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California State Auditor Report Number : 2015-030

State Bar of California
It Has Not Consistently Protected the Public Through Its Attorney Discipline Process and Lacks Accountability

Responses to the Audit

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State Bar of California

California State Auditor’s Comment on the Response From the State Bar of California

Response From the State Bar of California

June 3, 2015

Elaine M. Howle, State Auditor
Bureau of State Audits
621 Capitol Mall, Suite 1200
Sacramento, CA 95814

Re: State Bar of California Response to State Audit Report 2015-030

Dear Ms. Howle:

Please find enclosed the responses of the State Bar of California to the State Audit Report No. 2015-030.


In Attachment A are the State Bar’s responses to each of the 15 recommendations in the report. Attachment B contains the State Bar’s comments and observations to some of the details in the report. The State Bar agrees generally with all of the recommendations, while as noted in Attachment B, there may be disagreements with some of the details.

Commencing with the 2010 annual discipline report, the former executive director assumed executive oversight of the annual report in order to provide greater transparency and to ensure accurate performance reporting of the State Bar’s discipline system to our stakeholders. In 2011, substantial changes were made to the State Bar’s backlog goal and management structure of the Office of Chief Trial Counsel. Since 2012, the current chief trial counsel has made a series of operational changes designed to improve the efficiency and quality of State Bar prosecutions. Further, this year, the Board of Trustees commenced a review of its fiscal controls and procedures to assure greater financial accountability and that the State Bar’s public protection programs are reasonably and sufficiently funded. The recommendations in your report will help to advance these efforts.

Consistent with your request, the State Bar’s responses, as well as this cover letter, is being submitted in an encrypted secured email to Kathleen Fullerton, Team Leader (, in a PDF format.

Thanks to Ms. Fullerton and her team for their work on the report.


Signed by Robert A. Hawley

Robert A. Hawley
Deputy & Acting Executive Director
The State Bar of California


Chapter 1

Recommendation No. 1

To ensure that its backlog does not adversely impact the quality of the discipline it imposes on attorneys who fail to fulfill their professional responsibilities, the State Bar should adhere to its quality control processes. Further, it should take steps to prevent its management or staff from circumventing those processes, such as requiring the presentation to the board of any proposed changes to quality control.

Response to Recommendation No. 1

The State Bar agrees with this recommendation. The board will adopt appropriate oversight policies to implement this recommendation and to prevent a repetition of the situation identified in the report when the audit and review unit was eliminated and its quality control processes were circumvented without the knowledge of the board.

Recommendation No. 2

To ensure it consistently counts and reports it[‘s] backlog of disciplinary cases, the State Bar and the Legislature should work together to determine what cases the State Bar should include in its backlog. For example, one method of calculating the backlog would be to include every case that affects public protection that the State Bar does not resolve within six months from the time it receives a complaint. The Legislature should then amend the state law that currently defines how the State Bar should present the backlog in its annual discipline report. In the interim, the State Bar should comply with our 2009 recommendation to fully disclose the types of cases it includes and excludes from its backlog calculation, as well as any methodology changes from the prior year.

Response to Recommendation No. 2

The State Bar agrees with this recommendation. The definition of the backlog has remained largely unchanged since it was first adopted in 1986. At that time it was “the number of complaints as of December 31 of the preceding year, which were pending beyond six months after receipt without dismissal, admonition, or the filing of a notice [of disciplinary charges].” In 2001, when the definition was moved from section 6094.5 to section 6086.13 of the Business and Professions Code, the phrase “including, but not limited to” was added. (Stats. 2001, ch. 745 (Sen. Bill. 1191), §§ 3, 4, eff. Oct. 12, 2001.) Since 2011, the State Bar significantly changed the format and its methodology for reporting the backlog in its annual discipline report for the preceding calendar year. The most significant changes occurred with the reports for 2010 and 2013, when other types of cases not previously counted were added. A review of the types of cases counted and the benchmark for measuring the timeliness of processing of those cases is appropriate. Meanwhile, to fully disclose the types of cases counted, the State Bar will note any change in methodology and its effect in the respective data tables, as well as continuing to include that information other parts in its annual discipline report.

Recommendation No. 3

To provide clear and reliable information to the Legislature, the governor, and the public, the State Bar should define how it calculates case-processing speeds in its annual discipline report and report this metric using the same method each year. If the State Bar elects to continue presenting the median case-processing time, it should also present the average case-processing time. Finally, it should disclose any methodology changes from the methodology used in the prior year.

Response to Recommendation No. 3

The State Bar agrees with this recommendation.

Recommendation No. 4

To assure the Legislature and the public that the data in the State Bar's annual discipline reports are accurate, the board should implement controls over the accuracy, consistency, and sufficiency of the data gathered and methods used to compute the information included in the annual discipline report. For example, the board could expand the role of an existing board committee—such as the regulation and discipline committee—to include a review of the annual discipline report and the underlying discipline statistics.

Response to Recommendation No. 4

The State Bar agrees with this recommendation.

Recommendation No. 5

To align its staffing with its mission, the State Bar should engage in workforce planning for its discipline system. The workforce planning should include the development and formal adoption of an appropriate backlog goal, an assessment of the staffing needed to achieve that goal while ensuring that the discipline process is not compromised, and the creation of policies and procedures sufficient to provide adequate guidance to the staff of each unit within the discipline system.

Response to Recommendation No. 5

The State Bar agrees with this recommendation.

Recommendation No. 6

To provide independent oversight of the Office of Chief Trial Counsel and assurance that it properly closes its case files, the audit and review unit should report to the executive director rather than to the chief trial counsel.

Response to Recommendation No. 6


The State Bar agrees generally with this recommendation to ensure that the Office of Chief Trial Counsel is complying with established policies and procedures in its review and closing of complaints. There is great value in making the audit function independent of the Office of Chief Trial Counsel. A separate, bar-wide audit unit – to conduct analysis and internal audits of the Office of Chief Trial Counsel and other State Bar operations – may be a more appropriate mechanism for providing oversight. However, housing this function in the office of the executive director and including the authority to conduct “second-looks” at closed complaints to direct that they be reopened is problematic. Under existing law, the chief trial counsel serves under the regulation and discipline oversight committee of the board and not under the direction of the chief executive officer. The State Bar’s former complainants grievance panel had the authority to review and recommend the reopening of cases, but this process created delays and frustrations for complainants. In 1995, the Legislature repealed the panel and permitted the State Bar to adopt Rule 2601 of the Rules of Procedure delegating the discretion to reopen cases back to the Office of Chief Trial Counsel. The State Bar will undertake to develop an audit function consistent with this recommendation that also fits the statutory and operational structure of the State Bar.

Recommendation No. 7

To ensure that the audit and review unit's random audits of closed case files provide an effective oversight mechanism, the State Bar should follow its policy to conduct and record meetings and trainings related to the audit report's recommendations. Additionally, the audit and review unit should oversee the retrieval of cases files for audit to ensure that it maintains control over its random selection of cases.

Response to Recommendation No. 7

The State Bar agrees with this recommendation.

Recommendation No. 8

To ensure that the review function within the audit and review unit continues to provide a means for complainants to appeal the State Bar's decisions on closed- cases, the State Bar should implement a policy that prohibits the chief trial counsel from dissolving the review function of the audit and review unit. Alternatively, at minimum it should require the board to approve such an action.

Response to Recommendation No. 8

The State Bar agrees with this recommendation.

Chapter 2

Recommendation No. 9

To ensure that it spends revenues from the membership fee appropriately, the State Bar needs to implement policies and procedures to restrict its ability to transfer monies between funds that its board or state law has designated for specific purposes.

Response to Recommendation No. 9

The State Bar agrees with this recommendation. The board has already commenced consideration of this issue.

Recommendation No. 10

To ensure that it can justify future expenditures that exceed a certain dollar level, such as capital or IT projects that cost more than $2 million, the State Bar should implement a policy that requires accurate cost-benefit analyses comparing relevant cost estimates. The policy should include a requirement that the State Bar present the analyses to the board to ensure it has the information necessary to make appropriate and cost-effective decisions. In addition, the State Bar should be clear about the sources of funds it will use to pay for each project.

Response to Recommendation No. 10

The State Bar agrees with this recommendation. The board will include this issue in its review of fiscal and control policies, which it began in January.

Recommendation No. 11

To justify any future special assessment that the State Bar wants to add to the annual membership fee, the State Bar should first present the Legislature with the planned uses for those funds and cost estimates for the project for which the State Bar intends to use the special assessment.

Response to Recommendation No. 11

The State Bar agrees with this recommendation.

Recommendation No. 12

To ensure that it adequately informs the Legislature about the status of the IT projects in its strategic plan, the State Bar should annually update the projects' cost estimates, their respective status, and the funds available for their completion.

Response to Recommendation No. 12

The State Bar agrees with this recommendation.

Recommendation No. 13

To ensure that the State Bar's fund balances do not exceed reasonable thresholds, the Legislature should consider putting a restriction in place to limit its fund balances. For example, the Legislature could limit the State Bar’s fund balances to the equivalent of two months of the State Bar's average annual expenditures.

Response to Recommendation No. 13

The State Bar agrees with this recommendation. The board had begun review of reserves and will work with the Legislature on this issue.

Recommendation No. 14

To provide the State Bar with the opportunity to ensure that its revenues align with its operating costs, the Legislature should consider amending state law to, for example, a biennial approval process for the State Bar’s membership fees rather than the current annual process.

Response to Recommendation No. 14

The State Bar agrees with this recommendation.

Recommendation No. 15

To determine a reasonable and justified annual membership fee that better reflects its actual costs, the State Bar should conduct a thorough analysis of its operating costs and develop a biennial spending plan. It should work with the Legislature to set an appropriate annual membership fee based upon its analysis. The first biennial spending plan should also include an analysis of the State Bar's plans to spend its current fund balances.

Response to Recommendation No. 15

The State Bar agrees with this recommendation.

California State Auditors Comments on the Response From the State Bar of California

To provide clarity and perspective, we are commenting on the State Bar of California’s (State Bar) response to our audit. The numbers below correspond to the numbers we have placed in the margin of the State Bar’s response.


The State Bar included in its response one other document (“Attachment B”) that we have not included in our report. The contents of this document range from minor suggested text changes to detailed explanations for the State Bar’s decisions, particularly those related to the cases the State Bar settled in 2011. After reviewing the content of “Attachment B,” we made those changes to the report that we believed were warranted. “Attachment B” can be obtained by contacting the California State Auditor’s office.


The intent of our recommendation is to increase the independence and effectiveness of the audit and review unit’s audits and ensure its stability in providing reviews. As we state in Chapter One, the current reporting structure of the audit and review unit creates a risk that the chief trial counsel may be able to minimize or fail to act upon findings resulting from an audit or review. Moreover, we state earlier that, without notifying the State Bar’s Board of Trustees, the former chief trial counsel disbanded the second‑look review function of the audit and review unit in 2010 and redirected the unit’s staff to help reduce its discipline case backlog. Although we continue to believe our conclusion is valid based on the above factors, after reviewing the State Bar’s concerns with this recommendation, we modified the text to give the State Bar more options for reorganizing the audit and review unit’s structure.

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