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Posts Tagged ‘bifurcated bar’

https://cdn.morguefile.com/imageData/public/files/a/almogaver/preview/fldr_2008_11_07/file000136151699.jpgYesterday, Arizona took one more step toward reforming the way lawyers are regulated in the state. By a vote of 31-29, the Arizona House passed HB2295. This bill splits the State Bar of Arizona into two subsets. One preserves the mandatory membership character in order to function as an independent regulatory quasi-agency that makes paramount the protection of the public from unethical lawyers. The other subset becomes a voluntary organization that engages solely in the kinds of non-regulatory activities more traditionally associated with professional trade associations. It’s worth watching the HB2295 floor debate here starting at the 3:34 minute mark.

A conflicted identity.

Politicians 81Like mandatory bars elsewhere, the Arizona Bar suffers from what former Wisconsin State Bar President Steven Levine once described as “a schizophrenic identity.”

In a just published post at The Legal Watchdog, Wisconsin lawyer, blogger, author and scholar Michael Cicchini mentions the article, State Bar’s limits on financial transparency create budgetary blind spots (subscription required) where author James Briggs writes that “The State Bar straddles a line between being a state agency, under the jurisdiction of the Supreme Court, and a private corporation, which is not compelled to share financial information even with the people elected to govern it.” The author then quotes Levine on the Wisconsin Bar.

FunHouse 119But Levine could just as easily be referring to Arizona’s Bar while talking about Wisconsin, “When it comes to the advantages of being a state entity . . . they claim to be a state agency.  But when they want to act in private or in secret and avoid all public requirements state agencies are required to follow, they say they’re just a private organization.”1

Case in point when I filed a public records request last July with the State Bar of Arizona asking for lobbying expenditure disclosures concerning its opposition to bar reform legislation, the Bar’s response included the following lawyer doublespeak: “However, without waiving our right to assert any future objections applicable to a nonprofit organization either by rule or statute, this organization believes in transparency and will provide answers when possible.”

arizona_bar_frank2

Can’t serve two masters or walk around with two heads.

Two hats for two heads.2

By deunifying the regulator/trade association functions, HB2295 solves the longtime problem the State Bar of Arizona has been burdened with, which is trying to serve two masters by wearing two hats for two heads. The result has been an irreconcilable conflict of interest. Why? Because the interests of the public and the interests of lawyers are not the same. More often than not, they are in conflict.

Consequently, the State Bar should not simultaneously serve the interests of the public and the interests of the legal profession. If it truly means to protect the public, then the interests of the public have to be foremost. Because HB2295 separates the State Bar’s regulatory and disciplinary functions from the State Bar’s trade association services and activities, it improves the protection of the public from lawyers who violate the canons of professional ethics.

Moreover, by dividing the regulatory and disciplinary functions from its lawyer trade association activities and transferring all regulation to the Arizona Supreme Court, HB2295 helps to bring lawyer regulation more fully compliant with the 2015 U.S. Supreme Court decision in North Carolina State Board of Dental Examiners v. FTC.

In Dental Examiners, the nation’s high court ruled that state regulatory bodies controlled by “active market participants” – such as practicing lawyers -­ are not immune from federal antitrust laws. The solution then, as provided under paragraph B of HB2295 is “active supervision” by the state Supreme Court or by an independent body under the Court — not controlled by practicing lawyers. Despite the recent work of a Court State Bar task force, the State Bar of Arizona continues to operate under a lawyer-dominant governing board elected by lawyers.

HB2295 now moves to the Arizona Senate where the State Bar of Arizona hopes its lobbyists and well-paid executives can sustain a firewall sufficient to stop the spread of reform.

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1 Some 14 years ago, in a First Amendment suit against the State Bar of Arizona brought by former bar member Edmund Kahn, the U.S. District Court for Arizona in an unpublished opinion discussed whether a state bar was entitled to Eleventh Amendment immunity. The Arizona Bar, which usually asserts it’s a private association not a state agency, tried in this instance to hide behind the Eleventh Amendment by claiming a “level of integration between the State Bar and the Arizona Supreme Court.” The Court distinguished the cases the State Bar invoked, which were Bates v. State Bar of Arizona involving lawyer discipline; Hoover v. Ronwin concerning bar exams and another discipline case in O’Connor v. State of Nevada. The District Court stated that when it comes to cases that generally challenge either the state bar’s disciplinary function or its function administering bar exams and admitting new lawyers, “the state bar clearly acts as an arm of the Arizona Supreme Court in regulating the practice of law.” But the District Court next made a most critical distinction, “In this case, Plaintiff challenges the way in which the state bar spends mandatory dues on non-regulatory functions and the bar’s procedures for addressing objections to its spending. Because this suit challenges the bar’s spending on non-regulatory programs, the link between the state bar and the Arizona Supreme Court is more tenuous.” The Court then went on to declare that the State Bar, a “non-profit corporation” did not qualify as a state agency for Eleventh Amendment purposes because among other factors, it also maintained “its own treasury and any award of damages would come from the state bar’s funds rather than the state treasury.”

2 Cartoon inspired by a bar executive’s email reference to a lawmaker last session counterintuitively overlooking the Bar’s own 800 lb Chimera in its parlor when describing a bifurcated state bar as “Frankenstein.”

 

 

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https://upload.wikimedia.org/wikipedia/commons/thumb/f/f6/UserpageCOI.svg/262px-UserpageCOI.svg.pngThe movement begun in Nebraska in 2013 to deunify the regulatory and trade association functions of mandatory bar associations continues. On January 13, 2017,  Representative Anthony Kern introduced HB 2295 and HB 2300  to improve public protection by eliminating the Arizona Bar’s regulator and trade association conflict of interest. Yesterday, both bills were assigned to House Committees for their respective hearings.

https://i1.wp.com/azleg.gov/alisImages/MemberPhotos/52leg/House/KERN.gif

Rep. Anthony Kern

According to Kern, “The bills resolve the conflict of interest that exists when a quasi-public organization that licenses lawyers and is supposed to regulate their conduct also remains beholden to lawyer interests. Neither the public or lawyers are going to be well served by such a conflict. The two missions – protecting the public and serving lawyers – do not work well together.”

In accord with its prerogatives as a co-equal branch of government and its duty to uphold the Arizona Constitution, HB2295 represents a determination by the Arizona Legislature that the protection of the public is the highest priority. And that in the licensing, regulating, and disciplining of attorneys in the state, the protection of the public is paramount over other interests sought to be promoted. This bill goes to the heart of the conflict outlined by Kern.

Trade Association and Regulator.

https://upload.wikimedia.org/wikipedia/commons/thumb/b/b3/Berckheyde%2C_Jan_-_A_Notary_in_His_Office_-_1672.jpg/378px-Berckheyde%2C_Jan_-_A_Notary_in_His_Office_-_1672.jpgThe State Bar of Arizona tries to be all things to all people — but it can’t. Through the years it has employed various semantical machinations to reframe its trade association functions as enhancements to the legal profession. At the same time, it has also articulated a competing mission to serve the public. Indeed, under an updated rule iteration, it now says its mission is “to serve and protect the public with respect to the provision of legal services and access to justice.”

Semantical gyrations notwithstanding, the regulator/trade association conflict of interest remains intractable and irreconcilable.

In addition to doing away with those conflicted interests, HB2295 also reinforces First Amendment free speech and associational freedoms. Proponents also contend it would help lower the high cost to practice law in the state. HB2295 is similar to last session’s HB2221, which fell 5 votes shy of reaching the governor’s desk for signing.

A Voluntary Bar.

Consistent with the Arizona Legislature’s prerogatives as a co-equal branch of government and its duty to uphold the Arizona Constitution, HB2300 provides that to the extent provided by the state constitution, all lawyer regulatory and public protection functions are transferred exclusively to the Arizona Supreme Court.

The bill also provides that an attorney shall not be required to be a member of any organization to become or remain a licensed attorney in Arizona. By eliminating compulsory bar membership, HB2300 remedially makes the determination by the Legislature that conditioning the practice of law on bar membership violates the rights to free speech and free association guaranteed by the Arizona Constitution.

California Bar Deunification.

https://upload.wikimedia.org/wikipedia/commons/4/4b/Map_of_USA_highlighting_California.pngThe Arizona Legislature is not alone in its quest to reform the way lawyers are regulated. According to a report in the ABA Journal, during its last legislative session, the California Assembly “unanimously approved a bill that would have mandated a nonlawyer majority on the bar’s board of trustees to address the antitrust problem, and created a commission to study splitting the bar into a state agency that regulates lawyers and a separate private, voluntary trade group.”

The California Bill failed to pass after the Bar rallied opposition in the Senate. But the fight is far from over. It resumes this session. And the pressure for reform mounts. For example, because of policy changes to the governance of the California Bar that adversely impacted California Bar Section operations, including the Bar’s focus on its core regulatory functions, the Sections are currently considering separating from the Bar. The environment created in the past year, combined with the very high overhead and ever-increasing assessment the Sections are unilaterally mandated to pay, the environment has become too difficult for them to reasonably survive or thrive.

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Credit: UserpageCOI.svg, public domain, Wikimedia Commons; Berckheyde, Jan – A Notary in His Office – 1672.jpg, public domain, Wikimedia Commons; Map of USA highlighting California.png, Creative Commons Attribution-Share Alike License, Wikimedia Commons.

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petition | by League of Women Voters of CaliforniaA petition was filed today asking the Arizona Supreme Court to amend Rule 32(c) and (d) so as to split the functions of the State Bar of Arizona into two distinct subsets, a mandatory membership organization (“Mandatory Bar”) and a purely voluntary membership organization (“Voluntary Bar”). The amendment to the Court Rules would maintain the current mandatory membership requirement for all lawyers but (1) eliminate mandatory membership dues for non-regulatory functions and (2) allow voluntary contributions for all non-regulatory functions. Read the petition here.

The petition was filed by Sherman & Howard attorney Gregory Falls on behalf of the Goldwater Institute. By way of explanation on its website, the Goldwater Institute reiterates its opposition to “conditioning the practice of law on bar membership in Arizona because coerced membership violates the rights to free speech and free association guaranteed by the United States and Arizona Constitutions.”

It is for this reason, the Institute says it is “sponsoring a rule change petition to allow attorneys to practice law without being forced to fund the lobbying and other non-regulatory functions of the State Bar of Arizona.”

Change Management | by Jurgen AppeloThe petition is reminiscent of HB2221, which the petition acknowledges, “called for a less nuanced version of what Petitioner proposes here.” HB2221 came within 5 votes of clearing the Arizona Legislature and landing on the governor’s desk during the 2016 legislative session. Like today’s petition, HB2221 was modeled on the Nebraska Supreme Court’s bifurcated approach to bar membership articulated in its December 6, 2013 decision Petition For Rule To Create Vol. State Bar Assn. 286 Neb. 108.

j0289753The Nebraska Supreme Court ordered that the requirement be left in place mandating membership in the Nebraska State Bar Association. But the Court also lifted the requirement that attorneys fund the Nebraska Bar’s non-regulatory functions. This meant Nebraska attorneys still paid regulatory and disciplinary costs but were no longer forced to subsidize the Nebraska Bar’s speech and its non-regulatory activities.

In its website statement, the Goldwater Institute acknowledges that “the Nebraska Model falls short of the fully voluntary model used in 18 other states.” It adds, however, that Nebraska’s bifurcated model “is a significant positive step toward associational freedom.”

Another front.

The petition filing opens up another front in the long-term campaign to reform lawyer regulation in Arizona. Along with continuing legislative efforts, the goal is to remediate a system not only rife with inequity but which represents a continuing threat to consumers. In addition to impinging constitutional rights on lawyers by preconditioning membership in a trade association to earn a living in their chosen profession, mandatory bar associations have an inherent conflict of interest because they act as both regulators of and trade associations for lawyers. And that conflict of interest is further exacerbated when lawyers elect a controlling number of other lawyers to represent them in their own regulatory board. By its very nature, then, this cartel-protection system threatens capture of the regulatory board by lawyers at the expense of the public.

Jen, kissing the First Amendment goodbye? | by jasoneppinkConditioning the practice of law on bar membership also violates lawyers’ constitutional rights. The U.S. Supreme Court has found that the only compelling state interest in coercive bar association membership is to improve the practice of law through lawyer regulation. But the fact is that lawyer regulation and improved legal practice can be attained through less restrictive means. 18 states — Arkansas, Colorado, Connecticut, Delaware, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Ohio, Pennsylvania, Tennessee, and Vermont — have already found ways to regulate attorneys without compelling membership

Arizona lawyers aren’t the only professionals concerned with a mandatory bar’s opacity, bureaucratic wastefulness, and divided loyalties to the public and lawyers. Indeed, attorney and public members of the California State Bar’s Board of Trustees are working again with California Legislators to bifurcate that Bar’s regulatory and trade association functions. See Calif. State Bar Blasted for Lack of Transparency  and Lawmakers Fight to Reform California Bar After Audits Skewer Agency for Mismanagement, Lack of Transparency, and Pricey Salaries.

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Credits: Petition, by League of Women Voters of California LWVC at Flickr Creative Commons Attribution license; Change Management by Jurgen Appelo at Flickr Creative Commons Attribution License; Jen, kissing the first amendment goodbye, by Jason Eppink at Flickr Creative Commons Attribution.

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