Yesterday, 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.
Like 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.
But 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.”
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.
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.”