California State Auditor Finds State Bar Did Not Effectively Manage Its System for Investigating and Disciplining Attorneys Who Abuse the Public Trust

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By Ian Ross

On April 29, 2021, Elaine Howle, the California State Auditor presented her audit of the State Bar of California’s discipline and bar examination administration systems. The State Auditor conducted this audit pursuant to section 6145(b) of the Business and Professions Code, which requires that the State Bar contract with the State Auditor every two years. The State Auditor focused her audit on the disciplinary system because it had not conducted an in-depth review of the State Bar’s attorney discipline system since 2015. This audit also came at a time when the State Bar’s discipline system was scrutinized for its handling of complaints against Thomas Girardi, who was accused of mishandling client funds for several decades without discipline by the State Bar. The Auditor further conducted analysis on the State Bar’s response to COVID-19 in its administration of the bar exam and the State Bar’s efforts to manage revenue and expenditures. The audit resulted in two key findings related to the State Bar’s discipline system, and one key finding related to its administration of the bar examination during the COVID-19 pandemic.

In her investigation, the State Auditor found that the State Bar’s reorganization of its discipline system in 2016 had a negative effect and did not satisfy relevant statutory requirements or previous audit recommendations. The audit found that case processing times between 2015 and 2020 in the investigation phase for attorney discipline cases increased by 56 percent and that the backlog of unresolved cases increased by 87 percent. The total number of cases that resulted in discipline also decreased, declining by 54 percent over the same time period. The audit also found that the State Bar failed to provide all of the required information in its 2019 discipline report to the Legislature, limiting the Legislature’s ability to assess the annual licensing fee bill.

Regarding the bar examination, the Auditor reported that although the State Bar appropriately administered the bar exam during the COVID-19 pandemic, its procurement of the exam did not comply with its own policy. The Auditor noted that the State Bar entered into a $4 million dollar contract without providing evidence that the agreement represented the best value.

The State Auditor then produced a list of recommendations to both the Legislature and the State Bar regarding how to resolve these issues in the future. The State Auditor recommended, among other things, that the Legislature amend the disciplinary report’s publishing date to October 31 to ensure that it has sufficient time to review the discipline report before reviewing the annual fee bill. The State Auditor made several recommendations about how to reduce the current caseload backlog; recommended that the Bar review in committee the discipline report before it is issued; further assess the impact of its 2016 discipline system reorganization in its 2021 discipline report; and that the State Bar establish documentation standards and templates for contract managers when selecting vendors for the administration of the bar exam.

In its response (Audit Report at 41), the State Bar mostly agreed with the recommendations of the State Auditor but disagreed with some of the audit’s conclusions. The State Bar noted its intent to work with the Legislature to revise its approach to addressing its caseload backlog to place the focus and priority on the cases that pose the most harm to the public, as opposed to those that are simply the oldest, as the current statutory backlog measure provides. Although the State Bar agreed that it should assess the 2016 reorganization of its discipline system, it argued that the reorganization was beneficial and that outside factors explain the audit’s statistical findings. The State Bar also agreed with the State Auditor and noted that documentation standards and templates for contract managers are in place and that the State Bar’s contract with ExamSoft was unique due to industry consolidation and a last-minute need to adopt a remote exam.

As with all audits, the State Bar must provide the State Auditor with information regarding its progress in implementing the recommendations from her reports at three intervals from the release of the report: 60-days, six months, and one year.

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