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Board Approves Client Trust Account Protection Program Rules and Furthers Other Initiatives to Improve the Discipline System

At its September meeting Thursday and Friday, the State Bar of California Board of Trustees approved rules for implementing the Client Trust Account Protection Program (CTAPP) designed to strengthen proactive oversight and regulation of client trust accounts.

“This robust program has moved from broad vision to policy—ready to implement—in less than a year,” said Ruben Duran, Board Chair. “This important initiative will enable California to join many other states with similar measures in place to proactively regulate client trust accounts. New trust account reporting requirements will enable the State Bar to quickly identify attorneys in need of support and education, as well as to proactively flag instances of willful noncompliance, which will be referred for disciplinary action as appropriate.”

The CTAPP was recommended by the Board’s Committee on Special Discipline Case Audit, formed in mid-2021 in response to an audit of closed discipline cases against now-disbarred attorney Thomas Girardi. The Board approved development of the program in November 2021.

In its initial phase, expected to be implemented for the 2023 license renewal cycle that begins December 1, 2022, the CTAPP will require actively licensed attorneys to:

• Report annually to the State Bar whether they are responsible for client trust accounts and provide basic account information. Clarifying rule changes will make it possible for law firms to report account information for lawyers who work for them.
• Complete an annual self-assessment to validate their practices.
• Certify annually to the State Bar that they know and comply with the Rules of Professional Conduct related to safeguarding client funds.

The new Rule of Court giving the State Bar the authority to implement the program now goes to the California Supreme Court for approval. Assuming the Court approves, the State Bar is also planning both a public education campaign and professional development in support of the program.

Other discipline system improvements

The Board received a report and recommendations from its Ad Hoc Commission on the Discipline System and approved issuing the report for a 60-day public comment period.

The Board created the commission in November 2020, charging the group with assessing ways to further improve the efficiency, effectiveness, and fairness of the attorney discipline system. In developing its wide-ranging recommendations, the commission addressed the challenge of having a discipline system that both effectively protects the public and is fair to attorneys facing discipline.

Its final report makes nine recommendations including:

• Discipline Costs and Sanctions: Reevaluate the current discipline cost model to reduce costs and seek a statutory amendment to eliminate disciplinary sanctions. The State Bar’s discipline costs, which disciplined attorneys must pay, are higher than those of other comparable agencies, and other states typically do not impose sanctions. Attorneys who do not pay discipline costs have their license to practice suspended until payment is made. The recommendations are intended to better align the State Bar with other similar agencies and improve fairness.
• Early Neutral Evaluation Conferences (ENECs): Seek a statutory amendment to extend the deadline for transmission of criminal conviction matters in misdemeanor cases to allow for an ENEC, a settlement conference held before filing of disciplinary charges. Attorneys facing discipline for criminal conviction matters currently cannot use an ENEC to settle their case because the current statutory timeline is insufficient for an ENEC to be offered, scheduled, and conducted.
• Attorney Discipline on State Bar Website; Expungement of Attorney Discipline Records: Adopt timelines ranging from one to five years for removal of attorney discipline history from the State Bar website’s attorney profiles and for expungement of discipline records (for all forms of discipline except disbarment). The State Bar posts attorney discipline histories online to facilitate the public’s access. However, unlike other state licensing boards, there are no guidelines for removing those records from online platforms, even when the attorney has not committed any additional misconduct for many years. There is also no formal process for attorneys to petition the Supreme Court for expungement. The proposed changes are designed to increase fairness and promote rehabilitation.
• Attorney Representation: Develop an income-based pilot program to provide appointed counsel for attorneys facing a formal discipline investigation by the Office of Chief Trial Counsel (OCTC). The program is designed to address State Bar research that has shown that racial disparities in discipline outcomes can be partially explained by disparities in attorneys having representation as they engaged in disciplinary proceedings.

After the recommendations circulate for public comment, the commission will consider any revisions and submit a final version to the Board at its January 2023 meeting.

In its role overseeing the discipline system, the Board heard other important reports, including the ongoing development of new faster case processing standards, and a review of performance metrics for OCTC. In another change signaling the importance of discipline system improvements, the September meeting will be the last for the Board’s Regulation and Discipline Committee. Going forward, all matters previously heard by the committee will go before the full Board, which will sit as the Discipline Committee. 

Probation system redesign

The Board also heard an update on an innovative redesign of the State Bar’s probation program. The redesign is aimed at reducing recidivism of attorneys in the discipline system, reducing racial disparities in recidivism rates, and improving rehabilitation for respondents under State Bar supervision.

For years, State Bar probation conditions have tended to be generic, with the same standard conditions ordered for most respondents. Under the proposed new framework, the Office of Case Management & Supervision is working with discipline system partners to develop an expanded menu of conditions for respondents on probation.

Trustees heard about development of an innovative assessment tool to be used to customize conditions of probation depending on the respondent’s specific needs and their likelihood of recidivating. Similar assessment tools—broadly used in the juvenile and criminal justice systems—have critics, who have raised concerns about racial bias inherent in such tools.

Data analytics experts Dr. Michael Baglivio and Dr. Kevin Wolff worked with the State Bar to design a supervision strategies assessment tool that minimizes any racial-ethnic bias. Specifically, they removed from the model two of the factors identified in the State Bar’s previous analyses of racial disparities in the discipline system: the lack of representation by counsel and bank reportable actions.

While there are several steps before the redesign is fully implemented, including collaborating with the State Bar Court to update conditions of probation, the State Bar is expected to be the first attorney discipline regulator in the nation to implement this kind of assessment approach.

Dissolved the Closing the Justice Gap Working Group

The Board also approved dissolving the Closing the Justice Gap Working Group in light of the restrictions imposed by AB 2958, the annual fee bill, signed into law on September 18, 2022. The new statute prohibits any proposals that would permit nonlawyer ownership, the sharing of fees with nonlawyers, or any proposed changes in current limitations on the unauthorized practice of law, leaving nothing left to test in a sandbox. As permitted by the new law, the State Bar will seek feedback from legal services organizations, community-based organizations, small businesses, and consumers about options for increasing access to legal services and will report periodically to the Board on these efforts.

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The State Bar of California's mission is to protect the public and includes the primary functions of licensing, regulation and discipline of attorneys; the advancement of the ethical and competent practice of law; and support of efforts for greater access to, and inclusion in, the legal system.