suspend attorneys who are considered
officers of the court. Attorneys hold significant responsibility as
representatives of and advisers to their clients. Clients often seek
the services of an attorney during times of crisis when they are in
a particularly vulnerable situation. To fulfill their role, attorneys
are accorded a great degree of trust, as well as certain privileges
and responsibilities: they may legally represent their clients,
may hold funds on behalf of their clients, and must maintain the
confidentiality of the information that their clients provide them.
Every person who is admitted and licensed to practice law in
California must be a member of the StateBar of California
(StateBar), except for judges currently serving in that capacity. e
StateBar is a public corporation within the judicial branch. As the
text box shows, state law establishes public protection as the
highest priority of the StateBar. e StateBar
provides this protection by, among other activities,
licensing attorneys, regulating the profession and
practice of law, enforcing its Rules of Professional
Conduct for attorneys, and disciplining attorneys
who violate rules and laws. To prevent attorney
misconduct, the StateBar encourages ethical
behavior through resources such as education
programs and a hotline for attorneys seeking
guidance on their professionalresponsibilities.
e StateBar is governed by the 13-member
Board of Trustees of the StateBar (board), seven
of whom are attorneys appointed by the Supreme
Court or the Legislature. e remaining six are
members of the public who are not attorneys
and who are appointed by the Legislature or the
Governor. e board adopts a strategic plan with
goals for meeting the StateBar’s responsibilities,
such as ensuring timely, fair, and appropriately
resourced admission, discipline, and regulatory
systems for the more than 250,000 lawyers
The StateBar’s
Core Mission and Selected Responsibilities
Core Mission
State law establishes that “Protection of the public... shall
be the highest priority for the StateBar of California and the
board of trustees in exercising their licensing, regulatory,
and disciplinary functions. Whenever the protection of
the public is inconsistent with other interests sought to be
promoted, the protection of the public shall be paramount.”
Selected Functions
• License attorneys in California.
• Enforce the Rules of Professional Conduct for attorneys.
• Discipline attorneys who violate rules and laws.
• Administer the California bar exam.
Source: State law and the StateBar’s website.
[Insert Text Box]
10 California State Auditor Report 2022-030
April 2022
licensed in California. e board also establishes
committees composed of its own members,
including a regulation and discipline committee
that oversees the StateBar’s management of the
attorney discipline process.
Attorney Discipline
To protect the public from attorneys who fail
to fulfill their professional responsibilities
competently, the StateBar administers a discipline
system through which it receives, investigates,
and prosecutes claims of attorney misconduct.
e StateBar receives complaints from the
public by mail or through an online submission
form. In addition, it can initiate inquiries or
investigation into attorney conduct based on
information it receives from third-party sources.
For example, the StateBar may open cases based
on sources it terms reportable actions, such as a
notification from a bank that an attorney’s client
trust account has insufficient funds. e text box
identifies some major categories of professional
misconductallegations.
Two of the primary components of the StateBar’s attorney
discipline system are the Office of Chief Trial Counsel of the
StateBar (trial counsel’s office) and the StateBar Court of California
(StateBar Court). For 2021 the StateBar adopted a budget of nearly
$75million for these divisions. As Figure1 indicates, the StateBar’s
process for reviewing complaints of alleged attorney misconduct
includes multiple levels of reviews, and it closes many complaints
at the intake level. At the intake level, the trial counsel’s office
conducts a review to determine whether misconduct alleged in a
complaint warrants an investigation. When the StateBar closes a
complaint at the intake level, it informs the individual who made
the complaint of the decision in writing and describes how to
request an appeal of the decision or provide additional facts. From
January 2010 to November 2021, more than one-third of complaints
received were investigated, and slightly more than 5percent of cases
resulted in formal discipline of the attorney.
For those complaints that it does not close at the intake phase, the
trial counsel’s office investigates and, where appropriate, prosecutes
attorneys for violations of the StateBar Act or the StateBar’s Rules
of Professional Conduct, which establish professional and ethical
standards for attorneys to follow. e StateBar Court adjudicates
the matters that the trial counsel’s office files and may privately
[Insert Text Box]
[Insert Figure 1]
Examples of Allegations of
ProfessionalMisconduct
The StateBar receives allegations of attorney misconduct,
including the following general types:
Failure to perform competently: When an attorney does
not perform agreed-upon services, such as appearing in
court or drafting a document for the client.
Untimely communication: When an attorney does not
promptly inform a client of decisions or circumstances that
require informed consent or disclosure according to the
StateBar Act or the Rules of Professional Conduct.
Commingling of funds: When an attorney holds certain
funds received for the benefit of a client in an account that
holds the attorney’s own funds.
False advertising: When an attorney guarantees results
oroutcomes.
Source: State law, the StateBar’s Rules of Professional Conduct,
the StateBar’s intake procedures manual (intake manual), a state
court case, and the StateBar’s 2021 annual disciplinereport.
11California State Auditor Report 2022-030
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Figure1
The StateBar’s Attorney Discipline Process Includes Multiple Levels of Review
INTAKE
When the trial counsel’s office receives a complaint, it conducts a legal
review to determine whether the alleged misconduct constitutes a
disciplinable violation. In doing so, the trial counsel’s office may close the
complaint or forward it for investigation.
35.5%
INVESTIGATION
If forwarded, the trial counsel’s office conducts an investigation to
determine whether there is sufficient evidence to support the allegation of
attorney misconduct. If so, the complaint advances to prefiling. The trial
counsel’s office may, at its discretion, close a case at this stage without
imposing discipline, such as by issuing a warning letter.
13.3%
PREFILING
The trial counsel’s office drafts disciplinary charges for cases that it has
determined have sufficient evidence for prosecution in the State Bar Court.
Either party may request an early conference before a judge to discuss a
potential settlement.
7.1%
HEARING AND DISCIPLINE
• The State Bar Court conducts evidentiary hearings and then renders a
decision with findings and recommendations of discipline or closes the
case without discipline. The State Bar Court’s authority to discipline
attorneys includes issuing reprovals, which can be public or private.
• In cases that warrant the imposition of suspension or disbarment, the
State Bar Court recommends the appropriate disciplinary actions to the
Supreme Court for review.
64.5%
22.2%
6.2%
1.8%
of cases
went to
of cases
went to
of cases
went to
of cases were
closed with
of cases
were closed
during INTAKE.
during PREFILING.
during INVESTIGATION.
during HEARING and DISCIPLINE
without discipline.
of cases
were closed
of cases
were closed
of cases
were closed
of cases were closed with REPROVALS or
RESIGNATION WITH CHARGES PENDING
0.5%
STATE BAR COURT
5.3%
FORMAL DISCIPLINE
of cases were closed
with SUSPENSIONS and DISBARMENTS
4.8%
SUPREME COURT
Source: Analysis of the StateBar’s case data, state law, the Rules of Professional Conduct, the Rules of Procedure of the StateBar, the StateBar’s intake
manual, and the StateBar’s 2021 annual discipline report.
Note: Percentages in this figure are derived from the more than 221,000 cases that the StateBar closed between January 1, 2010, and November10,2021,
which include cases opened in previousyears.
12 California State Auditor Report 2022-030
April 2022
or publicly reprove an attorney or, if warranted,
may recommend that the Supreme Court—which
makes the final decision for such discipline—
suspend or disbar the attorney in question. e
text box identifies some of the possible outcomes
of the StateBar’s disciplinary cases.
According to the clerk of the StateBar Court, in
some instances, the StateBar Court chooses to
place an attorney on probation for all or part of
the time he or she would otherwise be suspended.
e goals of attorney probation include protection
of the public and rehabilitation of the attorney.
Probation may include a variety of conditions,
such as financial restitution or StateBar ethics
school. e StateBar’s Office of Probation
supervises attorneys placed on probation, and
when an attorney does not comply with the terms
of probation, the StateBar has established three
potential outcomes: close the matter without
further action; revoke the probation, which may
result in the attorney’s suspension; or prosecute
the noncompliance as a new offense, which may
result in the imposition of new discipline.
e Legislature passed a law, which became
effective on January 1, 2022, requiring the
California State Auditor’s Office to conduct an
audit of the StateBar’s attorney complaint and
discipline process. e Legislature included this
requirement in the law because the StateBar did not take action
against one attorney for misconduct until recently, despite repeated
allegations of this attorney’s misconduct overdecades.
[Insert Text Box]
Examples of Potential Outcomes of the
StateBar’s Disciplinary Cases
Disbarment: A public disciplinary sanction whereby the
Supreme Court orders the attorney’s name to be stricken
from the roll of California attorneys; during this time, the
attorney is precluded from practicing law in the State.
Suspension: A public disciplinary sanction that generally
prohibits a licensee from practicing law or from presenting
himself or herself as entitled to practice law for a period
of time ordered by the Supreme Court. A suspension can
include a period of actual suspension, stayed suspension,
or both.
Reproval: The lowest level of court-imposed discipline,
wherein the StateBar Court censures or reprimands
the offending attorney for misconduct. Reprovals may
include conditions such as making restitution, completing
probation, or completing education on subjects such as
ethics or the law. Reprovals can be public or private.
Dismissal: The disposal or closure of a disciplinary matter,
for reasons such as insufficient evidence. The StateBar may
close cases using methods that do not provide notice to the
public, such as a warning letter. Such methods are known as
nonpublic measures.
Source: State law, Rules of Procedure of the StateBar, the
StateBar’s investigation manual, and the StateBar’s training
material on determining the level of discipline.
13California State Auditor Report 2022-030
April 2022
Audit Results
Weaknesses in the StateBar’s Attorney Discipline System Have Resulted
in Some Attorneys Not Being Held Accountable forMisconduct
To assess the StateBar’s attorney discipline system, we focused on
key aspects of that process and determined whether the StateBar
had established safeguards that are sufficient to ensure that it
identifies attorney misconduct and imposes appropriate discipline.
To ensure that its reviews of complaints of attorney misconduct are
consistent, the StateBar must establish policies and processes for
its staff to follow. However, we found that the StateBar’s policies
on how it should use certain methods to close cases without public
notice—known as nonpublic measures—lack clarity and that it
overused these methods. Until recently, the StateBar’s policies
did not identify the factors staff should consider when deciding
whether to close cases in which an attorney has likely committed
misconduct but the complainant withdraws the complaint. In
addition, although the StateBar established policies for addressing
misconduct by California attorneys in other jurisdictions and for
addressing patterns of complaints against attorneys, its failure to
develop and use tools that would help it identify these issues has led
to inconsistencies and missed opportunities to inform and protect
the public.
The StateBar Prematurely Closed Some Cases That Should Have
Warranted Further Investigation and Potential Discipline
e StateBar’s official policy describes three primary purposes of
attorney discipline: protection of the public, the courts, and the
legal profession through deterrence; maintenance of the highest
professional standards; and preservation of public confidence in
the legal profession. However, some of the StateBar’s policies
lack clarity, which has resulted in its staff closing cases when
further investigation would likely have better protected the public.
Specifically, the StateBar closes many cases through nonpublic
measures, such as warning letters, but it lacks clear policies on
when it is appropriate for staff to use these nonpublic measures.
Complaints that are closed through nonpublic measures are
confidential and may have less of a deterrent effect on attorney
misconduct because current and potential clients cannot find out
about the behavior. Similarly, the StateBar has lacked clear policies
on whether its staff should proceed with cases when a complainant
withdraws the complaint, and it closed several such cases we
reviewed without determining whether misconduct had occurred.
14 California State Auditor Report 2022-030
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Although the StateBar’s policies provide general guidelines for
deciding when to use nonpublic measures, the policies lack the
details necessary to ensure that they are implemented consistently.
e StateBar uses a number of types of nonpublic measures,
which Figure2 details. Its policy directs staff to pursue nonpublic
measures only when doing so will reasonably protect against future
misconduct. Nevertheless, the policy does not identify the factors
that staff should consider to determine whether future misconduct
is likely to occur. e policy also states that nonpublic measures
should be used for minor violations that did not cause significant
harm or for violations that would likely not result in the imposition
of discipline. However, the policy does not define minor violations
or levels of harm resulting from an attorney’s conduct. e chief
trial counsel stated that staff should use their experience, judgment,
training, and knowledge of applicable standards to implement the
policy, but we found that the StateBar’s use of these measures is not
achieving the intent of its policy regarding their use.
e StateBar’s data indicate that the use of nonpublic measures is
not providing reasonable protection against future misconduct, as
its policy requires. A StateBar study from July 2021 showed that a
significant number of attorneys were investigated for misconduct
within two years after being disciplined. It also showed that nearly
26percent of attorneys whose cases were closed with a warning
letter in 2019 had a new complaint about their professional conduct
investigated by the StateBar within two years of the original case
being closed. e StateBar’s executive director indicated that the
StateBar has taken steps to address repeated misconduct, including
issuing a new policy addressing alternatives to discipline and adding
information to the closing letters for reportable actions that it
sends to attorneys, but its efforts to reduce recidivism are centered
around a redesign of its probation process for attorneys convicted
of misconduct.
Notwithstanding these steps, patterns of attorney misconduct
suggest that the StateBar is overusing nonpublic measures. From
2010 to 2021, the StateBar closed more cases through nonpublic
measures—a total of 22,600, or 10percent of all case closures—
than it did through public discipline, which totaled 11,200, or
5percent of all case closures. During the same period, more than
700 attorneys each had four or more cases that the StateBar closed
through nonpublic measures. Our review of a selection of cases
associated with five of these attorneys determined that StateBar
staff closed cases through nonpublic measures despite indications
in its case files that further investigation or actual discipline may
have been warranted. Of the five attorneys, four had at least
one previous complaint for similar misconduct that was closed
[Insert Figure 2]
The StateBar’s use of nonpublic
measures to close complaints is not
providing reasonable protection
against future misconduct, as its
policy requires.
15California State Auditor Report 2022-030
April 2022
Figure2
Nonpublic Measures That the StateBar Uses to Close Cases
Directs action on the part of an attorney. This
can include direction to return a client file or
to communicate with a client.
Informs an attorney of his or her ethical
obligations when there is substantial evidence
that he or she committed a violation that may
be misconduct.
A written agreement that may involve
conditions of practice or further legal
education or rehabilitation.
A censure or reprimand that may include
conditions. Private reproval is the only
nonpublic measure that the State Bar
considers to be discipline.
Describes resources, such as ethics training
or client trust account training, along with
a summary of the conduct of concern and
ways to rectify it.
RESOURCE LETTER
DIRECTIONAL LETTER
WARNING LETTER
AGREEMENT IN LIEU OF DISCIPLINE
PRIVATE REPROVAL
Source: The StateBar’s policy directives, website, and 2021 annual discipline report; Rules of
Procedure of the StateBar; the StateBar’s intake manual; StateBar discipline case files; and statelaw.
through nonpublic measures. In total, we reviewed 42 cases for
these five attorneys and found indications that the StateBar had
inappropriately closed 13 of them through nonpublic measures.
16 California State Auditor Report 2022-030
April 2022
CaseExample1 demonstrates how, for one of these attorneys, the
complaints against the attorney increased over time even as the
StateBar closed multiple cases involving this attorney through
nonpublic measures. e StateBar’s legal adviser reviewing the
complaints against this individual asserted that the complaints
related more to the attorney’s poor office management than to
misconduct and stated that education and outreach might be more
appropriate than discipline for this attorney. However, the nature
of the complaints against the attorney call into question the legal
adviser’s assertions.
e cases involving this attorney that were closed using nonpublic
measures not only included failing to provide settlement payments
or to provide client files, but also included the attorney threatening
to report another attorney to the StateBar if the other attorney
did not provide requested information as well as offering to pay a
complainant to withdraw a complaint made to the StateBar. Further,
the StateBar’s use of nonpublic measures to address complaints
made against this attorney were ineffective as the number of
complaints against this attorney per year have increased. is
increase in cases may have resulted in further harm to the public as
well as representing an additional workload for the StateBar.
In cases where complainants no longer wish to pursue their
allegations, the StateBar’s policies previously gave it discretion
to continue the investigation but did not require that it do so,
regardless of whether it already possessed evidence of misconduct.
e Rules of Procedure of the StateBar allow it to investigate and
prosecute misconduct at its discretion, even if a complainant asks
to withdraw his or her complaint. e inconsistencies identified
as a result of this audit led the StateBar to issue a policy directive
in February 2022 clarifying how to proceed when a complainant
withdraws the complaint or otherwise fails to cooperate in the
investigation. Before this new policy, the StateBar’s policies did
not identify what factors should prevent it from closing a case
when a complainant considers a matter resolved or withdraws
the allegation, and we determined that the StateBar closed
some cases even when there was evidence of misconduct.
To examine the possible effects of this unclear guidance, we
reviewed 33closedcases for which the StateBar indicated that
the complainant no longer wished to pursue the complaint or the
attorney and complainant had resolved the issue. In seven of those
cases, there was evidence of misconduct by theattorney.
For example, for the attorney in CaseExample2, the StateBar
closed four cases from March 2019 through August 2019 after the
client in each case withdrew the complaint. A senior trial counsel
at the StateBar stated that, in practice, the StateBar closes cases
when the complainant withdraws the complaint, in part because
[Insert CaseExample1]
The inconsistencies identified
as a result of this audit led the
StateBar to issue a policy directive
in February clarifying how
to proceed when a complainant
withdraws the complaint or otherwise
fails to cooperate in the investigation.
17California State Auditor Report 2022-030
April 2022
CaseExample1
Case Example 1
Complaints
against
the attorney
Complaints
closed using a
nonpublic
measure
2006 2014Year 2021
1 42
1 1 1 1 1 1
2 2 2
6 6 7 8
3 3
4
6
9 10
20 20 21
19 18
31 26
Case Example 1
An attorney exhibited a pattern of
failing to provide settlement
payments or to provide files to
clients until the client complained.
The State Bar closed cases against
this attorney 28 times over 16 years
using nonpublic measures and all
of the other closed cases were
closed outright. However, complaints against the
attorney continued to increase. From 2014 to 2021, the
attorney was the subject of 165 complaints. Despite
the high number of complaints, many for similar
matters, the State Bar has imposed no discipline, and
the attorney still maintains an active license.
In one early case, the State Bar issued a warning letter
to the attorney for failing to release a client’s case file
for nearly a year. However, the attorney has continued
to generate complaints from other clients for this
same issue. In the 11 years since the State Bar issued
that warning letter, complaints have led the State Bar
to issue 11 directional letters requiring the attorney to
return client files.
Case Example 1
Note: We changed the demographics depicted in some of our case examples to protect the
confidentiality of these investigations.
the StateBar would need further evidence and testimony from the
complainant to be able to prosecute a case, and it does not have
an effective way of compelling cooperation from a complainant.
However, the complaints against the attorney described in
CaseExample2 demonstrate that closing a case because a
complainant no longer wishes to pursue the complaint may not
be in the public’s best interest. ese cases demonstrate that the
18 California State Auditor Report 2022-030
April 2022
CaseExample2
Case Example 2
Case Example 1
The State Bar closed multiple
complaints that were made
against an attorney over the
course of about 18 months, each
alleging that the attorney had
failed to pay clients their
settlement funds. Generally, the
State Bar closed each complaint after the attorney
finally paid the client, noting either that the matter
was resolved between the attorney and the
complainant after the client withdrew their
complaint or that there was insufficient evidence to
support that the attorney’s conduct warranted
discipline. A pattern was discernible from five
complaints the State Bar received within one year
alleging that the attorney’s clients were not
receiving settlement payments. However, the State
Bar did not identify the need to examine the
attorney’s bank records until it had received more
than 10 complaints over two years. It did not
examine the records for another six months, during
which time the State Bar continued to receive
similar complaints.
When the State Bar finally examined the client trust
account, it found that the attorney had
misappropriated nearly $41,000 in total from
several clients. The State Bar ultimately filed
charges against the attorney stemming from these
more recent complaints. After the State Bar
questioned the attorney about discrepancies in the
client trust account, the attorney admitted to using
client funds for personal reasons.
Case Example 2
StateBar was informed that multiple clients had complained about
the attorney not promptly distributing funds the clients were
entitled to, which may be sufficient grounds for discipline. Had the
StateBar investigated these cases, it might have prevented further
harm to the attorney’sclients.
e StateBar’s practices and its staff’s responses to our inquiries
illustrated a common theme: the StateBar is generally focused on
closing cases expeditiously. is emphasis on closing cases quickly
appears to be in response to criticism the StateBar has faced for the
amount of time it has taken to close some cases.
[Insert CaseExample2]
19California State Auditor Report 2022-030
April 2022
e StateBar has long struggled to process all of the complaints
that it receives each year. Audits our office issued in April 2019 and
in April 2021 identified concerns about the backlog of unclosed
cases.
1
According to its executive director, addressing the complaint
backlog has been the most significant driving factor in the StateBar’s
development of performance measures and processes, in part
because of the focus of our office and the Legislature on the backlog.
Nevertheless, the patterns we observed suggest that staff following
some of the StateBar’s policies may be contributing to the large
number of complaints it must address. As Case Examples 1 and 2
illustrate, the StateBar’s actions have failed to prevent additional
misconduct of a similar nature, leading to an increase in the volume
of subsequent complaints about a specific attorney for the same
misconduct. In turn, this has increased the StateBar’s workload, which
makes it more difficult for it to address its backlog and fulfill its primary
mission of protecting the public.
Weak Processes Allow Attorneys Who Committed Misconduct in Other
Jurisdictions to Continue Practicing in California
Although state law clearly sets forth expectations regarding discipline
for attorneys who have committed misconduct in other jurisdictions,
the StateBar’s implementation of this law has not protected the public
in some instances and has led to significant delays in identifying
some cases of attorney discipline imposed on California attorneys
in other jurisdictions. Attorneys practicing law in other jurisdictions
may also be licensed by the StateBar to practice
law in California. e text box shows examples of
other jurisdictions. According to state law, a final
determination of professional misconduct in other
jurisdictions, such as a federal court or another state
court, is evidence that the attorney is culpable of
professional misconduct in California, with limited
exceptions. When another attorney disciplinary
authority, such as the state bar of another state,
disciplines an attorney who is also licensed to practice
in California, the StateBar’s policy is to determine
whether it should pursue imposing discipline on the
attorney based on the discipline imposed in the other
jurisdiction, a practice known as reciprocal discipline.
Imposing reciprocal discipline helps to protect the public and maintain
confidence in the legal profession by preventing attorneys who are
suspended or disbarred for misconduct in one jurisdiction from
practicing in California.
1
StateBar of California: It Should Balance Fee Increases With Other Actions to Raise Revenue and Decrease Costs,
Report -; and The StateBar of California: It Is Not Effectively Managing Its System for Investigating and
Disciplining Attorneys Who Abuse the Public Trust, Report -.
[Insert Text Box]
Examples of Other Jurisdictions
• Federal courts, including district courts and bankruptcycourts.
• Courts of other states.
• Regulatory agencies with authority to discipline attorneys,
such as the U.S. Patent and Trademark Office.
Source: Federal law, StateBar intake manual, StateBar
guidelines for attorney mandatory reportable actions, the
U.S.Court’s website, and StateBar case files.
20 California State Auditor Report 2022-030
April 2022
According to the assistant chief trial counsel who manages intake
staff (intake manager), the StateBar initiates cases related to
discipline in other jurisdictions in three instances: when attorneys
self-report the discipline as required by state law; when the
StateBar receives notifications from other jurisdictions; or when
the StateBar becomes aware of the discipline through other means,
such as media reports. However, as we discuss later, the StateBar’s
processes do not proactively identify discipline imposed by
otherjurisdictions.
From 2010 through 2021, the StateBar closed more than 700 cases
relating to attorney misconduct in other jurisdictions. We reviewed
32 of those cases and identified issues with nine of them, including
four for which the StateBar failed to impose public discipline even
though it was aware that another jurisdiction had done so, such as
in CaseExample3. In that case, before the attorney’s resignation in
California, the StateBar issued the attorney a warning letter instead
of taking other disciplinary action on the basis that it deemed the
attorney a minimal risk to the public due to their age and lack of
ties with California. e StateBar’s intake manager did not provide
any additional rationale for the StateBar’s decision to close the case.
However, the attorney’s age does not seem relevant, as the other
jurisdiction indicated that the alleged misconduct had recently
occurred—less than five years before the StateBar’s decision to
close the case with a warning letter. e StateBar does not consider
a warning letter to be a disciplinary action, and thus its response
was not reciprocal, given that the other jurisdiction ordered that the
attorney be permanently prohibited from practicing law. Because
the StateBar did not impose any public reciprocal discipline, the
attorney has no public record of misconduct in California. Based
on the attorney’s history of practicing law with a suspended license
and failing to comply with the agreement with the other state to
resign from practice in California, the lack of public discipline by
the StateBar increases the risk that this attorney could engage in
similar inappropriate behavior in the future.
In another of the cases we reviewed, the StateBar did not take
proactive steps to inform the public that another jurisdiction
had temporarily suspended the attorney to protect the public
from further misconduct while the case was being decided.
CaseExample4 describes this instance. State law considers
a certified copy of a final order determining that an attorney
committed professional misconduct by a court or body authorized
to discipline attorneys in another jurisdiction as conclusive
evidence that the attorney is culpable of professional misconduct in
California. Because the case in the other jurisdiction was not final
until January 2022, the StateBar could not have imposed discipline
before then based solely on the actions of that other jurisdiction.
However, state law does allow the StateBar to initiate and conduct
The StateBar does not proactively identify
discipline imposed by otherjurisdictions.
[Insert CaseExample3]
21California State Auditor Report 2022-030
April 2022
investigations of the conduct in other jurisdictions of attorneys
licensed in California. According to the intake manager, it seemed
more prudent to allow this case to reach its conclusion in the other
jurisdiction, at which point all of the facts that the other jurisdiction
could prove would be available to the StateBar. However, there
are other options available to the StateBar to address the risk of
harm the attorney posed to the public. According to the Rules of
Procedure of the StateBar of California, if an attorney is under
investigation by a regulatory or licensing agency, the chief trial
counsel may disclose information for the protection of the public
after privately notifying the attorney. us, the StateBar could
have informed the public on its website that this attorney had been
CaseExample3
Case Example 3
Case Example 1
In another state, an attorney was charged
with several violations of that state’s Rules of
Professional Conduct, including continuing to
advertise and practice law while suspended.
The attorney requested to permanently
resign from practicing law in that state and in
all other jurisdictions—specifically including
an agreement to resign in California—in lieu
of receiving discipline in that state. The
supreme court of that state issued an order
approving the request and further ordered that the
attorney be permanently prohibited from practicing
law, an action that state considered to be a public
reprimand. With limited exceptions, California state law
provides that the final order of discipline from the other
jurisdiction is conclusive evidence that the attorney is
culpable of misconduct in California.
However, the State Bar concluded that it could not use
the other state’s supreme court order permanently
prohibiting this attorney from practicing law as
conclusive evidence of a final order of discipline because
the other state’s supreme court order did not include a
final determination or finding on the attorney’s
misconduct. Instead, the State Bar used its authority to
open an investigation against the attorney. Ultimately,
the State Bar issued the attorney only a private warning
letter, thereby permitting the attorney to continue to
practice law in California despite the attorney’s
agreement in another state to resign from practicing
law in all jurisdictions. Subsequent to the warning letter,
the attorney resigned from the California State Bar.
Case Example 3
22 California State Auditor Report 2022-030
April 2022
CaseExample4
Case Example 4
Case Example 1
The supreme court of another
state temporarily suspended an
attorney in that state in 2020 for
misappropriating and misusing
client funds. The attorney was
also licensed to practice law in
California. The supreme court in
that state also placed
restrictions on the attorney’s handling of client funds,
concluding that the attorney posed a substantial
threat of serious harm to the public. According to
documents in the State Bar case file, that state’s
supreme court ultimately disbarred the attorney in
early 2022. Although the State Bar had been aware of
the attorney’s temporary suspension in the other state
since April 2021, it had not imposed discipline as of
February 2022.
Case Example 4
suspended in another state. e chief trial counsel agreed that doing so
could enhance public protection when another state has concluded that
an attorney presents a threat of harm to the public. However, because of
the StateBar’s inaction, current and potential clients in California were not
informed of the threat the attorney posed for more than a year after the
attorney was suspended in the otherjurisdiction.
e StateBar also has not actively sought information on attorney
discipline in other jurisdictions. e intake manager said that the StateBar
may open a case if it becomes aware of discipline imposed on a California
attorney in another jurisdiction through media reports or other means.
However, he also stated that there is no unit within the StateBar charged
with proactively seeking information on discipline imposed in other
jurisdictions. According to the intake manager, the StateBar opens cases
based on attorney self-reporting and reporting from other jurisdictions.
However, relying on attorneys to volunteer that they have been disciplined
is not an effective process, as they do not always do so in a timely manner.
Further, attorneys who commit misconduct warranting disbarment in other
jurisdictions have little incentive to report that misconduct to the California
StateBar. According to the intake manager, there is no attorney discipline
beyond disbarment. erefore, an attorney may not be motivated to report
the misconduct if they anticipate that they will be disbarred.
[Insert CaseExample4]
23California State Auditor Report 2022-030
April 2022
State law requires the StateBar to notify the appropriate discipline
agencies in any other jurisdictions where an attorney is admitted
to practice if it suspends or disbars an attorney or if it reinstates a
suspended or disbarred attorney. Other jurisdictions may have similar
rules. e special assistant to the chief trial counsel stated that he is not
aware of any agreements that the StateBar has with other jurisdictions
to share such information.
An attorney discipline agency in another state may not necessarily
report to the StateBar the discipline it imposes on attorneys also
licensed in California. For example, in one StateBar discipline case
we reviewed, another state’s attorney discipline oversight body
noted in court documents requesting a suspension that the attorney
was admitted to the California StateBar. However, according to the
California StateBar, it has no record of receiving information about this
disciplinary action.
Because it has relied on attorneys and other discipline agencies to
report instances of discipline in other jurisdictions, the StateBar
did not learn about some disciplinary actions until a year or more
after they were imposed. Of the 32 cases that we reviewed related
to 20attorneys that pertained to discipline in other jurisdictions,
we found 10 instances in which discipline was imposed by the other
jurisdiction, but the StateBar was not notified for one year or longer.
For example, as CaseExample5 describes, had the attorney not
chosen to self-report the discipline when reapplying to practice law in
California, the StateBar might never have learned of themisconduct.
In contrast to its current approach, the StateBar could take advantage
of existing information about attorney discipline imposed in other
jurisdictions. e American Bar Association maintains the National
Lawyer Regulatory Data Bank (data bank) for regulators, such as the
StateBar, to use to facilitate reciprocal discipline. e data bank is a
repository of information concerning public regulatory actions related
to lawyers throughout the United States. According to the intake
manager, StateBar staff do not regularly use the databank to proactively
identify attorneys disciplined in other jurisdictions. e StateBar’s
failure to use this resource increases the risk that those attorneys will
continue to practice in California and engage in misconduct here.
The Information That the StateBar Provides Its Staff Limits Their Ability to
Identify Patterns of Complaints
Patterns of complaints can provide useful information about the impact
of the StateBar’s corrective actions and whether new complaints
merit investigation. Although the StateBar directs its staff to look
for patterns when reviewing new complaints, we found that the tools
available to staff limit their ability to effectively do so.
We found  instances among
the  cases we reviewed in which
discipline was imposed on an
attorney by another jurisdiction,
but the StateBar was not notified
for one year or longer.
[Insert CaseExample5]
24 California State Auditor Report 2022-030
April 2022
For the purposes of this audit, we defined three or more separate
complaints for a single attorney involving similar allegations
within a span of 12 months to be a pattern of complaints. Although
patterns of complaints are not evidence of misconduct, they can
indicate whether the disciplinary or nondisciplinary measures
that the StateBar imposes are having an effect on the attorney’s
behavior. A pattern of complaints may also indicate that a
new complaint merits additional investigation. e StateBar’s
procedures require intake attorneys reviewing a new complaint to
research whether the attorney has a history of closed complaints,
closed investigations, discipline, or pending matters in order to
assess the possibility of a pattern of complaints or misconduct.
We reviewed the case history of 19 attorneys who each had 25 or
more complaints. Of those attorneys, we identified 17 who exhibited
a pattern of complaints. In some cases, the pattern involved a
significant number of complaints over an extended period. For
example, over the course of about two and a half years, there were
29 cases opened against the attorney in CaseExample2, all based on
allegations that the attorney failed to provide funds owed to clients.
CaseExample5
Case Example 5
Case Example 1
An attorney licensed to practice
law in California and in another
state was suspended in the other
state in 2007. The attorney did not
notify the State Bar of the
suspension within the statutory
30-day deadline and, in 2008, let
their California license become
inactive. When seeking to become active again in
2021, the attorney informed the State Bar of the
2007 discipline. The State Bar might have
readmitted the attorney without considering the
past misconduct if the attorney had not shared
this information. As of February 2022, the State Bar
is considering potential discipline of the attorney
for the misconduct in the other state and for failing
to disclose the past misconduct to the State Bar.
Case Example 5
25California State Auditor Report 2022-030
April 2022
e patterns of complaints against some attorneys suggest that
the StateBar’s responses to those complaints did not influence
the attorneys’ subsequent behavior. We determined that there
were 212 attorneys with six or more complaints that were closed
through nonpublic measures from 2010 through 2021. e patterns
of complaints we identified for 10 of the 19 attorneys we reviewed
occurred after the StateBar had closed cases involving allegations
of similar types of misconduct through nonpublic measures. For
example, the timing of the pattern of failing to provide settlement
payments or return client files described in CaseExample1
demonstrates that the StateBar’s use of nonpublic measures did
not deter the attorney from continuing the conduct and generating
similar complaints. Had the StateBar considered the pattern of past
conduct, it might have conducted further investigation, which could
have resulted in more severe corrective action and discouraged the
attorney from continuing this conduct.
In addition, a pattern of past complaints can indicate that a new
complaint merits further investigation. For instance, CaseExample2
describes a pattern of complaints against an attorney alleging that
the attorney had not provided funds to several clients, and the
StateBar closed these complaints as resolved after the attorney
paid each complainant. Had the StateBar treated the pattern
of complaints as an indicator that new complaints warranted
investigation, it might have discovered the misappropriation sooner
and mitigated harm to the attorney’sclients.
After we brought our concerns about its process for identifying
patterns of complaints to the StateBar’s attention, it issued a
policy directive clarifying procedures for intake staff to use when
considering prior closed complaints in their determination of
whether to close or investigate a complaint. e policy directive states
that prior closed complaints of a similar nature may support the
plausibility of certain allegations. It also notes that a history of similar
closed complaints may suggest the need for investigative steps to
generate sufficient evidence about whether a violation has occurred.
Although it has now clarified how patterns of complaints should be
addressed, StateBar staff lack the tools to effectively and efficiently
conduct such a review. e StateBar’s case management system
allows staff to access all cases against an attorney for the most
recent five years, and cases older than five years that resulted in
discipline and nondisciplinary measures. However, the report
showing the past cases against an attorney that the StateBar’s
case management system generates describes those cases using
individual allegation types rather than general categories. As of
January 2022, there were 672 different allegation types. For example,
the StateBar has established 46 allegation types related to client
or entrusted funds. Because the case management system uses a
A pattern of past complaints of attorney
misconduct can indicate that a new
complaint merits further investigation.
26 California State Auditor Report 2022-030
April 2022
detailed allegation type for each case, the numerous types makes
it difficult to identify patterns of similar behavior. e chief trial
counsel agreed that categorizing allegations into broader categories
would allow staff to more easily identify patterns of complaints. e
StateBar has already grouped the allegation types into 25 general
categories for use as a research tool outside of the case management
system. However, according to the chief trial counsel, the StateBar
is still assessing how best to use this case categorization in its
handling of cases.
The StateBar Failed to Accurately Track or Document Its
Consideration of Some Staff Members’ Potential Conflicts of Interest
According to the Rules of Procedure of the StateBar, the chief
trial counsel is required to recuse the trial counsel’s office from
inquiries or complaints against attorneys if a conflict of interest
or the appearance of a conflict of interest could raise doubts
that the chief trial counsel would be impartial. To make this
determination, the StateBar requires its employees to complete
an annual questionnaire in which they disclose personal, financial,
and professional relationships they have with licensed California
attorneys. e StateBar then adds these attorneys to a list (conflicts
list). Further, the StateBar can flag these attorneys in its case
management system. When the StateBar identifies a conflict, the
trial counsel’s office can assign the case to outside prosecutors, who
are attorneys contracted by the StateBar or, in certain situations,
recuse only those employees who have a connection to the case.
e StateBar relies on its employees to identify potential conflicts of
interest at both the intake and investigation stages. Its intake manual
requires the employee processing a complaint to check whether
the attorney identified in each complaint has a relationship with
the StateBar that presents a potential conflict. If the employee then
identifies such a potential conflict, a supervising attorney refers the
case to an independent administrator contracted by the StateBar, who
recommends whether the case should be processed by a StateBar
employee with no declared relationship to the case or by an outside
prosecutor. In addition, StateBar policy requires that employees notify
their supervisors as soon as possible if a potential conflict arises or
becomes known after a case has been opened.
Despite its staff identifying attorneys with whom they have
a conflict of interest, in 11 of 30 cases we reviewed where the
attorney was on the conflicts list, the StateBar did not document
its consideration of those conflicts. In seven of those 11 cases,
the attorney was on the conflicts list but was not flagged in the
StateBar’s case management system, and the case notes do not
describe any evaluation of the conflict of interest. In the other
The StateBar relies on its employees
to identify potential conflicts of
interest at both the intake and
investigation stages.
27California State Auditor Report 2022-030
April 2022
fourcases, the attorney was flagged as having a conflict of interest,
but intake staff proceeded to review the cases and ultimately closed
the cases without involving the independent administrator or
documenting the steps the StateBar took to mitigate the conflict
ofinterest.
e StateBar does not appear to recognize the significance of the
risk associated with dismissing a case against an attorney on the
conflicts list. For one of the cases, the intake attorney documented
an email exchange with his supervisor in which the supervisor
acknowledged the conflict of interest but nonetheless directed the
intake attorney to review the case anyway and agreed with the intake
attorney’s proposal to dismiss the case. In another case, the intake
attorney did not document any evaluation of the conflict of interest
in the case file, but in response to our questions, she provided
an email from her supervisor stating that the conflict-of-interest
requirements were waived and he approved closing the case. e
chief trial counsel believes that the cases in which an attorney
attempts to exert undue influence on a StateBar employee or in
which a StateBar investigator or attorney intentionally attempts
to influence the case are extremely rare and would be difficult
to prevent. Nevertheless, the decisions to close cases described
above illustrate that the StateBar is not appropriately assessing
how conflicts of interest pose a risk that staff will close cases
inappropriately. us, it is critical that the StateBar objectively assess
and document its consideration of conflicts of interest when closing
a case at the intake stage against an attorney on the conflicts list.
e chief trial counsel agreed with our findings and indicated
management of conflicts of interest is an area where the StateBar
needs much improvement. He further noted that conflict-of-interest
information has not been consistently updated in its current case
management system, and he is working with his staff to correct
thatissue.
The StateBar’s Weak Safeguards Have Hampered Its Ability to Prevent
Repeated Client Trust Account Violations
Despite establishing formal guidance in an intake manual in 2018
for reviewing certain complaints related to client trust accounts, the
StateBar has not consistently followed it. In several instances, the
issues we describe in the previous sections have contributed to the
StateBar’s failure to appropriately review cases of alleged client trust
account violations. For example, the StateBar has used nonpublic
measures to close cases involving client trust account violations, and
an attorney’s prior history of allegations did not appear to affect the
StateBar’s decision to close certain client trust account cases.
It is critical that the StateBar
objectively assess and document its
consideration of conflicts of interest
when closing a case at the intake
stage against an attorney on the
conflicts list.
28 California State Auditor Report 2022-030
April 2022
When attorneys or law firms receive funds on behalf of clients, such
as fees paid in advance for future services or proceeds from insurance
settlements, the StateBar’s Rules of Professional Conduct require these
funds be deposited into one or more client trust accounts. A primary
reason for maintaining client trust accounts is to ensure that funds
being held for the benefit of clients are not commingled with those of
the attorney or law firm. A client trust account also provides protection
against seizure of client funds by third parties or in the event that the
attorney declares bankruptcy. According to the StateBar’s Handbook
on Client Trust Accounting for California Attorneys, an attorney may
deposit funds related to multiple clients into a single client trust account
if the attorney keeps an accurate record of the amounts that belong
to each client. As part of the requirements for safekeeping of funds
and property of clients and other persons, the StateBar’s Rules of
Professional Conduct require attorneys to maintain, among other things,
monthly reconciliations of their client trust accounts. e reconciliation
process involves comparing the three basic types of records attorneys
are required to keep—bank statements, client ledgers, and account
journals—against each other to find and correct any mistakes.
From 2010 through 2021, 23percent of all StateBar cases involved
allegations related to client trust accounts. e StateBar receives
complaints about alleged client trust account violations from different
sources, such as from clients who believe that an attorney has acted
improperly, or through reportable actions, which are mandatory
reports about events concerning attorneys. Reportable actions are
submitted by entities such as courts and banks and include court orders,
sanctions, and overdraft notices for client trust accounts. According to
the StateBar, bank notifications about insufficient funds in client trust
accounts, or bank reportable actions, make up the largest number of
reportable actions.
It is critical for the StateBar to thoroughly review complaints regarding
client trust accounts because of the potential for attorneys to misuse
funds in these accounts and the harm that such misuse can cause to the
attorney’s clients. For example, an attorney could commingle personal
assets with a client’s assets, making it unclear to whom the funds
belong and risking that the attorney or his or her creditors will seize
the client’s funds. A serious misuse of a client trust account, known
as misappropriation, occurs when an attorney uses client funds for
personal benefit or otherwise fails to maintain the required balance of
client funds in the account.
When an attorney misappropriates client trust account funds for
personal use, one method to conceal the misappropriation is to repay
the client with funds belonging to another client or to use subsequent
deposits intended for other purposes to pay off amounts that are due
to a different client. In some situations, the attorney may continue this
pattern of misappropriating client funds until so much money has been
From  through ,  percent of
all StateBar cases involved allegations
related to client trust accounts.
29California State Auditor Report 2022-030
April 2022
diverted that there are insufficient funds to cover checks for even small
amounts, and the attorney is unable to pay clients for long periods of
time. Figure3 shows that for this reason, even small overdrafts of client
funds may be indicative of a larger misappropriation. In the hypothetical
example in Figure3, the attorney siphons a substantial portion of his or
her clients’ funds for personal use, even though the account shows only
a small overdraft. Depending on the circumstances, clients may suffer
significant financial harm from a misappropriation, which may be cause
for the attorney to be disbarred.
Because funds received for the benefit of a client must be deposited
into the client trust account before they can be paid out, the StateBar’s
guidance references a past court opinion indicating that the mere
fact that there are insufficient funds in a client trust account supports
a conclusion of misappropriation. at opinion also indicates that
misappropriation is a serious violation of professional ethics likely to
undermine public confidence in the legal profession.
Moreover, because overdrafts and misappropriations from client trust
accounts are serious problems, the Legislature has determined that it is in
the public interest to ensure prompt detection and investigation of these
occurrences. However, the StateBar’s current policies allow it to rapidly
close certain client trust account cases without ever contacting the
offending attorney for additional information. Specifically, the StateBar’s
procedures allow its staff the discretion to close certain reportable
actions as deminimis if the amount of the insufficient funds activity is
under $50 and there are no other pending—or no prior history of—bank
reportable actions. From 2010 through 2021, the StateBar closed roughly
11percent of client trust account cases as deminimis. According to the
chief trial counsel, the phrase deminimis defines misconduct that is
trifling or of so little importance that it would be unlikely to result in
discipline of any significance if the StateBar pursued it.
However, according to a StateBar analysis performed in 2020, the
likelihood of an attorney being disciplined is actually greater when
the amount of a client trust account overdraft is smaller. e analysis
quoted a StateBar attorney who specializes in bank reportable actions
and asserted that larger overdrafts tend to result from occasional
mistakes in account maintenance whereas smaller overdraft amounts,
especially involving multiple incidents, tend to be a reflection of more
serious misconduct. For example, as Figure3 illustrates, the amount
of an overdraft can be small compared to the amount of client funds
that have been misappropriated. Nevertheless, under its current policy,
the StateBar would likely have dismissed the bank reportable action in
this hypothetical example as deminimis. When the StateBar closes a
complaint as deminimis, it may send a letter to the attorney suggesting
that he or she pay greater attention to the management of the client trust
account and to take appropriate corrective action to avoid future reports
of insufficient funds activity.
[Insert Figure 3]
The StateBar’s current policies
allow it to rapidly close certain
client trust account cases without
ever contacting the offending
attorney for additional information.
30 California State Auditor Report 2022-030
April 2022
Figure3
A Small Overdraft in a Hypothetical Attorney’s Client Trust Account Is Indicative of a Larger Misappropriation Scheme
The attorney wins a
settlement of which
$8,000 is for Client A
The attorney takes
$4,000 of the settlement
for personal use
The attorney wins a
settlement of which
$6,000 is for Client B
The attorney
pays Client A
their $8,000
The attorney takes
another $4,000
for personal use
The attorney issues a
check, hoping to
replace the $50 before
the check is cashed
The check is cashed and
insufficient funds triggers a
bank reportable action
to the State Bar
Client C provides the
attorney $2,000 for
future case-related
expenses
The attorney
incurs $50 in
costs related to
Client C’s case
Client B demands
their $6,000 in
settlement funds
$8,000
(4,000)
6,000
2,000
(8,000)
(4,000)
(50)
$8,000
4,000
10,000
12,000
4,000
(0)
(50)
Client A Settlement
Attorney Personal Use
Client B Settlement
Client C Funds for Future Case-Related Expenses
Client A Payout
Attorney Personal Use
Client C Case-Related Expense
PAYMENT
CLIENT TRUST
ACCOUNT
BALANCE
$8,000
8,000
14,000
16,000
8,000
8,000
7,950
AMOUNT OWED
TO CLIENTS
DESCRIPTION
Source: Interviews with StateBar staff.
31California State Auditor Report 2022-030
April 2022
In some cases, however, the StateBar closes complaints as deminimis
without contacting the attorney to obtain additional information or to
provide guidance for avoiding future complaints. For one attorney we
reviewed, the StateBar closed three bank reportable actions as deminimis
over the course of four years but did not send the attorney a resource letter
when it closed any of the cases. e assistant chief trial counsel stated that it
is the StateBar’s practice to give attorneys the benefit of the doubt on these
initial minor overdrafts. Nevertheless, because of the StateBar’s practice,
the attorney may not be aware that, as the deminimis resource letter
describes, even minor transgressions related to client trust fund accounting
may create a track record warranting closer scrutiny and investigation.
Further, because the attorney did not receive the resource letter, he or she
was not referred to the various resources the StateBar provides attorneys to
help them avoid client trust account issues in the future.
Even when the StateBar does send a resource letter to an attorney upon
closing a case as deminimis, in some circumstances its use of deminimis
closures has been excessive. Figure4 shows the long-standing pattern of
complaints against one attorney, including 75 bank reportable actions. e
StateBar closed 34 of these cases as deminimis, allowing the attorney to
continue to practice without any disciplinary action for nearly 16 years
before being subsequently suspended from practice for using their client
trust account funds for personal use.
Although the StateBar has an intake manual describing the specific
circumstances under which staff may close bank reportable actions as
deminimis, the StateBar has failed to follow this formal guidance, in part
because staff have created and follow informal guidance that differs from
it. is informal guidance describes different standards for closing a case
as deminimis, because—unlike the intake manual—it does not limit the
use of deminimis closures to attorneys who do not have a pending or prior
history of bank reportable actions. According to the chief trial counsel, the
informal guidance has not been vetted by StateBar management for use
when reviewing reportable actions, nor does that guidance supersede the
intake manual. He further stated that the StateBar is working to update
its intake manual so that it can eliminate the use of the informal guidance.
Notwithstanding its unofficial status, the informal guidance allows for the
closure of certain cases that the intake manual does not specify as eligible to
be closed as deminimis.
According to a StateBar deputy trial counsel, staff refer to the informal
guidance because it is sometimes unclear when to close a reportable action
as deminimis if the attorney has a prior history of reportable actions, and
the informal guidance consists of institutional knowledge for resolving
reportable actions. However, it is not clear why the deputy trial counsel
believes that it is sometimes unclear whether a reportable action should
be closed as deminimis in such a situation. e StateBar’s intake manual
clearly states that one of the criteria for closing an attorney’s reportable
action as deminimis is the lack of a prior history of bank reportableactions.
The StateBar closed  cases
against an attorney as deminimis,
allowing the attorney to continue
to practice without any disciplinary
action for nearly  years before
subsequent suspension from
practice for using client trust
account funds for personal use.
[Insert Figure 4]
32 California State Auditor Report 2022-030
April 2022
Figure4
After Closing 87 Complaints Spanning 20 Years, the StateBar Eventually Sought Disbarment Based on an Attorney’s
Conviction in Federal Court
Complaint Summary
After closing 87 complaints spanning 20 years,
75 of which were bank reportable actions, the State Bar
eventually sought disbarment based on the attorney's
conviction in federal court.
YEAR 1
YEAR 20
ADMITTED
DISBARRED
Closed Without Corrective Action
Each Tile Represents a Complaint
Against the Attorney
Closed De Minimis
Closed with Nonpublic Measure
Closed with Discipline
Discipline Summary
The State Bar consolidated seven cases into one case
and then disciplined the attorney.
In response to two bank reportable actions, the attorney
explained that a client agreed to repair vehicles the
attorney owned, and the attorney used the client trust
account to pay for parts. Although this is not a
permissible use of a client trust account, the State Bar
closed the two cases due to insufficient evidence.
Through a random internal audit, the State Bar
determined the decision to close the two cases was an
error. The State Bar reopened the complaints and
consolidated them with five new bank reportable actions.
The State Bar found that, over 15 months, the attorney
had made 161 payments from the client trust account
for personal transactions. The State Bar Court
recommended the attorney be suspended for 90 days,
but noted that the attorney’s record was discipline-free
as a significant mitigating circumstance when
determining the discipline.
Disbarment Summary
The State Bar requested that the attorney be disbarred
after it learned about the attorney’s conviction in federal
court for using client trust accounts for money laundering.
Source: Trial counsel’s office case files and the State Bar Court’s stipulation of facts.
Our review of case files indicates that the StateBar’s practices for closing
complaints as deminimis were not always in the best interests of either
the public or the attorneys. We reviewed 13complaints against five
attorneys that were closed as deminimis, and we found that in all of them
the StateBar did not follow its formal policy for not closing complaints
as deminimis against attorneys with a prior history of bank reportable
actions. Its failure to follow its policy may have resulted in inadequate
public protection. For example, had the StateBar intervened when it
began receiving reportable action notifications for the attorney described
in CaseExample6 instead of closing multiple complaints as deminimis,
it might have imposed discipline or provided guidance that would have
prevented the attorney’s subsequent client trust account violations.
Following the StateBar’s investigation, the attorney was suspended from the
practice of law and was disbarred the following year for differentcharges.
[Insert CaseExample6]
33California State Auditor Report 2022-030
April 2022
As we discuss previously, according to the StateBar’s intake
manual, staff should consider prior complaints when deciding
whether to forward cases for investigation. However, a history of
prior complaints, such as the pattern shown for the attorney in
Figure4, has not always resulted in the StateBar investigating new
cases, even when the complaints were bank reportable actions. For
example, the StateBar used nonpublic measures to close multiple
complaints related to client trust accounts against the attorney in
CaseExample6
Case Example 6
Case Example 1
Early one year, the State Bar closed five
cases alleging client trust account
violations by an attorney as de minimis.
Later that same year, the State Bar
received another complaint pertaining to
a $435 overdraft of the attorney’s client
trust account and contacted the attorney
to obtain further information. The
attorney explained that the complaint
was due to a mistake. The State Bar accepted this
explanation and closed the complaint without taking
further action, incorrectly noting that the attorney had
no prior history of reportable actions.
During this period, the State Bar was investigating
another complaint against the same attorney that
involved, among other issues, an alleged client trust
account violation. The State Bar did not forward any of
the complaints described above to the investigative
team to determine whether they were connected and
ultimately closed the client trust account violation
complaint it was investigating as well. Within a month,
the State Bar received three more client trust account
complaints. The State Bar requested additional
information from the attorney, who early in the next
year informed the State Bar that the violations were due
to a series of personal crises. By the time the State Bar
subpoenaed the attorney’s client trust account records,
the attorney had withdrawn or attempted to withdraw
funds from the client trust account nearly 50 times,
totaling approximately $5,400 for the payment of
personal expenses. Although the attorney deposited
personal funds to reimburse the expenses, the State Bar
concluded that the attorney had commingled assets in
a client trust account in willful violation of the Rules of
Professional Conduct and suspended the attorney.
Case Example 6
34 California State Auditor Report 2022-030
April 2022
CaseExample7, despite the existence of prior client trust account
complaints. According to the assistant chief trial counsel, the
deputy trial counsel who reviewed this case stated that the StateBar
could have issued a letter to the attorney to request additional
information regarding the December 2021 complaint, but because
the StateBar had recently sent the attorney a warning letter, the
trial counsel’s office did not believe further action was necessary.
However, the StateBar’s intake manual states that if the attorney
previously received a warning letter or discipline for similar
misconduct, a new complaint will likely result in the pending matter
being forwarded for investigation. Although the attorney had a
pattern of cases closed through nonpublic measures going back
to 2017, the StateBar had not investigated any of the attorney’s
30bank reportable actions as of February 2022.[Insert CaseExample7]
CaseExample7
Case Example 7
From 2015 through
2021, an attorney was
the subject of 35
complaints, 30 of
which were alleged
client trust account
violations. Of these
complaints, the State
Bar closed 12 with
warning letters, five with resource letters, and one
with a directional letter. The rest, including the
attorney’s most recent client trust account complaint
in December 2021, were closed in the intake phase
without further investigation. The State Bar
inappropriately closed the December 2021 client
trust account complaint without contacting the
attorney for additional information, despite having
issued a warning letter to the attorney just one
month earlier for 11 complaints of alleged client trust
account violations.
Case Example 7
Further, the StateBar did not always follow its intake manual
regarding client trust account complaints when it was actively
investigating an attorney for other client trust account violations.
e StateBar’s intake manual states that if there are other pending
disciplinary matters regarding the attorney in question, staff
should determine whether to forward the bank reportable action
35California State Auditor Report 2022-030
April 2022
for investigation before requesting a response to the complaint
from the attorney. As CaseExample8 shows, the StateBar did not
forward a bank reportable action for investigation even though
the StateBar was pursuing investigations of multiple complaints
against the attorney. According to the assistant chief trial counsel,
the deputy trial counsel who originally reviewed this case agreed
that StateBar staff should have emailed the investigator and legal
adviser to determine whether they wanted the matter forwarded for
investigation, but staff did not do so in this case. [Insert CaseExample8]
CaseExample8
Case Example 8
Case Example 1
An attorney was the subject of
28 complaints over a five-year
period, one of which was initiated
after a bank notified the State Bar
that the attorney failed to maintain
funds that were received for a
client in a client trust account. Over
this period, 10 of the 28 complaints
involving the attorney alleged client trust account
violations. At the time the State Bar reviewed the
violation reported by the bank, the attorney had
two other disciplinary matters open, one of which
alleged a client trust account violation. Although
State Bar intake staff noted the open investigations
in their review of the violation reported by the
bank, they did not forward the complaint to be
investigated by the staff who were investigating
the other open complaints. Instead, the State Bar
closed the complaint as de minimis.
Case Example 8
Although the StateBar implemented new training in 2021 for
reviewing client trust account complaints, in some cases its staff
have not followed the guidance provided in that training. State
law allows the StateBar to subpoena any and all of an attorney’s
financial records held by financial institutions. In 2021 the StateBar
held a series of mandatory training sessions on the fundamentals of
effective client trust account investigations that included guidance
on when to subpoena bank records. e first session, in July 2021,
directed staff to subpoena client trust account records in any of the
circumstances described in the text box. Based on this training,
StateBar staff should have subpoenaed the bank records for the
36 California State Auditor Report 2022-030
April 2022
attorney in CaseExample7 when they received the
December 2021 reportable action because the attorney
had multiple previous client trust account allegations.
Instead, the StateBar closed the bank reportable
action as deminimis without contacting the attorney
for additionalinformation.
According to the assistant chief trial counsel, the
deputy trial counsel who reviewed this case did not
believe further action was necessary because the
attorney did not have multiple consecutive overdrafts,
and the December 2021 overdraft itself was small.
Nevertheless, given that the StateBar had received
30bank reportable actions regarding the attorney and
closed 18 cases with nonpublic measures, the StateBar should have
followed guidance from its training and subpoenaed the attorney’s
financialrecords.
Although the StateBar provides training to its staff on investigating
client trust account violations, it may need additional expertise to
investigate such misconduct. For example, an individual with expertise
in financial matters would have likely questioned the evidence
that the StateBar accepted from the attorney in CaseExample9.
In February2022, the board’s finance committee approved the
establishment of one forensic auditor position to handle financial
investigations involving high-dollar client trust accounts and other
complex tracings of funds.
Nevertheless, the StateBar will need to encourage its staff to seek
advice from this expert. According to the chief trial counsel, the
StateBar maintains a list of contract forensic auditors who are available
for assistance with client trust account complaints. e StateBar has
informed its staff during training sessions that they should consider
using these forensic auditors in certain circumstances, such as when an
attorney exhibits a pattern of withholding funds from clients for periods
of time but subsequently pays after the StateBar becomes involved.
However, according to the chief trial counsel, the StateBar has retained
a forensic auditor for only two cases since 2018. Based on the attorneys
we identified with patterns matching the example that the StateBar
describes, such as the attorney in CaseExample2, we would expect the
StateBar to have used the expertise of forensic auditors morefrequently.
Weaknesses in the StateBar’s Monitoring of Its Attorney Discipline System
Limit the Independence of That Monitoring
We identified instances in which the StateBar’s decisions to close
complaints do not appear to have been justified based on the
information available, as we describe in the previous sections. Best
[Insert Text Box]
[Insert CaseExample9]
StateBar Guidelines on Subpoenaing
Client Trust Account Records
StateBar staff should subpoena client trust account records
when an attorney has the following:
• A history of closed reportable actions with warning and
resource letters.
• Prior discipline for client trust account violations.
• Multiple closed investigations involving client trust
accountallegations.
Source: StateBar training materials.
37California State Auditor Report 2022-030
April 2022
CaseExample9
Case Example 9
Case Example 1
To explain two overdrafts of a client trust account that
occurred in a particular month, an attorney submitted
a copy of the account’s bank statement for the prior
month, but not for the month when the client trust
account was actually overdrawn. Instead, the attorney
submitted a narrative providing details of certain
transactions for the month in question and then
asserted that the
overdraft was caused
by charges the attorney
expected would be
paid from a different
account. Instead of
requesting the bank
statement for the
month in question, the
State Bar accepted the
attorney’s explanation
and closed the case.
Case Example 9
practices suggest that monitoring the safeguards in a system is essential
to assessing performance over time and providing assurance that the
organization’s goals are being carried out. However, weaknesses in
the StateBar’s monitoring of its attorney discipline system threaten
to diminish its ability to ensure that it is closing attorney discipline
cases appropriately. Following the decision to close a case, the
StateBar has two processes it can use to identify cases that staff closed
inappropriately—the appeals process and its external review process—
and we identified areas for improvement in both of theseprocesses.
The StateBar Could Improve Its Appeals Process by Using anOmbudsperson
e StateBar’s appeals process is one method of assessing whether
it has closed cases inappropriately. Complainants can appeal the
decision to close a case, but they must do so within 90 days of the
case being closed. From 2017 to 2020, the StateBar received only
about 5,300appeals of the more than 49,000 cases it dismissed,
and it reopened only 158 of those cases. e difference between the
number of dismissed cases and the number of closed cases that are
appealed suggests that one of two situations is occurring: either many
of the original complaints that the StateBar received have no merit,
38 California State Auditor Report 2022-030
April 2022
or individuals had difficulty navigating the appeals process. In
either case, it appears that individuals need additional assistance
in understanding the complaint process and in filing complaints
andappeals.
One option for assisting complainants with filing complaints
and appeals would be to establish an ombudsperson for attorney
discipline. A public sector ombudsperson is an official appointed
to receive and impartially investigate citizen grievances about
administrative acts of government. Some ombudsperson duties
may include responding to questions and concerns raised by the
public, such as how the complaint and appeals system operates;
how to access the system; and how to file a complaint or appeal
as well as reporting trends and systemic problems to executives.
An ombudsperson can also make recommendations to oversight
entities, such as a state supreme court, for improvements to an
attorney discipline system.
e state of Texas has established an ombudsperson for attorney
discipline that fulfills such purposes. e Texas attorney discipline
ombudsperson is responsible for receiving grievances about its
state bar system and investigating those grievances to make sure
its state bar followed proper procedures. e ombudsperson is also
responsible for making recommendations to the Supreme Court of
Texas and its state bar board of directors for improving the state’s
attorney discipline system.
e California StateBar may similarly benefit from an
ombudsperson for attorney discipline because the ombudsperson’s
role could include educating the public about the complaint
process, such as how to access the complaint system and file
complaints. We discussed the benefits of implementing an
ombudsperson office for attorney discipline with the executive
director, and she agreed that an ombudsperson for the California
attorney discipline system is something that is needed and could be
a useful resource for the public in terms of navigating the StateBar’s
attorney discipline system. Further, she agreed that having the
ombudsperson independent from the StateBar makes sense.
However, she stated that it would be important to have adequate
communication and coordination between the StateBar and the
ombudsperson so that trends identified by the ombudsperson could
inform the StateBar’s consumer education, attorney education,
and internal compliance activities. e StateBar identified in its
2022 budget that it will use funds to implement an ombudsperson
office within the StateBar that will initially focus on admissions and
discipline-relatedcomplaints.
[Insert pullout]
[Insert Figure 5]
39California State Auditor Report 2022-030
April 2022
Limitations in the StateBar’s External Review Reduce Its Independence
Another method the StateBar has established to
monitor the outcomes of its attorney discipline
system is a semiannual review of closed cases by an
external reviewer. However, flaws in the design of
the external review process limit its independence,
which increases the risk that the review is not
objective. According to the U.S.Government
Accountability Office, an external review can
identify results that are not consistent with a
program’s objectives, reduce the risk of incorrect
outcomes, and potentially detect fraud. However, an
improperly designed external review can reduce or
nullify these benefits. e StateBar’s external review
is limited in several ways as identified in the text box.
A key aspect of a properly designed external review is its
independence, but several aspects of the StateBar’s external
review process call into question whether it is truly independent.
For example, best practices state that a long association between
the external reviewer and the entity can represent a threat to
independence. For this reason, the external reviewer should be
rotated to ensure that the reviewer does not become too familiar
with the entity, which could affect the reviewer’s objectivity.
However, the StateBar contracted with a former employee as its
external reviewer in 2012, and that same individual has conducted
reviews for the StateBar since then. Although the executive
director indicated that it is very difficult to find qualified people
willing to perform this work, if the external review is not objective
and independent, it may be providing a false sense of assurance.
Second, interfering with an external reviewer’s selection of items
to be examined or the procedures they use is considered to be
an undue influence and a threat to the reviewer’s independence.
e StateBar’s policy requires that the semiannual review include
at least 260case files that should be randomly selected but
must include a minimum number of cases closed at the intake,
investigation, and trial stages. However, according to the current
policy, the StateBar selects each of the cases for the external
reviewer. Not allowing the external reviewer to select the cases
introduces the risk that the StateBar could withhold from review
cases for which its staff did not follow prescribed policies. e chief
trial counsel asserted that the selection of cases is random, using
an algorithm developed by the StateBar, and that there is nothing
to suggest that the StateBar has sought to influence the random
selection of cases for the review. Nevertheless, the entity being
reviewed should not select the items to be reviewed.
[Insert Text Box]
Limitations to the StateBar’s
External Review Process
• The State Bar has a long association with a single
externalreviewer.
• The StateBar selects cases for review.
• Findings are reported to the chief trial counsel instead of
directly to the StateBar’s board.
• The StateBar lacks a process to track the review’sfindings.
Source: Auditor analysis of the StateBar’s external review policy
and interviews with State Bar staff.
40 California State Auditor Report 2022-030
April 2022
Best practices also indicate that the results of external reviews
should be presented to those charged with governance—in this case
the StateBar’s board—and communicating those results should
be free from interference. is arrangement can help ensure that
the governing body receives objective information directly from
the external reviewer upon which to base decisions for appropriate
corrective action. However, instead of having the external reviewer
present the findings to the board, the StateBar’s policy until
recently was for the trial counsel’s office to prepare a memorandum
summarizing the external review’s findings and provide it to the
trial counsel’s office’s management. In November 2021, the trial
counsel’s office began a practice of presenting the findings and
recommendations of the external reviewer to the board, and it
formalized this practice in a January 2022 policy directive. In
the January 2022 policy, the StateBar indicated that the external
reviewer is responsible for summarizing the external review’s
findings and any recommendations. e trial counsel’s office
prepares a written response to the review that it provides to a board
committee along with the reviewer’s summary. Although this new
policy represents an improvement in how information is shared,
the external reviewer should still be provided the opportunity
to present the results of his or her review directly to the board.
e chief trial counsel stated that he did not object to having the
external reviewer report findings directly to the board as long as
appropriate confidentiality could be maintained.
e benefits of the external review are further limited by the
StateBar’s lack of monitoring to ensure that it follows up on
and corrects any deficiencies identified during the review. Best
practices state that management should complete and document
the corrective actions it takes to resolve findings from reviews.
Currently, the StateBar’s process for addressing recommendations
from the external review is to consider them and, if its trial
counsel managers deem them appropriate, to present its plans for
implementing any agreed-upon recommendations to the board.
However, according to the chief trial counsel, the StateBar does
not have a formal process for tracking the implementation of
recommendations from the external reviews. Without a method
to track recommendations and the corrective actions it takes to
resolve them, the StateBar increases the risk that it will overlook a
recommendation or the corrective actions it should take to resolve
an issue the external reviewer identifies. Neither the chief trial
counsel nor the executive director objected to the establishment
of a formal process to track progress on implementing
recommendations from past external reviews, other than asserting
that it would require additional resources to implement.
Please refer to page 5 to find the recommendations that we have
made as a result of these audit findings.
41California State Auditor Report 2022-030
April 2022
We conducted this performance audit in accordance with generally accepted government auditing
standards and under the authority vested in the CaliforniaStateAuditor by GovernmentCode
section8543 et seq. ose standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
based on the audit objectives. We believe that the evidence obtained provides a reasonable basis
for our findings and conclusions based on our audit objectives.
Respectfully submitted,
MICHAEL S. TILDEN, CPA
Acting California State Auditor
April 14, 2022
42 California State Auditor Report 2022-030
April 2022
43California State Auditor Report 2022-030
April 2022
Appendix A
Demographic Data Pertaining to Complaints Against Attorneys
Table A displays by demographic group the number of cases closed
from January 2010 through November 2021 and outcomes resulting
in discipline. e StateBar collects demographic information when
it administers the bar exam and when attorneys pay their annual
dues. As respondents are not always required to provide such data,
a large group of attorneys is categorized in the table as “information
unavailable.” To be consistent with the data collected by the
StateBar, we have not altered the descriptions of the demographic
categories. We present the descriptions as they appear in the
StateBar’s data.
We present the following information to provide perspective on
cases and outcomes for the various demographic groups. However,
to avoid interfering with ongoing litigation regarding disparate
treatment in the StateBar’s attorney discipline system, we do not
draw conclusions on these data.
44 California State Auditor Report 2022-030
April 2022
Table A
Attorney Discipline Cases and Disciplinary Outcomes by Race and Gender, 2010 through 2021
PERCENTAGE CLOSED AT:
RESULT
PUBLIC DISCIPLINE NONPUBLIC MEASURES
RACE GENDER
TOTAL
CASES
INTAKE INVESTIGATION PREFILING POSTFILING
DISBARRED SUSPENDED
PUBLIC
REPROVAL
RESIGN WITH
CHARGES PENDING
PRIVATE
REPROVAL
NONDISCIPLINARY
ACTIONS
American Indian/ Alaska Native Female 209 61.7% 17.7% 9.1% 11.5% 6.2% 1.9% 1% 0% 0% 12.9%
Gender variant/
Nonconforming/ Nonbinary
11 72.7 27.3 0 0 0 0 0 0 0 27.3
Male 612 50.5 25.8 13.2 10.5 2.9 2.6 0.2 0 0.7 7.2
Multiple 3 100 0 0 0 0 0 0 0 0 0
Not listed 1 100 0 0 0 0 0 0 0 0 0
Two spirit* 4 100 0 0 0 0 0 0 0 0 0
Totals for American Indian/Alaska Native
840 54% 23.6%
11.9% 10.5% 3.7% 2.4% 0.4% 0% 0.5% 8.8%
Asian Female 3,772 73.2% 19.9% 2.5% 4.4% 0.9% 2.3% 0.2% 0.1% 0.2% 10.4%
Gender variant/
Nonconforming/ Nonbinary
6 83.3 16.7 0 0 0 0 0 0 0 0
Information unavailable 169 18.9 17.8 37.9 25.4 21.9 1.8 0 0 0 4.1
Male 10,962 56.5 21.4 14.6 7.4 2.3 3.2 0.2 0 0.2 9.5
Multiple 18 66.7 33.3 0 0 0 0 0 0 0 5.6
Not listed 2 100 0 0 0 0 0 0 0 0 0
Two spirit 1 100 0 0 0 0 0 0 0 0 0
Totals for Asian 14,930 60.4% 21% 11.8% 6.9% 2.2% 2.9% 0.2% 0.1% 0.2% 9.7%
Black/African American Female 3,125 69.1% 20.2% 3.7% 7% 1.9% 2.9% 0.2% 0.1% 0.3% 11.7%
Gender variant/
Nonconforming/ Nonbinary
4 100 0 0 0 0 0 0 0 0 25
Information unavailable 2 100 0 0 0 0 0 0 0 0 50
Male 7,186 56.7 24.7 7.3 11.3 2.7 4.3 0.4 0 0.2 11.6
Multiple 32 65.6 31.3 0 3.1 0 3.1 0 0 0 15.6
Not listed 3 0 100 0 0 0 0 0 0 0 0
Two spirit 27 81.5 18.5 0 0 0 0 0 0 0 25.9
Totals for Black/African American 10,379 60.5% 23.4% 6.2% 9.9% 2.4% 3.9% 0.3% 0% 0.2% 11.7%
Hispanic/Latino Female 3,966 66.1% 26% 3% 4.9% 1.1% 2% 0.3% 0.1% 0.1% 11.3%
Gender variant/
Nonconforming/ Nonbinary
3 100 0 0 0 0 0 0 0 0 33.3
Information unavailable 40 60 10 7.5 22.5 5 10 0 0 2.5 10
Male 11,522 62 25.7 5.1 7.2 1.7 3.4 0.2 0 0.2 11.5
Multiple 39 64.1 33.3 0 2.6 0 2.6 0 0 0 20.5
Totals for Hispanic/Latino 15,570 63.1% 25.7% 4.5% 6.7% 1.6% 3% 0.2% 0% 0.2% 11.4%
45California State Auditor Report 2022-030
April 2022
Table A
Attorney Discipline Cases and Disciplinary Outcomes by Race and Gender, 2010 through 2021
PERCENTAGE CLOSED AT:
RESULT
PUBLIC DISCIPLINE NONPUBLIC MEASURES
RACE GENDER
TOTAL
CASES
INTAKE INVESTIGATION PREFILING POSTFILING
DISBARRED SUSPENDED
PUBLIC
REPROVAL
RESIGN WITH
CHARGES PENDING
PRIVATE
REPROVAL
NONDISCIPLINARY
ACTIONS
American Indian/ Alaska Native Female 209 61.7% 17.7% 9.1% 11.5% 6.2% 1.9% 1% 0% 0% 12.9%
Gender variant/
Nonconforming/ Nonbinary
11 72.7 27.3 0 0 0 0 0 0 0 27.3
Male 612 50.5 25.8 13.2 10.5 2.9 2.6 0.2 0 0.7 7.2
Multiple 3 100 0 0 0 0 0 0 0 0 0
Not listed 1 100 0 0 0 0 0 0 0 0 0
Two spirit* 4 100 0 0 0 0 0 0 0 0 0
Totals for American Indian/Alaska Native
840 54% 23.6%
11.9% 10.5% 3.7% 2.4% 0.4% 0% 0.5% 8.8%
Asian Female 3,772 73.2% 19.9% 2.5% 4.4% 0.9% 2.3% 0.2% 0.1% 0.2% 10.4%
Gender variant/
Nonconforming/ Nonbinary
6 83.3 16.7 0 0 0 0 0 0 0 0
Information unavailable 169 18.9 17.8 37.9 25.4 21.9 1.8 0 0 0 4.1
Male 10,962 56.5 21.4 14.6 7.4 2.3 3.2 0.2 0 0.2 9.5
Multiple 18 66.7 33.3 0 0 0 0 0 0 0 5.6
Not listed 2 100 0 0 0 0 0 0 0 0 0
Two spirit 1 100 0 0 0 0 0 0 0 0 0
Totals for Asian 14,930 60.4% 21% 11.8% 6.9% 2.2% 2.9% 0.2% 0.1% 0.2% 9.7%
Black/African American Female 3,125 69.1% 20.2% 3.7% 7% 1.9% 2.9% 0.2% 0.1% 0.3% 11.7%
Gender variant/
Nonconforming/ Nonbinary
4 100 0 0 0 0 0 0 0 0 25
Information unavailable 2 100 0 0 0 0 0 0 0 0 50
Male 7,186 56.7 24.7 7.3 11.3 2.7 4.3 0.4 0 0.2 11.6
Multiple 32 65.6 31.3 0 3.1 0 3.1 0 0 0 15.6
Not listed 3 0 100 0 0 0 0 0 0 0 0
Two spirit 27 81.5 18.5 0 0 0 0 0 0 0 25.9
Totals for Black/African American 10,379 60.5% 23.4% 6.2% 9.9% 2.4% 3.9% 0.3% 0% 0.2% 11.7%
Hispanic/Latino Female 3,966 66.1% 26% 3% 4.9% 1.1% 2% 0.3% 0.1% 0.1% 11.3%
Gender variant/
Nonconforming/ Nonbinary
3 100 0 0 0 0 0 0 0 0 33.3
Information unavailable 40 60 10 7.5 22.5 5 10 0 0 2.5 10
Male 11,522 62 25.7 5.1 7.2 1.7 3.4 0.2 0 0.2 11.5
Multiple 39 64.1 33.3 0 2.6 0 2.6 0 0 0 20.5
Totals for Hispanic/Latino 15,570 63.1% 25.7% 4.5% 6.7% 1.6% 3% 0.2% 0% 0.2% 11.4%
continued on next page…
46 California State Auditor Report 2022-030
April 2022
PERCENTAGE CLOSED AT:
RESULT
PUBLIC DISCIPLINE NONPUBLIC MEASURES
RACE GENDER
TOTAL
CASES
INTAKE INVESTIGATION PREFILING POSTFILING
DISBARRED SUSPENDED
PUBLIC
REPROVAL
RESIGN WITH
CHARGES PENDING
PRIVATE
REPROVAL
NONDISCIPLINARY
ACTIONS
Information unavailable Female 587 63.4% 16.9% 14.1% 5.6% 2.6% 2.6% 0.2% 0% 0% 8.9%
Information unavailable 32,425 54.5 22.9 11.3 11.2 3.9 3.1 0.2 0.4 0.1 6
Male 2,500 61.2 23.3 9 6.5 1.2 3.8 0.2 0.2 0.1 9.8
Multiple 36 63.9 22.2 2.8 11.1 0 11.1 0 0 0 5.6
Not listed 5 80 20 0 0 0 0 0 0 0 0
Two spirit 1 100 0 0 0 0 0 0 0 0 0
Totals for Information unavailable 35,554 55.2% 22.8% 11.2% 10.8% 3.7% 3.2% 0.2% 0.3% 0.1% 6.3%
Middle Eastern/ North African Female 829 72.9% 24.7% 1% 1.4% 0% 0.8% 0.1% 0% 0% 15.2%
Gender variant/
Nonconforming/ Nonbinary
4 50 0 50 0 0 0 0 0 0 50
Male 3,606 60.6 35.6 1.4 2.4 0 1.6 0.1 0 0.1 14.1
Multiple 2 100 0 0 0 0 0 0 0 0 0
Not listed 9 100 0 0 0 0 0 0 0 0 11.1
Two spirit 1 0 0 0 100 0 100 0 0 0 0
Totals for Middle Eastern/North African 4,451 63% 33.5% 1.4% 2.2% 0% 1.5% 0.1% 0% 0.1% 14.3%
Multiracial Female 2,628 73.7% 22.4% 1.3% 2.5% 0.1% 1.3% 0.1% 0.1% 0.2% 11.3%
Gender variant/
Nonconforming/ Nonbinary
18 66.7 27.8 0 5.6 0 0 0 0 0 16.7
Information unavailable 14 64.3 28.6 0 7.1 0 0 0 0 0 35.7
Male 5,209 65.7 27.1 1.8 5.4 0.3 2.6 0.3 0 0.3 11.2
Multiple 259 57.9 30.1 5.4 6.6 0 5 0 0 0.4 11.2
Not listed 36 86.1 8.3 2.8 2.8 0 0 0 0 2.8 13.9
Two spirit 16 62.5 18.8 6.3 12.5 6.3 0 6.3 0 0 18.8
Totals for Multiracial 8,180 68.1% 25.6% 1.8% 4.5% 0.3% 2.2% 0.2% 0% 0.3% 11.3%
Native Hawaiian/ Other Pacific
Islander
Female 187 75.4% 20.9% 0.5% 3.2% 0.5% 2.7% 0% 0% 0% 11.2%
Information unavailable 6 83.3 16.7 0 0 0 0 0 0 0 0
Male 478 70.1 23.8 1.3 4.8 1 2.3 0.2 0 0.2 15.9
Multiple 1 0 100 0 0 0 0 0 0 0 0
Two spirit 10 70 20 0 10 0 10 0 0 0 20
Totals for Native Hawaiian/Other Pacific Islander 682 71.6% 23% 1% 4.4% 0.9% 2.5% 0.1% 0% 0.1% 14.5%
Other race, ethnicity, or origin Female 1,121 76.8% 20.1% 1.2% 2% 0.1% 0.8% 0.3% 0% 0.4% 13.3%
Gender variant/
Nonconforming/ Nonbinary
12 75 25 0 0 0 0 0 0 0 25
Information unavailable 28 85.7 14.3 0 0 0 0 0 0 0 17.9
Male 3,778 69.3 24.8 2.4 3.5 0.2 1.9 0.3 0 0.2 13.2
Multiple 97 64.9 25.8 3.1 6.2 0 6.2 0 0 0 6.2
Not listed 557 70 22.3 3.8 3.9 0.2 2.3 0.4 0.2 0.2 12.6
Two spirit 37 81.1 18.9 0 0 0 0 0 0 0 16.2
Totals for Other race, ethnicity, or origin 5,630 71% 23.6% 2.2% 3.2% 0.2% 1.8% 0.3% 0% 0.2% 13.1%
47California State Auditor Report 2022-030
April 2022
PERCENTAGE CLOSED AT:
RESULT
PUBLIC DISCIPLINE NONPUBLIC MEASURES
RACE GENDER
TOTAL
CASES
INTAKE INVESTIGATION PREFILING POSTFILING
DISBARRED SUSPENDED
PUBLIC
REPROVAL
RESIGN WITH
CHARGES PENDING
PRIVATE
REPROVAL
NONDISCIPLINARY
ACTIONS
Information unavailable Female 587 63.4% 16.9% 14.1% 5.6% 2.6% 2.6% 0.2% 0% 0% 8.9%
Information unavailable 32,425 54.5 22.9 11.3 11.2 3.9 3.1 0.2 0.4 0.1 6
Male 2,500 61.2 23.3 9 6.5 1.2 3.8 0.2 0.2 0.1 9.8
Multiple 36 63.9 22.2 2.8 11.1 0 11.1 0 0 0 5.6
Not listed 5 80 20 0 0 0 0 0 0 0 0
Two spirit 1 100 0 0 0 0 0 0 0 0 0
Totals for Information unavailable 35,554 55.2% 22.8% 11.2% 10.8% 3.7% 3.2% 0.2% 0.3% 0.1% 6.3%
Middle Eastern/ North African Female 829 72.9% 24.7% 1% 1.4% 0% 0.8% 0.1% 0% 0% 15.2%
Gender variant/
Nonconforming/ Nonbinary
4 50 0 50 0 0 0 0 0 0 50
Male 3,606 60.6 35.6 1.4 2.4 0 1.6 0.1 0 0.1 14.1
Multiple 2 100 0 0 0 0 0 0 0 0 0
Not listed 9 100 0 0 0 0 0 0 0 0 11.1
Two spirit 1 0 0 0 100 0 100 0 0 0 0
Totals for Middle Eastern/North African 4,451 63% 33.5% 1.4% 2.2% 0% 1.5% 0.1% 0% 0.1% 14.3%
Multiracial Female 2,628 73.7% 22.4% 1.3% 2.5% 0.1% 1.3% 0.1% 0.1% 0.2% 11.3%
Gender variant/
Nonconforming/ Nonbinary
18 66.7 27.8 0 5.6 0 0 0 0 0 16.7
Information unavailable 14 64.3 28.6 0 7.1 0 0 0 0 0 35.7
Male 5,209 65.7 27.1 1.8 5.4 0.3 2.6 0.3 0 0.3 11.2
Multiple 259 57.9 30.1 5.4 6.6 0 5 0 0 0.4 11.2
Not listed 36 86.1 8.3 2.8 2.8 0 0 0 0 2.8 13.9
Two spirit 16 62.5 18.8 6.3 12.5 6.3 0 6.3 0 0 18.8
Totals for Multiracial 8,180 68.1% 25.6% 1.8% 4.5% 0.3% 2.2% 0.2% 0% 0.3% 11.3%
Native Hawaiian/ Other Pacific
Islander
Female 187 75.4% 20.9% 0.5% 3.2% 0.5% 2.7% 0% 0% 0% 11.2%
Information unavailable 6 83.3 16.7 0 0 0 0 0 0 0 0
Male 478 70.1 23.8 1.3 4.8 1 2.3 0.2 0 0.2 15.9
Multiple 1 0 100 0 0 0 0 0 0 0 0
Two spirit 10 70 20 0 10 0 10 0 0 0 20
Totals for Native Hawaiian/Other Pacific Islander 682 71.6% 23% 1% 4.4% 0.9% 2.5% 0.1% 0% 0.1% 14.5%
Other race, ethnicity, or origin Female 1,121 76.8% 20.1% 1.2% 2% 0.1% 0.8% 0.3% 0% 0.4% 13.3%
Gender variant/
Nonconforming/ Nonbinary
12 75 25 0 0 0 0 0 0 0 25
Information unavailable 28 85.7 14.3 0 0 0 0 0 0 0 17.9
Male 3,778 69.3 24.8 2.4 3.5 0.2 1.9 0.3 0 0.2 13.2
Multiple 97 64.9 25.8 3.1 6.2 0 6.2 0 0 0 6.2
Not listed 557 70 22.3 3.8 3.9 0.2 2.3 0.4 0.2 0.2 12.6
Two spirit 37 81.1 18.9 0 0 0 0 0 0 0 16.2
Totals for Other race, ethnicity, or origin 5,630 71% 23.6% 2.2% 3.2% 0.2% 1.8% 0.3% 0% 0.2% 13.1%
continued on next page…
48 California State Auditor Report 2022-030
April 2022
PERCENTAGE CLOSED AT:
RESULT
PUBLIC DISCIPLINE NONPUBLIC MEASURES
RACE GENDER
TOTAL
CASES
INTAKE INVESTIGATION PREFILING POSTFILING
DISBARRED SUSPENDED
PUBLIC
REPROVAL
RESIGN WITH
CHARGES PENDING
PRIVATE
REPROVAL
NONDISCIPLINARY
ACTIONS
White Female 28,348 73.4% 18.2% 3.5% 4.8% 1.2% 1.6% 0.2% 0% 0.2% 9.7%
Gender variant/
Nonconforming/ Nonbinary
73 75.3 16.4 1.4 6.8 0 5.5 0 0 0 9.6
Information unavailable 507 68.8 18.1 9.7 3.4 0.8 1.2 0.2 0 0.2 8.1
Male 95,480 66.2 21.7 5.3 6.8 1.9 2.9 0.2 0.1 0.2 10.6
Multiple 376 65.4 32.2 0.5 1.9 0 1.3 0 0.3 0 15.7
Not listed 148 60.8 27 2 10.1 0 8.8 0 0 0.7 8.1
Two spirit 37 83.8 16.2 0 0 0 0 0 0 0 10.8
Totals for White 124,969 67.8% 21% 4.9% 6.3% 1.8% 2.6% 0.2% 0.1% 0.2% 10.4%
Totals for All 221,185 64.5% 22.2% 6.2% 7.1% 2% 2.8% 0.2% 0.1% 0.2% 10%
Source: The StateBar’s case data from January 2010 through November 10, 2021, and attorney demographic data reported to the StateBar through its
administration of the bar exam and during the collection of annual dues.
* California state law includes two spirit as a non-binary gender identity. According to the Federal Indian Health Service, traditionally, in most
Native American tribes two spirit people occupy a distinct, alternative gender status, but not all cultures perceive two spirit people the same way.
49California State Auditor Report 2022-030
April 2022
PERCENTAGE CLOSED AT:
RESULT
PUBLIC DISCIPLINE NONPUBLIC MEASURES
RACE GENDER
TOTAL
CASES
INTAKE INVESTIGATION PREFILING POSTFILING
DISBARRED SUSPENDED
PUBLIC
REPROVAL
RESIGN WITH
CHARGES PENDING
PRIVATE
REPROVAL
NONDISCIPLINARY
ACTIONS
White Female 28,348 73.4% 18.2% 3.5% 4.8% 1.2% 1.6% 0.2% 0% 0.2% 9.7%
Gender variant/
Nonconforming/ Nonbinary
73 75.3 16.4 1.4 6.8 0 5.5 0 0 0 9.6
Information unavailable 507 68.8 18.1 9.7 3.4 0.8 1.2 0.2 0 0.2 8.1
Male 95,480 66.2 21.7 5.3 6.8 1.9 2.9 0.2 0.1 0.2 10.6
Multiple 376 65.4 32.2 0.5 1.9 0 1.3 0 0.3 0 15.7
Not listed 148 60.8 27 2 10.1 0 8.8 0 0 0.7 8.1
Two spirit 37 83.8 16.2 0 0 0 0 0 0 0 10.8
Totals for White 124,969 67.8% 21% 4.9% 6.3% 1.8% 2.6% 0.2% 0.1% 0.2% 10.4%
Totals for All 221,185 64.5% 22.2% 6.2% 7.1% 2% 2.8% 0.2% 0.1% 0.2% 10%
Source: The StateBar’s case data from January 2010 through November 10, 2021, and attorney demographic data reported to the StateBar through its
administration of the bar exam and during the collection of annual dues.
* California state law includes two spirit as a non-binary gender identity. According to the Federal Indian Health Service, traditionally, in most
Native American tribes two spirit people occupy a distinct, alternative gender status, but not all cultures perceive two spirit people the same way.
50 California State Auditor Report 2022-030
April 2022
51California State Auditor Report 2022-030
April 2022
Appendix B
Scope and Methodology
We conducted this audit pursuant to the requirements contained
in the Business and Professions Code section 6145. Specifically,
we assessed the StateBar’s management of its attorney discipline
system by reviewing its policies and procedures and how it
implemented that guidance by reviewing a selection of attorney
misconduct complaints. Table B lists the audit objectives and the
methods we used to address them.
Table B
Audit Objectives and the Methods Used to Address Them
AUDIT OBJECTIVE METHOD
1
Review and evaluate the laws, rules, and
regulations significant to the StateBar’soperations.
Reviewed laws, regulations, and other background material related to the regulation of
attorneys in California.
2
Analyze whether the StateBar adequately
reviews complaints against attorneys to
determine the existence and extent of alleged
misconduct and whether it takes appropriate
disciplinary action.
Based on our assessment of the sufficiency of the StateBar’s controls in Objective 3, we
reviewed the StateBar’s handling of a judgmental selection of attorney discipline cases in
the followingareas:
• Cases closed through nonpublic measures.
• Cases closed when the complaint was withdrawn.
• Cases resulting from misconduct in other jurisdictions.
• Cases closed for a lack of sufficient evidence.
• Cases representing a pattern of complaints.
• Cases regarding client trust accounts.
3
Assess the sufficiency of the StateBar’s
management controls, including
conflict-of-interest policies, to ensure that
investigations of attorney complaints are not
compromised by undue influence.
• Reviewed the StateBar’s policies and interviewed staff regarding its processes for
investigating and disciplining attorneys accused of misconduct.
• Assessed the StateBar’s conflict-of-interest policies and reviewed its methods for
tracking, identifying, and mitigating potential conflicts between its staff and the
attorneys the StateBar regulates.
• Evaluated the StateBar’s external review of its attorney discipline complaint process.
4
Examine any data trends that could suggest
racial or gender inequities in outcomes from the
discipline process.
• Presented data on outcomes in the discipline system by race and gender in Appendix A.
• Because of ongoing litigation regarding allegations of disparate treatment in the
StateBar’s attorney discipline system, we do not make conclusions on the demographic
data provided by the StateBar.
5
Identify potential options for the StateBar
to more proactively protect the public from
misconduct by licensed attorneys, including,
to the extent possible, the implementation
of an independent discipline monitor, an
independent ombudsperson, or other options
to protect the public.
• Assessed actions taken by other entities engaged in the regulation of attorney conduct
that could benefit the StateBar in accomplishing its mission.
• Interviewed StateBar staff to obtain perspective on the feasibility of the
implementation of practices identified in this objective.
6
Review and assess any other issues that are
significant to the audit.
Did not identify any areas outside of those identified in the objectives above as being
significant to the audit.
Source: Audit workpapers.
52 California State Auditor Report 2022-030
April 2022
Assessment of Data Reliability
e U.S. Government Accountability Office, whose standards
we are statutorily required to follow, requires us to assess the
sufficiency and appropriateness of the computer-processed
information that we use to support our findings, conclusions,
orrecommendations.
In performing this audit, we relied on the StateBar’s discipline case
management data. To evaluate these data, we reviewed existing
information about the data, interviewed staff knowledgeable
about the data, and performed electronic testing of the data. We
found that these data were sufficiently reliable for the purposes
of this audit. We also obtained attorney demographic data
from the StateBar. We found these data to be of undetermined
reliability because the data are self-reported to the StateBar by
each individual when paying annual dues or applying to take the
barexam.
Additionally, we relied on data in the StateBar’s conflicts list. As our
testing identified that the StateBar had not consistently used the
conflicts list, we did not assess the accuracy or completeness of the
list. As such, we found these data to be of undeterminedreliability.
53California State Auditor Report 2022-030
April 2022
Los Angeles Office
845 South Figueroa Street
Los Angeles, CA 90017
www.calbar.ca.gov
San Francisco Office
180 Howard Street
San Francisco, CA 94105
Michael Tilden, CPA
Acting California State Auditor
621 Capitol Mall, Suite 1200
Sacramento, CA 95814
RE: State Bar of California Response to Audit Report No. 2022-030
Dear Mr. Tilden:
The State Bar has been working diligently to improve the effectiveness, timeliness, and fairness
of its discipline system. Based on proposals from the Board of Trustees’ (Board) Special
Discipline Case Audit Committee convened in response to clear failings in responding to
complaints regarding licensee Thomas Girardi, the State Bar is currently implementing a
comprehensive Client Trust Account Protection Program, among other efforts. Additionally, in
accordance with directives in Senate Bill 211 (Umberg), we are working with outside experts to
develop and propose new case processing standards aimed at resolving attorney discipline
cases in a timely, effective, and efficient manner while minimizing backlogs of attorney
discipline cases and best protecting the public. We continue our efforts to address previous
reports regarding racial disparities in the discipline system. And, just last week, we adopted a
five-year strategic plan that puts front and center our commitment to administer an attorney
discipline system that is efficient, accountable, and transparent.
Given the Board’s intense focus on the discipline system, and our understanding of the gravity
of the deficiencies that the Girardi matter laid bare, some of the findings in your recent report
are profoundly eye-opening and troubling. In particular, our failure to promulgate clear and
comprehensive policies in the areas identified, and to develop corresponding accountability
measures to ensure compliance with those policies, are unacceptable. We are proud to have
appointed a new chief trial counsel who manifests this sentiment, as reflected by the many
steps he has already taken to address identified deficiencies so far in his short tenure, as well as
his responsiveness during the audit process itself, a characteristic well-documented in your
report. Our executive director shares this sentiment as well, and her responsiveness during the
audit process is also well-documented in your report. We appreciate the insights provided by
your report, and we will continue to work with both the executive director and the chief trial
BOARD OF TRUSTEES
180 Howard Street, San Francisco, CA 94105
[email protected]
*
* California State Auditor’s comments begin on page 65.
54 California State Auditor Report 2022-030
April 2022
Michael Tilden
April 1, 2022
Page 2
counsel to incorporate your findings into our ongoing efforts to improve the attorney discipline
system.
As outlined below, we generally agree with the majority of your recommendations; there is
only one area where we disagree on policy grounds. We also believe it is important that we
explicitly address the resource needs associated with the implementation of the reforms you
have outlined. To that end, we have included a fiscal impact section in this response. Because of
the very real resource constraints we face, our agreement with any particular recommendation
is, respectfully, not a commitment to implement that recommendation absent new resources.
We have made this distinction where applicable.
State Bar Responses to Audit Recommendations
1. Recommendation: To ensure that it uses nonpublic measures to close complaints only when
such use is consistent and appropriate, the State Bar should revise its policies by October
2022 to define specific criteria for which cases are eligible to be closed using nonpublic
measures and which are not eligible.
Response: Agree. As noted, the Office of Chief Trial Counsel (OCTC) has in place a policy,
issued in June 2021, that addresses nonpublic alternatives to discipline—resource,
directional, and warning letters and agreements in lieu of discipline (ALDs)—and
provides guidance on their content and how to decide when to issue them. We agree
that this policy should be modified to address private reprovals issued prior to filing of a
Notice of Disciplinary Action—a nonpublic form of discipline—and to provide additional
and more specific criteria for which cases are and are not eligible for closure or
resolution using any of these nonpublic measures. No later than October 2022, OCTC
will adopt specific criteria that provide more guidance for the exercise of staff discretion
in determining whether use of any of these nonpublic measures is or is not appropriate
based on the particular facts.
2. Recommendation: To ensure that it fulfills its duties to investigate attorney misconduct, b
y
Ap
ril 2023, the State Bar should begin monitoring compliance with its new policy fo
r
i
dentifying the circumstances in which investigators should continue to investigate even if
the complainant withdraws the complaint.
Response: Agree; full implementation dependent on resources.
As noted, in February 2022, OCTC put in place a new policy making clear that a
complainant’s withdrawal of or failure to cooperate in the investigation of their
55California State Auditor Report 2022-030
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Michael Tilden
April 1, 2022
Page 3
complaint is not alone a basis for closure and setting out the circumstances under
which, in both intake and investigation, complaints should continue to be pursued
despite a complainant’s withdrawal or failure to cooperate. In conjunction with the
implementation of the new policy, closing codes in OCTC’s case management system
have been modified to accord with the policy. We will monitor compliance with this
policy by regularly conducting a randomized review of files closed using certain of these
codes. This will require State Bar staff to pull files closed using these codes, review the
substance of the files, and check the closing letters to ensure that closures complied
with the policy. As noted below, such monitoring will require additional resources.
3. Recommendation: The State Bar should notify the public on its website when other
jurisdictions determine that an attorney that is also licensed in California presents a
substantial threat of harm to the public.
Response: The State Bar agrees that if we learn of an interim action and finding in
another jurisdiction regarding an attorney that is also licensed in California, we will
notify the public on our website by posting of a consumer alert setting out the nature of
the interim action and finding while also advising that the attorney is presumed
innocent of the disciplinary charges in the other jurisdiction unless and until those
charges have been established.
Please understand that our ability to learn of interim actions in other jurisdictions is
limited, however. The American Bar Association (ABA) data bank referenced in the next
recommendation depends on reporting to that data bank by other jurisdictions, and it is
not clear how often interim actions are reported.
4. Recommendation: To ensure that it identifies discipline imposed on California attorneys in
other jurisdictions, the State Bar should use the American Bar Association’s data bank to
i
dentify attorneys disciplined in other jurisdictions who do not report that discipline.
Response: Agree. OCTC staff have access to the ABA data bank and are now set up to
receive automated emails when another jurisdiction notifies the ABA data bank of
discipline imposed on an attorney identified in the data bank as also being admitted in
California.
5. Recommendation: To allow its staff to more easily identify patterns of similar complaints
made against attorneys, by July 2022, the State Bar should begin using its general complaint
type categorizations when determining whether to investigate a complaint.
1
2
56 California State Auditor Report 2022-030
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Michael Tilden
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Page 4
Response: Agree; full implementation dependent on resources.
As noted, in February 2022 OCTC implemented a policy regarding intake’s consideration
of prior closed complaints in determining whether to move a current complaint forward
for investigation. As also noted, the State Bar has recently developed a set of general
complaint type categorizations that group particular allegations into more general
categories. We agree that OCTC should begin using the general complaint type
categorizations for the purpose of identifying possible patterns of similar complaints
among both previously closed and currently open complaints. The identification of a
pattern may signal additional steps that should be taken, either in intake or
investigation, before making a determination as to how to proceed with the current
complaint or whether to reopen older complaints for further action.
Pursuant to a Board resolution adopted to address findings regarding racial disparities in
the discipline system, complaints closed without discipline or an alternative to discipline
that are more than five years old are archived and will not be reviewed as part of the
effort to identify patterns of similar complaints.
6. Recommendation: To improve its ability to identify and prevent conflicts of interest that it
s
st
aff may have with attorneys who are subjects of complaints, the State Bar should develop
a process by July 2022 for monitoring the accuracy of the information in its c
ase
man
agement system used to flag attorneys with whom its staff have declared that they
have a conflict of interest.
Response: Agree; full implementation dependent on resources.
7. Recommendation: To ensure that State Bar staff do not inappropriately close cases against
attorneys on the conflict list, the State Bar should create a formal process by October 2022
f
or determining whether it is able to objectively assess whether such a complaint should b
e
c
losed or whether the decision should be made by the independent administrator. The
State Bar should document this assessment in its case files for each case against an attorney
on the conflict list.
Response: Agree; full implementation dependent on resources.
The Board’s Special Discipline Case Audit Committee identified as a priority the need to
ensure that all OCTC investigative and charging decisions are free from conflicts or
outside influence. Accordingly, we agree that decisions to close cases should be made
only after conflicts determinations are made and documented. We will work with the
57California State Auditor Report 2022-030
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Michael Tilden
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Page 5
chief trial counsel to establish a formal process under which OCTC staff are required to
review cases prior to closure to identify potential conflicts, refer any cases posing a
potential conflict to the independent administrator of the Special Deputy Trial Counsel
program for a final determination regarding the potential conflict, and document this
process and the final determination regarding conflicts in OCTC’s case management
system.
8. Recommendation: To ensure the independence and objectivity of the external review of it
s
c
ase files, the State Bar should amend its policies by July 2022 to do the following:
• Require the external reviewer to select the cases for the semiannual review.
• Establish formal oversight to ensure that it follows up and addresses the external
reviewer’s findings.
Response: Agree; full implementation dependent on resources.
In November 2021 the chief trial counsel began providing to the Board a summary of
the external reviewer’s report and recommendations together with OCTC’s response to
the recommendations. In January 2022, with the Board’s agreement, the chief trial
counsel issued a policy formalizing this practice. We will work with the chief trial counsel
to implement policies and procedures for OCTC to also report back to the Board on its
progress in implementing actions to address the external reviewer’s findings.
9. Recommendation: To ensure it appropriately reviews complaints involving overdrafts and
alleged misappropriations from client trust accounts, the State Bar should perform the
following by July 2022:
a. Discontinue its use of informal guidance for review of bank reportable actions and
direct all staff to follow the policies established in it is intake manual.
b. Revise its intake manual to disallow de minimis closures if the attorney has a pending
or
prior bank reportable action or case alleging a client trust account violation.
c. Establish a monitoring system to ensure staff are following its policies for de minimis
c
losures.
d. When investigating client trust account related cases and bank reportable action
s
n
ot closed de minimis, require its staff to obtain both the bank statements and th
e
attorney’s contemporaneous reconciliation of the client trust account, and
determine if the relevant transactions are appropriate.
e. Require a letter with client trust account resources to be sent to the attorney after
the closure of every bank reportable action.
58 California State Auditor Report 2022-030
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Michael Tilden
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Page 6
Response: Agree in part, disagree in part, as outlined below.
9a. Discontinue its use of informal guidance for review of bank reportable actions
and direct all staff to follow the policies established in it is intake manual.
Agree.
9b. Revise its intake manual to disallow de minimis closures if the attorney has a
pending or prior bank reportable action or case alleging a client trust account
violation.
Agree in part. While manual revisions are still pending, there will be some
exceptions to the approach recommended by the State Auditor, primarily
designed to take into account the age and amount of prior reportable actions
and the age and disposition of prior client trust account violation complaints.
9c. Establish a monitoring system to ensure staff are following its policies for de
minimis closures.
Agree; full implementation dependent on resources.
To monitor compliance with policies for de minimis closures of bank reportable
actions, a randomized review of such closures will need to be conducted at
regular intervals. This will require State Bar staff to pull files underlying these
closures, review the substance of the files, and check closing letters to ensure
that closures have accorded with policies. As noted below, we believe such
monitoring will require additional resources.
9d. When investigating client trust account related cases and bank reportable
actions not closed de minimis, require its staff to obtain both the bank
statements and the attorney’s contemporaneous reconciliation of the client trust
account, and determine if the relevant transactions are appropriate.
Disagree.
This approach would consume inordinate amounts of resources and time,
requiring the State Bar in every such case to: (a) request from the attorney
and/or subpoena from the bank statements for the account and wait for their
3
4
59California State Auditor Report 2022-030
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Michael Tilden
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Page 7
receipt; (b) request the attorney’s contemporaneous reconciliation and wait for
its receipt; and (c) do a financial analysis of the statements and reconciliation to
determine if the relevant transactions are appropriate. Many bank reportable
actions and client trust account complaints do not warrant this level of
investigation. For example, some non de minimis bank reportable actions are
explained by extended holds on deposits of which the attorney was unaware,
resulting in the issuance of checks at a time when the attorney believed funds
had cleared but they had not—if a more truncated investigation shows this to be
the case, there is no justification for the more extensive further investigation
recommended by the State Auditor. A study the State Bar conducted last year of
over 70,000 bank reportable action matters found that 22 percent did not
involve a negative bank balance in actuality—the reportable action was triggered
only by check deposit holds. Doing an investigation of the scope recommended
by the State Auditor for every bank reportable action and client trust account
complaint regardless of the underlying facts and merits would result in a waste
of limited investigative resources and is not sound public policy.
In addition, given data that shows that Black male attorneys are ten times more
likely than their white male counterparts to be the subject of bank reportable
actions, the impact of the approach recommended by the State Auditor will fall
heavily on this group of attorneys. Black male attorneys will be
disproportionately required to take time away from their practices to gather and
submit documentation to the bar and respond to investigative inquiries. Given
that the data indicates that there is a significant percentage of cases for which
this level of intervention is not required, the potentially disparate impact of the
State Auditor’s approach is difficult to justify.
As noted above, OCTC has already modified its policy for identifying the
circumstances in which complaints should continue to be pursued despite a
complainant’s withdrawal or failure to cooperate, and it will be revising its
policies and practices regarding the use of alternatives to discipline and the
identification of patterns of similar complaints against attorneys. All of these
policy changes will apply to the State Bar’s handling of bank reportable actions
and complaints alleging client trust account violations. In addition, OCTC will
revise its policies to define specific criteria in which bank reportable actions and
complaints alleging client trust account violations should not be closed in the
absence of obtaining both bank statements and the attorney’s
contemporaneous reconciliation of a client trust account and determining if the
relevant transactions are appropriate and will implement a monitoring system to
5
6
7
60 California State Auditor Report 2022-030
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Michael Tilden
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Page 8
ensure these policies are being followed. We believe that this more targeted
approach will more efficiently and effectively use the State Bar’s limited
investigative resources to further the goal of public protection while at the same
time minimizing disparate impacts from increased investigations of bank
reportable actions and client trust account complaints.
9e. Require a letter with client trust account resources to be sent to the attorney
after the closure of every bank reportable action.
Agree.
Resources Needed to Implement the State Auditor’s Recommendations
The fiscal impact of the State Auditor’s recommendations are as follows:
A. Increased oversight and monitoring. [recommendations 2, 6, 7, 8, and 9c]
Given the volume of complaints handled by OCTC, the proactive regulation and
compliance monitoring mechanisms reflected in the audit recommendations will require
both human and technological capital:
Recommendation
FTE Impact
Contractual
Impact
Notes
#2: Withdrawn Complaint Policy
1
Additional staff resources
needed to audit compliance
with policy. This effort will
involve random selection and
review of a statistically
significant sample of case files.
#6 and #7: Improve Conflict
Identification and Response
1.5
$200,000
annually
Additional staff resources
needed to audit conflict flags in
case management system
against staff reported conflicts
of interest as well as to
implement more rigorous
approach to case closure
determination where conflict
identified; additional workload
for the Special Deputy Trial
8
61California State Auditor Report 2022-030
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Michael Tilden
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Page 9
Counsel program (conflicts
counsel) also anticipated as
more cases will be directed to
that program for closure
determination.
#8: Oversight of Compliance
with External Reviewer’s
Findings
1
Formal monitoring and tracking
of implementation actions
taken in response to each
external review (two per year)
will require additional staff
resources.
#9c: Monitor de minimis
closures of bank reportable
actions
3
Additional staff resources
needed to audit compliance
with policy. This effort will
involve random selection and
review of a statistically
significant sample of case files.
B. Id
entifying patterns of complaints using new complaint categorizations
.
[recommendation 5]
Imp
lementation of this recommendation will require significant work to categoriz
e
p
reviously closed and currently open cases in accordance with the general complaint
type categorizations and ensure that this categorization is available in a readil
y
accessible way to investigators and attorneys.
FTE Impact
Contractual
Impact
Notes
2
$500,000
Contractual dollars needed to configure case management
system to reflect new categorization system and to
identify complaint patterns; additional staff needed to
support continued implementation of categorization
system and analysis of results.
C. In
vestigate all reportable actions not closed as de minimis and all client trust account
complaints. [recommendation 9d]
As noted above, the State Bar disagrees with this recommendation on policy grounds.
62 California State Auditor Report 2022-030
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Michael Tilden
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Page 10
That being said, irrespective of policy concerns, the fiscal impact of this
recommendation is significant:
FTE Impact
Contractual
Impact
Notes
22
$500,000
Contractual resources needed to develop platform for
automated transmittal of bank and attorney records and 1
FTE needed to maintain platform; one trial team (19 FTE
1
)
needed to investigate all reportable actions not closed as
de minimis (estimated at approximately 1,500 annually)
and all client trust account complaints (estimated at 1,000
annually); additionally, 2 forensic accountants needed to
support review of bank and reconciliation records.
I
n total, full implementation of the State Auditor’s recommendations would require an
additional 30.5 FTE and $200,000 annually on a go-forward basis, as well as $1 million in one-
time funds. Absent new resources, the State Bar’s implementation of these recommendations
will be limited to what can be done within existing funding parameters.
In closing, we thank you for your review, which has helped sharpen the focus of discipline
system improvements currently underway and identified areas for further improvement. It is
gratifying to know that the Board’s and our staff’s focused efforts align with issues and
recommendations set forth in your report. We have set improvement of the attorney discipline
system as our number one goal in our recently adopted five-year strategic plan and have
worked with the executive director and new chief trial counsel to identify strategies and
implementation steps for accomplishing this goal beyond those already underway. Current
externally facing efforts include the Client Trust Account Protection Program, which, when fully
1
The recommendation for investigating reportable action matters and CTA-related complaints would add
approximately 1,500 cases to OCTC’s investigation caseload per year.
The State Bar completed a workload study in 2018 that was reviewed by the State Auditor; you recommended an
additional 19 new positions for OCTC based on that review. Applying the previously vetted 2018 workload study
methodology, the additional investigation cases that will result from implementation of recommendation 9d. will
require an estimated 19 additional investigators:
As outlined in the 2018 workload study, 67 budgeted investigator positions handled approximately 5,600 cases per
year. The 19 new positions recommended by the State Auditor at that time included 5 new investigator positions,
bringing the total to 72. The relationship between 72 investigator positions and 5,600 cases translated to 78 cases
per investigator per year. Applying this caseload to the 1,500 additional cases in investigation that will result from
implementation of recommendation 9d. will thus result in the need for 19 additional investigators.
9
63California State Auditor Report 2022-030
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Michael Tilden
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Page 11
implemented, will reflect the first comprehensive proactive regulation of legal client trust
accounts in the state’s history, and the Ad Hoc Commission on the Discipline System, which is
charged with conducting a wide-ranging review of the efficiency, effectiveness, and fairness of
the attorney discipline system. Less visible has been our inward focus on strengthening Board
oversight of the chief trial counsel and OCTC. Of particular note is the fact that beginning in
2021, performance targets have been set for the chief trial counsel; progress in relation to
those targets is formally assessed on a quarterly basis under the direction of the leadership of
the Board’s Regulation and Discipline Committee.
Reflecting the value we see in many of your recommendations as well as their alignment with
initiatives in progress under the leadership of the new chief trial counsel, we have already taken
significant steps towards implementing several. In November 2021 the chief trial counsel began
to present to the Board of Trustees a summary of the external reviewer’s report and
recommendations together with OCTC’s response to those recommendations. In February 2022
several reforms were initiated including issuance of a new policy outlining the circumstances in
which staff should continue to pursue allegations of misconduct even if a complainant
withdraws their complaint, and a clarification of office policy regarding consideration of prior
closed complaints. Information technology staff has also been engaged to ensure that conflicts
information in the case management system reflects the most current information from the
conflict-of-interest database. While it is undeniable that there is much work to do to address
challenges that have been decades in the making and are reflective of a complex and
unproductive cycle of insufficient funding, poor outcomes, and low morale, I am confident that
the Board will continue to both demand and support meaningful improvement in all areas of
OCTC’s operations.
We are committed to doing the internal work needed to ensure that our attorney discipline
system is effective, efficient, transparent, and fair. Although we cannot fully implement the
State Auditor’s recommendations absent additional funding, we will advance the majority of
them to the full extent possible given the resource constraints we face.
Sincerely,
Ruben Duran
Chair, Board of Trustees
10
64 California State Auditor Report 2022-030
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65California State Auditor Report 2022-030
April 2022
Comments
CALIFORNIA STATE AUDITOR’S COMMENTS ON THE
RESPONSE FROM THE STATE BAR OF CALIFORNIA
To provide clarity and perspective, we are commenting on the
response to our audit from the StateBar. e numbers below
correspond to the numbers we have placed in the margin of
theresponse.
We did not assess the changes the StateBar made to its case
management system. As we note on page16, the StateBar issued
a policy directive in February 2022 regarding those cases in which
the complainant withdraws the complaint or otherwise fails to
cooperate in the investigation. Because our audit fieldwork was
substantially complete, we did not perform testing to determine
whether the StateBar’s modification of closing codes would help
alleviate our concern. We look forward to reviewing the details of
the StateBar’s efforts to address this issue in its 60-day response to
our recommendations.
e StateBar’s reference to the American Bar Association’s data
bank in response to this recommendation is misleading. Our
recommendation regarding the data bank pertains to final orders
of discipline. We did not recommend that the StateBar use the
data bank for identifying interim actions. erefore, the StateBar’s
mention of the data bank in this context is not relevant.
e StateBar’s response addressing proposed revisions to its intake
manual may not result in a meaningful change to its existing policy.
As Figure4 on page32 shows, one attorney had 34 cases closed
as deminimis and was ultimately disbarred based on a federal
conviction of money laundering through their client trust accounts.
Without additional details on the exceptions that the StateBar
plans to make to the approach that we recommended, it is unclear
whether this policy will address this type of concern and others
wedescribe.
e StateBar’s description of the actions necessary to monitor
compliance with policies for closing bank reportable actions
indicates that it does not plan to implement our recommendation
for limiting deminimis closures as stated on page6. If the StateBar
were to implement our recommendation for revising its intake
manual, there would be no need to review the underlying files or
check the closing letters. Instead, supervisors could determine
whether staff followed the change to the StateBar’s policies
we recommend by simply reviewing an attorney’s case history
whenever a case is closed as deminimis.
1
2
3
4
66 California State Auditor Report 2022-030
April 2022
e StateBar’s response overstates the level of review we
recommended and does not address the significant failures of its
investigative process that we identified. Our recommendation
does not suggest that the StateBar should conduct a full financial
analysis involving a forensic accountant for every bank reportable
action or client trust account case. Rather, when investigating such
cases the StateBar should, at a minimum, obtain more reliable
evidence, including bank statements and the client trust account
reconciliations that the attorney is already required to maintain.
e recommendation is intended to address the inadequate
evidence that the StateBar has relied on in the past when closing
cases, such as those instances we identified in which the StateBar
should have conducted a more thorough review. For example, in
its investigation of the attorney we describe in CaseExample9 on
page37, the StateBar relied on the attorney’s narrative detailing
certain transactions pertaining to overdrafts in a particular month
and a bank statement for a different month. Similarly, the StateBar
accepted the attorney’s explanation when investigating a complaint
described in CaseExample6 on page33 and closed the complaint
without taking further action. Ultimately, the StateBar determined
that the attorney had been withdrawing funds from the client
trust account to pay for personal expenses. Finally, as we illustrate
in Figure4 on page32, after a long history of closing complaints
against an attorney as deminimis, the StateBar determined that
the attorney had used the client trust account for impermissible
purposes to pay for personal expenses. e inappropriate
transactions that the StateBar did ultimately find were identified
through its review of bank records.
Accordingly, we stand by our recommendation on page7 regarding
obtaining bank statements and the attorney’s contemporaneous
reconciliations, which are more reliable forms of evidence for
investigating client trust account related cases and bank reportable
actions than attorney assertions.
e statistic that the StateBar describes does not support its
conclusions. Based on the StateBar’s statement that 22percent of
the bank reportable action matters it reviewed did not involve a
negative balance, it appears to be acknowledging that the remaining
78percent of those matters did involve a negative balance. Such
a substantial number of bank reportable actions involving actual
negative bank balances is indicative of high risk and the need for
more thorough investigations. In contrast, the StateBar suggests
that investigating these matters without considering the underlying
facts and merits would be a waste of limited investigative resources
and is not sound public policy. However, as we illustrate throughout
the report, the StateBar has regularly failed to effectively assess the
5
6
67California State Auditor Report 2022-030
April 2022
underlying facts and merits of bank reportable actions, resulting in
harm to the public. us, the StateBar’s objections to investigating
bank reportable actions on a more consistent basis are unreasonable.
We disagree with the StateBar’s assertion that our recommendation
would disproportionately require certain attorneys to take time
away from their practices to gather and submit documentation.
Providing the information we recommend should not represent a
significant workload. As we note on page28, the StateBar’s Rules of
Professional Conduct require attorneys to maintain, among other
things, monthly reconciliations of their client trust accounts. us,
attorneys should have the required information readily available to
comply with a request from the StateBar. Further, as we describe
on page31, in some cases the StateBar closed complaints without
contacting the attorney to obtain additional information or to
provide guidance for avoiding future complaints. If the StateBar
were to consistently provide information on client trust account
resources to attorneys after closing each bank reportable action,
as we recommend on page7, this information may help reduce
the number of bank reportable actions for all attorneys. With
respect to the State Bar’s disparate impact concerns, it is the
responsibility of the State Bar, just like all auditees, to implement our
recommendations in a manner consistent with federal and state law.
e resources the StateBar asserts that it needs to implement our
recommendations appear to be significantly inflated and based on
questionable estimates. For example, the StateBar indicates that it
needs three full-time staff to monitor deminimis closures of bank
reportable actions. is number appears excessive because its
supervisors should already be performing some monitoring of staff’s
compliance with the existing policy. Moreover, the change described
in our recommendation regarding deminimis closures on page6
would not require the StateBar to randomly select and review case
files, as it proposes to do.
e StateBar also asserts that it would need contractual resources
to develop a platform for the automated transmittal of bank and
attorney records, as well as personnel to maintain that platform.
However, it already maintains an electronic case management system
that documents records of the type that it would collect pursuant to
our recommendation. us, we question why the StateBar believes
that it needs a new platform for the collection of such information.
Further, as we discuss on page 66, the StateBar overstates the
level of review we recommend, thereby inflating its estimate of
the resources it would need to investigate client trust account
complaints. In particular, it states that our recommendation would
add about 1,500 cases to its investigation caseload per year. Such a
statement is misleading because the StateBar already performs some
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68 California State Auditor Report 2022-030
April 2022
level of review during the intake stage for each case, as Figure1 on
page11 illustrates. In addition, the StateBar’s estimated resource
needs for addressing these cases is unreasonably high because it
is including staff resources for conducting a financial analysis of
each of these cases—an action that we did not recommend. Rather,
we recommended that the StateBar obtain bank statements and
attorneys’ client trust account reconciliations when reviewing
overdrafts and alleged misappropriations from client trust accounts,
which would be more reliable evidence for determining whether the
relevant transactions are appropriate. Moreover, although obtaining
documents for cases that were previously closed as deminimis
would require some additional effort, we question whether that
additional effort requires the resources that the StateBar estimates.
e StateBar misrepresents our conclusions regarding its 2018
workforce plan. A state law that took effect in 2016 required
the StateBar to implement a workforce plan that included the
development of an appropriate backlog goal and an assessment
of needed staffing. e resulting workforce plan made numerous
recommendations, including that the StateBar reorganize the
structure of its trial counsel’s office. However, in our 2019 report
titled StateBar of California: It Should Balance Fee Increases
With Other Actions to Raise Revenue and Decrease Costs,
Report2018-030, we did not recommend that the StateBar
should add positions based on the workforce plan. Rather, we
recommended a fee increase that would allow the StateBar to hire
19 additional staff—constituting one additional investigative team—
and we recommended that the StateBar analyze performance data
to make more informed estimates of its future staffing needs. We
made that recommendation because the staffing study the StateBar
performed as part of its workforce plan was conducted in the midst
of its efforts to make a number of significant changes to how it
performed its work, including the implementation of a digital case
management system, which may have had a significant impact on
staff workloads and the associated case processing times. erefore,
we question whether the StateBar’s estimated resource needs are
accurate, given the nature of the changes it has implemented since it
conducted the staffing study it used as the basis for thoseestimates.
We question why the StateBar is proposing a new system of
proactively monitoring attorney client trust accounts when it is not
yet effectively responding to the risks represented by bank reportable
actions and complaints. As we describe in CaseExample6 on
page33, CaseExample7 on page34, and CaseExample8 on page35,
the StateBar did not effectively investigate cases involving bank
reportable actions and complaints against attorneys regarding
their client trust accounts. According to a November 2021 report
to its board, the StateBar’s proposal would include financial and
compliance reviews of attorney client trust accounts chosen using
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69California State Auditor Report 2022-030
April 2022
both random and risk-based methods. It is not clear why the
StateBar believes that random reviews of attorney client trust
accounts would be a more effective method of identifying client
trust account violations than thoroughly reviewing the complaints
it receives regarding specific attorneys. Further, the StateBar’s
proposed new program may be more expensive than its estimates of
the costs to implement our recommendations—which it describes
as unreasonable. In its presentation to its board, the StateBar
estimated that its program would cost $500,000 initially and
$3.35million annually.