Senate Standing Committee on Judiciary

Good afternoon everyone. I want to thank we're going to go ahead and begin today's State Bar Oversight Hearing. I want to thank everyone for joining us this afternoon to focus on the State Bar of California and how the agency can rebuild the public's trust in the wake of recent scandals. For as long as I've served on this committee, the State Bar has presented the legislature with serious issues that have needed to be addressed. And in the past ten years, the Legislature has seen the State Bar do the following: unceremoniously terminate a former Executive Director for improperly using Bar resources to secure loans for building improvements using future member dues as collateral, fight the Legislature's attempts to split regulatory and advocacy functions of the Organization, erroneously release bar exam subjects to the public consistently be unable to clarify and justify its budgeting practices to the Legislature, increased executive compensation by 45% and most importantly, grown its backlog of discipline matters despite a substantial increase in licensing revenue. Legislative inquiries and complaints into these matters have frequently been met with comments that it's a new Bar. The staff responsible for these mistakes are no longer here, and the Committee has certainly listened to those explanations. But nonetheless, such hope and optimism were dashed when it came to light that prominent trial attorney Tom Girardi had inappropriately used his connections to State Bar leaders to avoid discipline for corruption, including embezzling millions of dollars from his clients. In fact, as we learned from a recent investigation, decades of complaints against Mr. Girardi went unheeded by the State Bar while State Bar employees were taking gifts, free travel and money from Mr. Girardi. This corruption, which has meticulously been brought to light by major media outlets and the State Bar's own outside investigator, has once again shattered public trust in the agency. Which brings us to today's hearing. As a legislative policy Committeescharged with overseeing the State Bar, we look to accomplish several goals this afternoon. First, we must understand how the State bar permitted corruption to infect its discipline system and taint high-level employees. Second, we are going to hear what steps the State Bar is taking to remedy the discipline system to ensure this never happens again. And finally, we will study potential reforms to the State Bar of California to ensure the agency acts as an effective regulator that all Californians can trust. It's my hope that by the end of this hearing, both committees will have a roadmap for reforming the State Bar that may be potentially included in the 2023 annual fee bill. SB 221. I'd like to thank my colleagues for their participation today and now invite my counterpart, Senator Tom Umberg, to also make his opening comments.

Thank you very much, Chair Maienschein, thank you for opening your house to this hearing. We appreciate the cooperation, the collaborativeness on this issue that is of concern to both houses. The Legislature, the Supreme Court has primary responsibility for the State Bar. They have primary regulatory power over attorneys. Under the Constitution and the doctrine of separation of powers, attorneys are officers of the court. State Bar. California is part of the judicial branch. It functions as the administrative arm of the California Supreme Court in regard to admission to practice law and the discipline of those licensed to practice law. State Bar's most basic function is to protect California consumers who receive legal services. And in fact, that's where we share responsibility. We share responsibility because that's also the Legislature's role, is to protect California's consumers. And thus, here we are today. Here we are today because we're concerned about whether or not we collectively are doing what's necessary to protect California's consumers. This issue, as you mentioned, Chair Maienschein, the issue of discipline typically was of concern to very few Californians. 1% were concerned about attorney discipline. Basically, those attorneys who are being disciplined or not being disciplined. That has now changed because of the Girardi scandal and other attendant issues concerning discipline. Maybe it's thankful to the Housewives of Beverly Hills that this issue now has not just become of concern to a very small segment of California's population. Now when it's on the front page of the newspaper, now, when it's on television, now when it becomes the subject of the Beverly Hill, the Housewives of Beverly Hills, Californians are asking all of us, what are you doing? What are you doing to protect California's consumers? As was mentioned by Chair Maienschein, reports have come to everyone's attention as to Tom Girardi and the State Bar and that relationship. In the wake of the issues surrounding Mr. Girardi and his spouse, the State Bar hired an outside law firm to conduct investigation to examine how the bar handled complaints filed against now disparate attorney Girardi and where the process was affected by Mr. Girardi's connections to the State Bar. I realize that we're looking backward. We're looking backwards, though, in order to create the reforms that are necessary so this doesn't happen again. I also recognize that, for example, Chair Durazo is doing everything within his power to rectify that. And I recognize that the State Bar is now cognizant of the issues that basically Californians in the Legislature are concerned about. It's clear in my mind at least, that reforms are needed. Our goal today, along with the Assembly Judiciary Committee, is to gain a comprehensive understanding of what led to the failure of the bar and its discipline process as it relates to Tom Girardi and, I suspect, others, and how to prevent something like that from happening again. Today, we're going to hear from three different panels. The first panel addresses the harm that members of the public face when misconduct of attorneys is allowed to continue. The second panel will hear from the State Bar about what it's doing to address the issues raised by the Girardi scandal. And the last panel will address various proposals for reform. Let me turn it back over to you, Mr. Chair.

Thank you very much, Mr. Chair. Our first panel today will focus on how the Girardi scandal came to be and the impact on ordinary people when attorney misconduct is permitted to continue unchecked. We have two witnesses who will be given ten minutes each Aaron May, a partner at Halpern May, Ybara and Gelberg, and then Jillian Engledow, a former Girardi Keese client. So we'll begin with Aaron May.

Afternoon Senators and Assemblymembers. I appreciate the opportunity to be here today. My name is Aaron May. I'll give you a little bit of background about me. I'm currently a partner at the Halpern, May,Ybarra, Gelberg Law firm, which is a boutique law firm in Los Angeles. I'm a graduate of Stanford Law School. After law school, I clerked for two federal judges in California and then went on to practice at Munger, Tolles and Olson as a litigation associate, where I worked on internal investigations and other matters. From there, I went to the US. Attorney's Office in the Central District of California, where I was in the major fraud section for approximately seven years. And in that role, I ran grand jury investigations and worked closely with the FBI, DEA, IRS, and other federal agencies in conducting my investigations. In 2014, I founded my current law firm with some of my partners, and we now have four former federal prosecutors at our firm. And one of the main things we do is we conduct internal investigations, and we do that for some of the largest institutions in California, both public and private. In September 2021, the State Bar Board of Trustees hired me and my firm to conduct an independent investigation of the State Bar. As backdrop, and I think most of you all know, over Girardi's legal career, there were close to 205 complaints made against him. And over the vast majority of that time period, there was no public discipline against him except in 2021 when he was disbarred. The State Bar initially hired Alyse Lazar, a former State Bar prosecutor, to analyze the Girardi files to determine if the reason there was no public discipline over the years was because of Girardi's improper influence or connections to the bar. Ms. Lazar reviewed 130 files, and while she found issues with how those cases were handled, she was unable to see any undue influence from her reviews of the files alone. That's where me and my firm came in. We were hired to look outside the four corners of the files to dig into the evidence to see whether there were influence and corruption involved in the handling of State Bars handling of Girardi complaints. In particular, our mandate was to investigate whether the State Bar's handling of past discipline complaints against Tom Girardi was affected by Girardi's connections to or influence at the State Bar, and identifying actions by anyone with ties to the State Bar that may constitute malfeasance in how discipline complaints against Girardi were handled. To be clear, we were not looking at whether Girardi actually violated any ethical rules or laws or stole any money. Our focus was on the bar's handling of complaints against Girardi. The process we went through to conduct our investigation had multiple stages. The first was collecting documentary evidence. We collected approximately a million documents, most of them from the State Bar itself. We also were able to obtain documents from the Girardi Keese Law Firm and from other sources as well. We then went about and conducted 74 interviews of individuals. Those interviews included current and former State Bar employees, board members and officers. We also interviewed former Girardi Keese attorneys and employees as well as others that were involved with Girardi and the Girardi complaints. We did have subpoena power and so some witnesses refused to meet with us voluntarily but we were able to compel those who refused to meet voluntarily to meet with us under court orders. Two witnesses invoked their Fifth Amendment rights when we questioned them and refused to answer, including Tom Girardi himself. We prepared a detailed 94 page report which we delivered to the State Bar Board of Trustees in February and I will do my best to try to summarize what we found and I'm happy to go into more detail on any questions that anyone has. The first major finding that we had was that Girardi maintained an extensive network of connections at all levels of the State Bar. As one witness told us, it was like Girardi was a part of the fabric at the State Bar. Girardi cultivated contacts on the board, in the Executive Director's office, in the office of the Chief Trial Counsel, both at managerial levels and in line prosecutor and investigator levels. His ties span decades and they appear to have been intentionally cultivated. We found evidence that Girardi was involved in the appointment of at least one State Bar Court Judge and the attempted appointment of the Chief Trial Counsel. We found that at least nine former State Bar employees or board members had connections to or accepted items of value travel or meals or other items from Gerardi while they were working at the State Bar or on the State Bar court or were on the board. In particular, former State Bar employee Tom Layton, along with his wife, received gifts and payments estimated to be at over a million dollars in value from Girardi and from Girardi's firm. Much of that while Layton was employed at the State Bar, this included approximately $600,000 in cash, leased luxury cars, free reign of a Girardi Keese credit card, travel on private jets and otherwise and other benefits. Tom Girardi was godfather to Mr. Layton's daughter and also employed two of Mr. Layton's children. While. Tom Girardi. Sorry. While Tom Layton was employed by the State Bar, we also found that high-level executives, including former Executive Director Joe Dunn and former board president Luis Rodriguez accepted rides on Girardi's private plane while on their roles at the State Bar. Multiple other employees accepted tickets to concerts and sporting events while employed at the State Bar, and many individuals at all levels attended lavish dinners and parties thrown by Girardi. In addition to Layton having children employed by Girardi's firm, another investigator also had a daughter who was under Girardi Keese employee while the investigator was employed at the State Bar. In addition, Girardi would offer to assist State Bar employees with judicial appointments and other career advancement opportunities. And while we did find these historical connections, it's important to note that we did not find any current connections between Girardi and any current State Bar employees, judges or board members. We also found that complaints against Girardi were in some instances closed by individuals who had connections to or had received items of value from Girardi, in particular, as it relates to case handling, we found that two former OCTC employees, Murray Greenberg and John Newton, had conflicts of interest at the time they worked on Girardi case. As a result of their connections to Girardi, the Girardi cases they worked on were closed without public discipline and some under questionable circumstances. We concluded that these employees conflicts tainted the discretionary decisions they made on behalf of the State Bar and that the Gerardi cases they worked on were improperly handled as a result. We also found that former Executive Director Joseph Dunn terminated two Senior Attorneys in the Office of Chief Trial Counsel during the same time period when those attorneys were advocating for serious changes to be brought against Girardi in pending State Bar cases. This was an unprecedented move, as the Executive Director's Office did not typically interfere or involve itself in the management or operations of the Office of Chief Trial Counsel. One of these employees was advocating for the State Bar to reconsider the decision by another by an outside counsel to not further discipline Girardi. And the other employee had recommended a complaint against Girardi go forward with public discipline with filing of a complaint. In addition, we found that both the Executive Director's Office and the Office of General Counsel had received reports about Girardi's influence at the State Bar and connections to Layton and others, but failed to investigate the complaints. In 2013 and 2014, reports came into the Executive Director's Office that Layton had ties to Girardi and was assisting Girardi. No investigations were conducted and the matters were closed. The decision to do so was endorsed by Bob Hawley, who was then the Deputy Executive Director at the time. Separately or potentially relatedly, Bob Hawley also closed the Girardi investigation by ghostwriting the memorandum advocating closure pursuant to State Bar Rule 22 one whenever the OCTC had a conflict of interest, it was supposed to refer out for discipline any cases to an independent outside attorney to handle. We discovered that Hawley had been ghostwriting cases and drafting memorandum for outside counsel, and then, at least in one instance, maybe more passed off the work product of the Independent passed off this work product as if it were from the work product of the Independent outside counsel. And this included a Girardi case. Those are the major findings of our investigation and report that's obviously at a very high level. And I'm welcome to answer any questions that any Senators or Assembly Members have for me.

Thank you very much, Mr. May. We appreciate your report. Our second witness is not available at this time. I'm being advised. Okay. And so, Mr. May, maybe I'd ask you if you could to spend a few minutes to maybe let us know. Our second witness was a former Girardi client and Ms. Engledow. I'm probably familiar with the general substance of her testimony was going to be that the firm used tricks and noncommunication to defraud her out of a settlement for medical expenses that she desperately needed. Would it be possible for you maybe to go into at least a little bit of detail about ways that some of these clients the effect on some of these Girardi clients?

Thank you, Chairman. Typically that was a bit outside the focus of my investigation. We were focused on the impact of Girardi's connections at the State Bar. We did not dig into any of the case files and the conduct that Girardi was allegedly doing with respect to his clients. And so the only insights I have from that are from reading the case files, which I understand I am not permitted under law to discuss under the Business and Professions Code. So I don't have a source of information on that that I'm free to communicate.

Okay, that's understood. Thank you for your testimony, Mr. May. I'll turn to the panel and see if anyone has any questions for Mr. May. Mr. Umberg

Thank you, Mr. Chair. Thank you, Mr. May for both your testimony and very comprehensive report. There was a background paper that was prepared for this hearing. I'm wondering if you had a chance to review it.

I have not.

All right, well, we'll provide it to you and then I realize this is pro bono activity at this point, but I personally would be interested in your reaction to some of the proposals at the end.

Understood, and happy to look at that and give you any commentary I can provide.

All right, thank you.

Thank you. Any other further questions from the committee, mr. Essayli?

Thank you. Mr. May. Just quick question. You looked at some of the ways that Mr. Girardi influenced decision makers. Did you also look at political contributions?

That was not a focus of our investigation. We are aware that he did make political contributions, including to some of the Legislators who had appointment power connected to State Bar positions.

Okay. And remind me again, what was the scope?

The scope of the investigation was to look at Girardi's influence at the State Bar and whether his connections influenced the outcome of any complaints that were made against him.

Okay. And in that scope, political contributions to those not at the State Bar would have been outside your scope.

So we were aware that he did make political contributions to presidential candidates and candidates at all levels of politics, and that he had close ties to the Governors, to the Assembly Members, Senators at both the local, state, and national level. And that was understood that he could get in contact with political representatives with a simple phone call at almost any level, as high as the president and everywhere in between.

Didn't he also make political contributions to Director Joe Dunn?

That's correct. We did see in connection with our investigation that he did make political contributions to Senator Joe Dunn, and I believe it was to two different campaigns of Senator Joe Dunn while he was running for Senator.

Thank you very much.

Thank you. Any further questions, comments from the committee? Ms. Reyes.

Thank you. In the background information that was provided to us that I know is going to be provided to you, there's mention of over 150 complaints against Gerardi before 2021, and I understand that most of those were not investigated. Were any of those investigated?

Well, I think the answer would be yes, that for every time there's a process for the filing of a complaint. So a complaint comes in, it goes into intake, at which point a decision is made whether to close the case at intake or pass it along for investigation. The investigation team then decides, after doing their investigation, whether to file a complaint against the attorney or, in this case, Mr. Girardi. So there definitely were cases that made it past intake into the investigative stage, but I don't believe any of those made it past the investigative stage into the filing of a public complaint, except in 2021.

Thank you. And I really would be interested, as was noted earlier in your input, on the suggestions on what we can do better to protect the public in the future. Thank you.

You're welcome. Thank you.

Thank you.

Thank you. Any other questions or comments? Seeing none, we will turn this portion over to Senator Umberg. Senator Umberg.

Thank you. Mr. Chair, we're now going to turn to thank you, Mr. May. I really appreciate your participation, and we look forward to any input you might have concerning the proposals. All right, we'll turn now to the second panel. We're going to hear from a panel of witnesses from the State Bar. Mr. Ruben Duran, George Cardona, and Leah Wilson. Thank.

Thank you all for being here today. Unless you have a different order, we would go ahead and start with Chair Duran.

Let me make sure my mic is activated. Good afternoon, Chair. Umberg, Chair Maienschein. Members of the committees. It's indeed a long time coming to this day, and I thank you for arranging the joint hearing. I thank you for taking the time to consider the very important issues of public protection that are represented in the work of your staff leading up to this day and for everything that you do truly, to protect consumers in California. I think, as our conversation and I hope that it is indeed a conversation, as our conversation ensues, you will find that the people who are going to speak to you on behalf of the State Bar today share your outrage, share your concerns, and I think, share the ultimate purpose here, which is to reform this disciplinary system to better protect California consumers. Just by way of introduction, as Chair Umberg said, my name is Ruben Duran. I'm a partner in the law firm of Best, Best and Krieger. My practice is primarily public agency based. I serve as a City Attorney in Ontario and Fontana. I live in the city of Ontario, and I've got 25 years practicing on behalf of public agencies. Let me just start by saying that what happened and what you heard from Mr. May was wrong. And we must do everything in our collective power to ensure that nothing like it will ever happen again. The Board of the State Bar is not the same board that was in place in the Girardi heyday, and we are not the same organization. And I understand Chair Maienschein's, perhaps frustration in hearing that message over and over again, but the fact remains that the people who were in charge back then are no longer in charge today. Some of them were terminated as a result of the activity that Mr. May uncovered and reported to us and reported to you. And that's the beginning of a path forward. Indeed, five years ago, the legislature initiated the State Bar's transition to a purely regulatory agency. This move significantly accelerated reform efforts that began in 2014-2015, with the termination of those people just mentioned. Today, we will outline many of the changes we have made and are making in our ongoing efforts to reform the State Bar. And we do want to thank you again for helping us to get here. Through dialogue, audits, and, yes, indeed, through pressure, you have helped to accelerate changes that were, in some instances, already in the works, and in all cases, long overdue. Speaking personally, I'd like to thank you, Chair Umberg, for the many conversations that we have had over the months and feels like years, but certainly I think it's just a number of months since I stepped into this position. I appreciate the work that you and your staff do to protect Californians. The findings in Mr. May's report spotlight an error at the State Bar, where a lax culture and the absence of safeguards pave the way for undue influence and corruption in ways that are indeed shocking. Now, the reports revealed systemic organizational dysfunction that persisted for many years and through many changes in leadership at the bar board level and at the staff level. Again, none of those people are here today. We make no excuses for what is documented in the reports, and we've apologized to the public and to our stakeholders for these past lapses. We recognize the need to do the hard work to implement changes in policies, practices and culture at the State Bar to ensure that failings of this kind on either an organizational or an individual level can never happen again. So what specifically have we learned? First and foremost, I think transparency is central to accountability and rebuilding trust. The release of the information from the Girardi complaints in November resulted from the State Bar's new Leadership, revisiting Business and Professions Code 6086.1 and leaning into transparency as opposed to avoiding it. Ultimately, that resulted in officially noticing the Supreme Court of the changed position of the State Bar in the LA Times litigation litigating, the Public Records Act issues, and recent notice to the Court of a settlement in principle on that matter. But the board and the staff must be held to the utmost ethical standards at the same time. To that end, we have been working on conflict of interest protocols and improvements on the board itself. We have required conflict of interest training to be completed by all members of the Board of Trustees, and that training has been completed. We are also getting training on filing our Statement of Economic Interest, the form 700, so that the public is fully aware of those financial interests that we have that might come to bear in decisions that we make at the policy level, and indeed, when we are required to recuse ourselves from any consideration of those issues. We have also rolled out conflicts training to the staff of the Office of the Chief Trial Counsel, as well as form 700 training. And that training will be provided by the FPPC to a test group comprised of key positions within the State Bar. Again, from top to bottom, we're looking at where are the pressure points, where are the places where undue influence could be brought to bear and how do we stop it from happening? There has been a more active role by the Office of the General Counsel in reminding board members and being proactive about discussions about potential conflicts. With us today in the audience is our newly hired general counsel, Ms. Elaine Davtian. She came to the State Bar from LA Care Health Plan, the largest public healthcare agency in the country, in their Office of General Counsel. We recognize that perceived conflicts are as problematic as actual ones, and when the full board learned of a former board member's involvement ten years ago in investigating a Girardi complaint. He advanced his planed resignation from the board, and the board immediately directed an appropriate investigation by external counsel. Effectively overseeing the Office of the Chief Trial Counsel is both a top priority and a significant effort among the board and our staff. We have started by making the full board, the Regulation and Discipline Committee of the Board, essentially sitting as a committee of the whole. The board now receives what we call Performance Dashboard of key Indicators at every one of our public meetings. Mr. Cardona and his staff have developed a very useful interactive dashboard that any member of the public and trustees can go on to look at the statistics and the data, and there's always a lot of conversation about the backlog. We recognize that we and you and members of the public can do a deep dive on the cases that are being handled. Broad brushstrokes, of course, no details of the individual cases, but that is an important part of accountability for us and for Mr. Cardona's office. We are doing things like tracking issues, including numbers of attorneys with multiple complaints, which, of course, as we learned with Mr. Girardi, some 200 complaints over a long career. Something like that certainly should never be able to happen again. And it shouldn't be anywhere near 200, right? If there are 15 complaints, that's a problem or more. It's certainly a problem. Additionally, the Board has appointed what are known as discipline liaisons to trustees whose main one of their main focus is to interact with Mr. Cardona and his leadership on a regular basis to check in on the metrics to advance discussion of policy efforts that are going to make their way through the committees and through the board of trustees for ultimate action and sometimes for recommendation to the legislature and the Supreme Court. But what more is needed? There's been discussion of a dedicated discipline monitor to perform something like an Inspector General function. Indeed, there was a presentation from several experts at the last meeting before this last meeting, so two meetings ago, and those conversations are ongoing. We continue to strengthen our conflict of interest, policies and procedures, most recently with several actions taken at our board meeting last week. And we recognize the need for stable and adequate funding source to make the changes to the disciplinary system that are required to reform this agency. We stand ready to partner with you on additional reforms, as well as to tackle the serious access to legal services and the diversity, equity and inclusion work that is also a part of our statutory mission. Before I turn the microphone over to Mr. Cardona, I'd like to introduce the members of the board's ad hoc Committee on Accountability and Governance. Two of them are here with us today. In the audience, Trustee Melanie Shelby, Trustee Hailyn Chen, trustee Arnie Sowell will be here with us shortly, and with your permission, Mr. Chair, to be a part of that third panel that we're going to talk about. The Board of Trustees, as you may know, and is reflected in your written material, is 13 members, public and or non-atorney and attorney. Under the current structure, there are supposed to be seven attorney members and six public members, public members appointed by the Governor and the Legislature, the attorney members appointed by the Legislature and by the Supreme Court. We are two members shy at the moment, but we are looking forward to having the appointing authorities offer some, what I hope will be continued excellent trustees with a diverse background, legal and non legal in California and also diversity in the state by way of practices and geography. Vice Chair Brandon Stallings, who is here with us, is a practicing attorney in the District Attorney's office in Kern County. One of our board members is the elected mayor excuse me, the elected treasurer of San Francisco, Jose Cisneros. I have used my time and I look forward to answering questions and a continued conversation. Thank you, Mr. Chair.

Thank you, Mr. Cardona.

Thanks. I'm George Cardona. I'm the Chief Trial Counsel. I was appointed in October of 2021 by the board and then confirmed by the Senate in late June of 2022. When I came on board, the issues relating to Gerardi were already front and center. And at my confirmation hearing, I committed to trying to do everything we could to reform OCTC and try and make sure that we put it in the best position to assure that nothing like that ever happened again. Since then, of course, we've had the release of the redacted versions of the May and Lazar reports, which were prepared at the Bar's request. Examine in detail the failings and even more, highlight the failings that occurred in connection with handling the cases against Girardi. As I think we all recognize, those are things that shouldn't happen. They are things that can't happen again. And we've begun and are trying to do everything we can to make sure that they don't happen again. We've made a number of changes in our policies over time since I started. We're still doing that. But as with the May and Lazar reports, make clear changes in policies isn't enough. We need to ensure that those policies are understood and followed by all of our staff. We need to make sure that there are procedures in place to make this as simple as possible and to ensure that individuals are held accountable if they don't follow those policies. And we also need to ensure that we have incentives in place for the handling of cases that are consistent with our goals. In particular, we need to move away from incentives that encourage closing cases and move towards incentives that encourage people to identify as quickly as possible those cases that pose significant risks and then devote the majority of our resources to investigating handling and disciplining the attorneys who pose those risks. We're trying to do all that. And so with all of that in mind, here are some specific things that we've done to try and address some of the specific things that we learned from the May report, the Lazar report, and also the prior April 22 report of the State Auditor that also looked at a number of issues arising in connection with the Girardi matters. So first, the May report found that part of the reason why State Bar insiders failed appropriately to disclose gifts from and relationships with Girardi and handled cases despite what should have been obvious conflicts was the State Bar's historical lack, and I'm quoting from the report historical lack of robust conflicts of interest policies and related policies regulating, for example, the receiving of gifts from attorneys and little or no formal training on conflicts issues for state bar staff. So, effective June 1 of last year, OCTC for our employees put in place a new comprehensive policy and accompanying procedures regarding both conflicts and gifts. With respect to conflicts. The policy provides detailed outlines of what can constitute the different types of conflicts financial, personal, potential, actual and requires attorneys and investigators, the ones who make the discretionary decisions in our cases, to perform and document conflict checks, both when they get cases assigned to them and prior to taking any action, to close a case. These documented conflict checks appear in our case management database and we can run reports to identify cases in which conflict checks were not done as required. With respect to gifts, the new policy implements what is essentially a blanket prohibition on OCTC attorneys or investigators receiving or accepting, directly or indirectly, any gift or thing of value from any California licensed attorney unless there's a predisclosed personal relationship that would already ensure that they're conflicted off of any matter involving that attorney. The policy also requires annual training for all OCC staff on these policies. We worked with the Office of General Counsel and we just provided that training to all staff in March of this year. Second, the May and Lizar Reports noted a disturbing pattern of instances in which individuals would submit complaints alleging Girardi's failure to timely pay them settlement amounts that they should have received. Then, once Girardi learned of the complaint, he would pay the amount due, the complainant would then withdraw their complaint and OCTC then, based simply on the withdrawal without any further investigation, would close the complaint. Again, this shouldn't have happened. In February of this year, of February of last year, OCTC implemented a new policy making clear that a complaining witnesses withdrawal of their complaint, whether because they reached a resolution with the attorney at issue or for other reasons, is not alone a basis for closing a complaint. Instead, if we can proceed without the complainant's assistance, in other words, if we think we can do it without their help, we proceed and we continue with the investigation of those complaints. To implement this, we implemented new closing codes in our case management system to make clear that closures in these instances can't be based just on the withdrawal, but have to be based on an assessment of the sufficiency of the evidence in the absence of information from the complainant. We conducted a random sample of cases closed with these new codes to be ensure that they were being closed correctly, and those audit results were submitted to the State Auditor as part of our report on compliance with their April 22 recommendations. Third, the May and Lazar reports noted numerous instances in which OCTC staff appeared to be closing or using nonpublic measures to resolve individual complaints against Gerardi without knowledge of other pending complaints or of prior similar closed complaints. Failures to identify and address patterns of prior complaints was also noted in the State Auditor's April 20, 2022 report. So to address this, in February of 2022, we put in place a new policy-making clearer for everybody that a lawyer's pattern of prior closed complaints needs to be considered in making investigative decisions. In October of 2022, we issued a new policy setting out clear criteria to limit the use of nonpublic resolutions of disciplinary matters, requiring consideration of both the seriousness of the currently alleged conduct and the attorney's prior history of complaints and discipline. In November 2022, working with staff from the State Bar's Mission Advancement and Accountability Division, we provided OCTC staff with an interactive dashboard that allows them to search and identify both open and previously closed complaints for a particular attorney, grouped by general category. To make it easier to identify patterns. In May of this year, we adopted new procedures regarding cases involving repeaters that is, attorneys who a complaint is filed with us and we learn that they already have a previously closed complaint within 90 days or a currently open complaint. This new policy ensures that prior and pending cases are considered and that the team handling any current complaint or any prior complaint are aware of each other, so we're not siloing information across different attorneys. We've also implemented a new flag in our case management system for which cases in which a respondent is identified as having 15 or more complaints either closed or pending over the last five years. Cases that are flagged as 15 plus respondent receive increased scrutiny prior to closure, including required consideration of the respondent's prior complaint history and any patterns demonstrated by that history. So in addition to these new policies procedures, we've taken a number of other steps to try to ensure that nothing like Girardi happens again. We've provided mandatory training for all our attorneys and investigators on investigating client trust account matters. We've encouraged the use of forensic accountants if we have to contract outside with them. We do, and we've actually hired one full-time forensic accountant to handle and consult on complicated financial investigations. We're in the midst of a reorganization that I'll discuss in a moment. And as part of that, we're hoping to add a second forensic accountant to address these types of cases. Effective in August of last year, we implemented a pilot project in accord with the State Auditor's April 2022 recommendations that impose heightened procedures for investigating both bank reportable actions, instances where a bank notifies us that there's been an insufficient funds transfer in a client trust account, and other complaints involving client trust accounts. As part of our reorganization, based on the data from the pilot project, we plan on making this pilot team permanent. So those are all examples of things we've done. And obviously, I have 1 minute left, I am told. So I'll talk a little bit about what we're doing in the future, and hopefully you'll give me 30 or 40 seconds more. We're in the midst of a substantial reorganization. We are trying, in accordance with recommendations from both the auditor and the Legislative Analyst Office to differentiate cases appropriately so that we can assign the appropriate level of resources to them. We're keeping some specialized teams. We're moving to horizontal handling of some cases, and we're going to retain vertical handling of others. We're also in the process of trying to implement a program to allow preinvestigation diversion for certain respondents with limited histories of complaints and fairly minor violations, with the dual goal of decreasing our currently growing inventory of cases while also providing preventive resources to attorneys to avoid future complaints. We also submitted last year proposed new case processing standards. And with the reorganization that we're putting in place and efforts to streamline our handling of cases, we hope to soon be in a position to work with you on the workload analysis that will be necessary to assign staffing levels and figure out the appropriate staffing levels for whatever new case processing standards are adopted. So that's basically a brief overview of what we've done and where we're going in the hopes of making OCTC both more efficient and more effective in addressing attorneys who violate the rules. And with that, I'll turn it over to Leah Wilson.

Thank you, Mr. Cardona. Ms. Wilson.

Hello. Leah Wilson, Executive Director of the State Bar. I was in the role from 2017 to 2020. Then I left for about 18 months and I came back in 2021. And I'm going to take a slightly different vantage point here because, of course, as Executive Director, I do not have responsibility or authority for the oversight of discipline case processing. But what I do have is a responsibility to support the board in its efforts to oversee the discipline system and to support George in his work in making sure that the Office of the Chief Trial Counsel is sufficiently resourced, but also that the culture of the organization overall supports the kind of change that we've all been that's brought us here today. As has been cited a number of times, Aaron May identified a very lax culture, moral culture at the State Bar. And culture is not something that you can change with a list of tactical to dos. If any of you have done culture work, you know that. But it is absolutely foundational to ensuring that this never happens again. And so both our Board Chair and George talked about a number of policy initiatives in this area. But we've also done some other work, including developing and rolling out organizational values, working with our staff about how each and every one of us, from those in the mailroom to those at the top of the chart, are responsible for holding one another accountable to the values and for our culture. I think this is very important. It's critical to answering that question of how can we ensure this never happens again? We've also recently implemented a contract with the Department of Justice to serve as the investigative entity for any whistleblower complaints. You heard from Aaron May this morning about how we had good employees in the Office of the Chief Trial Counsel trying to do the right thing visa vis Girardi, who ended up being terminated. There was no meaningful avenue for those individuals to voice their concerns outside of the organization. That is absolutely not the case today. We also have an anonymous employee inbox it's, a system called incognito. I highly recommend it to any of you. It's an online system, but any concerns that come in regarding our discipline system are sent directly to those discipline liaisons that the board chair referenced. So again, it's not going into a black hole. There is visibility to any concerns that are raised by staff and accountability, and I think that's something really important that I want to get across. I also want to take a couple of moments to talk about some things that I think are important, some of which stem directly from the Girardi matter, but again, not directly related to discipline case processing. The first is our work to address racial disparities in the discipline system. It's important for all of us to remember this work now as we are talking potentially about getting tougher on crime in response to Girardi. I think there is an obvious and necessary reaction that we need to do a better job of investigating and prosecuting misconduct. However, at the same time, we need to ensure that we do not exacerbate existing disparities in our system. As a reminder, in 2019, the State Bar became the first licensing agency of its kind to study racial disparities in discipline. What we found is yes, black male attorney is twice as likely to be disciplined as their white male counterparts. We found that the drivers for that disparity have to do primarily with two factors disparate numbers of complaints and the lack of representation in the discipline system. On the complaint side, one of the key factors driving complaints against blackmail attorneys are reportable actions from banks. And this takes us to another initiative I want to discuss. But the reportable action from bank, that's a client trust account issue. So that's a very important component of this disparity that the Bar is now addressing. Squarely on the representation front, blackmail attorneys are least likely to be represented in our discipline system. So something for us all to consider right now, there is no appointed counsel in that system based on income. And this certainly may be an effort that the legislature is interested in partnering with us on. But moving on to client trust accounts, I mentioned that there is a significant variance in who receives a bank reportable action on a client trust account matter. The Girardi situation certainly highlighted our lack of oversight as an organization on client trust accounts. Some of you may be aware that for decades now, attorneys have been required to report information on their IOLTA accounts. Those are the pooled trust accounts, multiple clients. That reporting has really stemmed from a desire to manage the interest rates being levied on those accounts because the interest funds are turned around to provide resources to legal services organizations in the state to the tune of $60 or $70 million. But that was the reason why we were collecting information on IOLTA accounts. And just to give you a sense, over about 30 years, we received information on 40,000 IOLTA accounts. During that process, pursuant to the work that the Board did in response to Gerardi, the State Bar initiated the Client Trust Account Protection Program, or CTAPP, which for the first time requires attorneys to report not only on their IOLTA accounts, but on their individual client trust accounts as well. This is now a rule that if this is not complied with, we'll make an attorney subject to discipline. The reporting period on this just closed. I'm very happy to report we had 94% compliance over 204,000 attorneys reporting. And what we learned is we have about 87,000 attorneys with IOLTA or CTAs in this state. You have $30 billion on deposit in these accounts, very little exposure to this or oversight. There's four practice areas for these trust accounts. We find them predominantly in these four practice areas. We are at the beginning of being able to effectively regulate and oversee this area because we receive parallel information or corresponding information from banks only with respect to IOLTA accounts. So obviously, what the State Bar ultimately wants to be able to do is match information an attorney has reported with information a bank has reported, and you want to see a one to one match. Right now, on the IOLTA side, we don't have that. We have about 19,000 mismatches. That means a bank has reported, but the attorney has not reported. This is a first flag for the State Bar to proactively reach out to an attorney and say, hey, a bank has reported you have an account. Do you want to correct your reporting to the State Bar? And this is what we are doing and I tie this back to the Farca study because this is what we are doing outside of the discipline process. We are working to support attorneys in being compliant. We're giving you opportunities to report your information to the State Bar. We are providing a tremendous number of tools to learn how to properly manage your client trust accounts. And it is only in egregious circumstances will cases be referred to the Office of the Chief Trial Counsel, but they will be referred. So again, this is another effort that we would love to partner with all of you on. As I mentioned, we only get bank data on the IOLTA side. We would very much like to get bank data on the individual client trust account side as well. Moving on to another initiative, I know, as Senator Umberg in particular, very important to you, the mandatory reporting for attorneys. Just want to highlight the fact that the board just this last week did vote to send two versions of a mandatory reporting rule to the Supreme Court. And I think it's been rightfully noted that in the past the State Bar has taken up this issue and not had the wherewithal to advance a rule. This time the Board did something different and I think that's really important. When we talk about how the State Bar has changed, it's not that we didn't receive scores of opposition from lawyers to this rule, but you do have a different board and a different State Bar and two versions of that rule are being sent forward to the Supreme Court. The last thing I want to highlight that sort of is an underpinning. That's important context for any discussion we're going to have about next steps is our financial integrity. It's been referenced certainly in the background paper, many missteps in the past. I do want to highlight that just this year the State Auditor released a report after having reviewed our financials extensively and indicated that the State Bar needed a fee increase, a fairly significant fee increase. And it is both that recognition of the need of fee increase, but perhaps even more the clean bill of financial health, so to speak, that the State Auditor gave us that I want to highlight here. I think it's appropriate to expect and demand that of us. And I just want to assure you that we take our responsibilities quite seriously in this regard. Also, on a financial note, the board at its meeting last week also approved the sale of our building in San Francisco. This is another sort of effort that has been talked about for years. Those of you that have been engaging with us, certainly staff, we've heard, why do you own a building in San Francisco and why are you a landlord? The State Bar has finally taken action and moved to sell that building and I expect that the Board will receive a purchase agreement to formally authorize at its. Meeting in July, so doing our part to ensure the fiscal integrity of the organization. And we certainly look forward to working with you to make sure that we are adequately resourced going forward to do the good work that I know that you expect of us. Thank you.

Thank you, Ms. Wilson. I appreciate that. All right. Questions, comments from committee members? Yes. Assembly Member Essayli.

Thank you, Mr. Senate chair. I appreciate the presentation and the acknowledgment of the many changes that have been done, but from my perspective, this is not simply a policy failure. There was criminal conduct committed here. What charges have been brought against any former State Bar employees?

Mr. Duran. Mr. Cardona.

I will answer that in the way that I can while remaining within confidentiality requirements. So OCTC, because virtually everybody identified in the May Report was a former employee of OCTC, OCTC would be conflicted off of that. So any disciplinary matters would be referred out to the Special Disciplinary Trial Counsel, which is the entity that handles conflict cases. When we have a conflict in terms of criminal referrals, that would be done by the Office of General Counsel. And I will look back to see if I can say anything about that.

Sure. Come on. You may come forward to speak in the microphone. You can speak from the microphone right there in front of you if you like. Identify yourself.

Yes. Eileen Duffy. Can you hear me okay?

General Counsel for the State Bar. Thank you for the opportunity to be here today. And I wanted to assure both the Judicial and Assembly Committees that appropriate referrals have been made to law enforcement. We made referrals to Los Angeles District Attorney's office. We also made referrals to FPPC. And as some of you may be aware, we were also collaborating with a federal enforcement agency prior to the release of the May Report.

Yes, we can.

All right. Is there anything public that you can acknowledge today?

Unfortunately, I'm not in a position to say more, not to interfere with any investigative activities of our law enforcement agencies.

Right, okay.

I appreciate that. And I think it's important that that's made public, that those criminal frauds are made public because part of fixing the wrongs is having accountability and justice. And when I look at former employees receiving hundreds of thousands of dollars, employment for children, lavish lunches, political contributions in exchange for favoritism acts or omissions is criminal. And I think it's important that they be held accountable for future deterrence as well. So I appreciate that, and I thank you. And I also understand, Mr. Cardona, that there are disciplinary the discipline action against Mr. Dunn is active, and you're saying your office would not be the one handling that.

Yes, I am not aware of the current status of that because we're recused from it. But that is being handled by the Special Disciplinary Trial Counsel, which, again, is the body that handles cases. We're conflicted off of. We're conflicted because obviously he was a former Executive Director of the Bar.

Yeah. And I see that he's still licensed to practice and affiliated with University of California, Irvine. So with that said, I appreciate the efforts. I think policy changes are important. I want to make sure there isn't also an overcorrection where we're going after attorneys for mistakes or other things to look like we're being aggressive, because I don't think that would be fair either. So I think getting it right is important. And I trust Mr. Cardona you'll do that.

I agree with that. I mean, part of what we're trying to do is to differentiate the people we should be basically bringing the hammer down on from people who are just making mistakes and shouldn't be the subject of discipline. That's one of the reasons that we're looking at trying to put in place a more formal diversionary program. Some of the non public resolution measures that were addressed in the state audit report are actually a form of diversion and that we'll do an investigation and decide based on all of the circumstances that, for example, someone may have done something wrong, but it may have been a first offense, so that we'll only give them a warning. But we need to tighten that up to make sure that we're only using that in appropriate circumstances and not using it in circumstances where it's someone like Girardi. As the report indicates, Girardi received a number of those kind of quasi-diversionary resolutions over the span of that time period, maybe the first time that's appropriate. But at some point, it's got to be called off and we have to make the decision to go forward, investigate, and charge.

Thank you, Mr. Cardona. Thank you, Mr. Chair.

Thank you. I understand, Mr. Cardona, you actually have some experience, quote, putting the hammer down. Is that correct?

Yes. Before I took this job, immediately before, I was with the City Attorney's Office in Santa Monica. I see Mr. Allen there. But before that, I worked for about 20 years as a federal prosecutor specializing in financial fraud cases.

Thank you, Ms. Dixon.

Thank you, Chair. Mr. Senator. Chair. A couple of questions. Actually, concurrent with Mr. Essayli. I think I took notes here that 205 complaints were filed against Mr. Girardi during this particular period of time. During that particular period of time were there, how many other complaints against lawyers were filed and how were they addressed? And your normal process that you're working to improve, just describe what has been going on the last several years, if you would, please.

So in any given year, we receive between and these are estimates between 14 and 17,000 complaints against lawyers. I think someone earlier mentioned the three stages of the process we go through. Mr. May mentioned that generally all of the complaints come into our intake unit, which is a group of attorneys who review the complaints and make essentially an initial assessment as to whether the complaint states a violation that we could proceed on. In other words, whether the complaint is sufficient on its face to suggest that there's a disciplinary action. If they do, then it's forwarded on for investigation. Every year, roughly, between 40 and 50% of complaints are forwarded on. I shouldn't say that I think it's between 35 and 55% of complaints are forwarded on. That's going to vary highly depending on the nature of the complaints. In the investigative phase, we do information gathering. We can issue subpoenas. We can interview witnesses. We also are required to advise the attorney of the allegations against them and get their response to those. We then review all that information and make a decision as to whether the case warrants moving forward to charging. Every year we move forward roughly, I think it's between three and 5% of the complaints that come in move forward to charging. And that's the stage where we will put together the charging document and ultimately, if a decision is made, file it with the State Bar court to proceed to seek discipline.

So in that process, you're still going to be improving as a result of the Girardi experience. There are some procedure processes and procedures that you're going to be looking at as you've described.

Yes.

So is that at 14,000? So with the 200 against Mr. Gerardi, did that stand out to anybody?

One of the problems that was identified was that there were a whole host of different attorneys handling those complaints. And as the Lazar and May reports both suggested, there were instances in which attorneys or investigators would receive complaints and just handle them without looking at the other complaints that had been filed against Mr. Girardi. One of the things we've tried to do is put in place procedures and practices to ensure that doesn't occur. So that someone like Mr. Girardi, who has a history of prior complaints is flagged and identified as someone for whom our attorneys and investigators should be looking not just at the single complaint before them but at the pattern of complaints that have occurred over time. Looking at that to see whether there is additional investigation warranted whether, for example, we've issued a warning letter in the past and so shouldn't now and should instead take this seriously, move forward to investigation. In other words, we're trying to make sure that we identify people like that who their pattern of complaints suggest they do pose a significant problem for heightened scrutiny.

So I guess I'm really surprised to hear that that each complaint was looked at unilaterally and singularly and not in the context of a prior record.

Not always. In other words, there were instances in which some people looked at two or three complaints. And to be fair, there were instances in which people looked at two or three complaints and said we should move forward. And for whatever reason, there was a decision not to move forward. Interesting. But there were also instances in which it was clear that people were just looking at the complaint alone without looking at the overall pattern.

Well, thank you. It seems like a database system could clear that up pretty simply.

And in part that we now have in place, that's our case management system now, which is now an electronic case management system, so that it's much easier to see those types of patterns.

All right, thank you very much.

Thank you. Assembly Member Dixon, Chair Maienschein.

Thank you. I have a few questions, but actually that raised one with me. You said they were coming in one or two at a time, the complaints against Mr. Girardi, but they did come in 150 times.

Yes, that was over a significant period of time. So there were occasions, and to be fair, there were occasions when there were six or seven or eight complaints in OCTC at a given time. And yet for whatever reason, as I mentioned, there were instances where those were handled distinctly as opposed to looking at them altogether.

So you talked about a new case management system. So let's hypothetically say 150 came. Like, at what point would something be triggered? At what point would something be triggered? Or you got to 150.

So as I mentioned earlier, we've just put in place a new policy to flag any individual who so if we get a complaint today, we have a new procedure where we're going to look at that person's history, and if they have 15 or more prior complaints over the last five years, they're going to be flagged.

Okay, so there's a policy in place. Maybe this is somewhat of a segue into the next part of our discussion, but could you talk a little bit about what the financial consequences were to clients of Mr. Girardi?

Yes. The case that brought this to the forefront was a case in Chicago, the Boeing case involving the crash of the Boeing 737 flight. What brought this to a head was the fact that Girardi was unable to pay $2 million in overdue settlement amounts to a number of clients in that case. There's information suggesting that there were similar non-payments of settlement amounts in some, significant amounts to others. I can't talk about specifics of those cases because of the confidentiality requirements, but it's been reported in the press. If you look at the LA Times article, there was reference to a number of the victims who had lost significant amounts of settlements that should have been paid much earlier but weren't, and were then lost as a result of the bankruptcy.

So if we just talk about the ones that have been publicly identified in those LA Times articles, which I've read, I assume most of my colleagues up here have read as well. What's being done? What are their options to be compensated? What's happening to those victims?

First, outside of our system. There's obviously the bankruptcy and the bankruptcy trustee is trying to address claims by many of those victims against the estate. That's one thing. For our part, we also have the client security fund. That's not something that's within my purview. But perhaps Ms. Wilson can talk about the Client Security Fund and how it goes about trying to compensate victims who have suffered losses at the hands of attorneys.

Yeah, I'm sorry. I was beeping over here. I was trying to email the head of the Client Security Fund team to ask exactly how many victims we've paid out and how much. But we did expedite payment to Girardi victims, and I believe we paid out about 3 to 4 million. And there is a cap per payee cap of $100,000. So that'll give you some context for what we've done.

Okay. And then, Ms. Wilson, what impact moving to kind of the disparity issue on enforcement, what impact has the Bars policies had on disparity on the attorney discipline system from the time of the original study?

So the study was conducted in 2019, and I believe the board moved to adopt one of the primary remediation steps, which is archiving complaints that have closed with no action. Archiving those complaints after five years. I believe that the board implemented that step in 2020. We have not looked officially at what the impact has been of archiving. The unofficial meaning, not sort of evidence based data, is that we have improved in our statistical outcomes. The formal study to assess where we are visa vis the 2019 findings is slated and funded to occur in 2024. So five years later, so anecdotally it looks positive, but I can't say that that's evidence based at this point.

Thank you. Chair Maienschein, a few questions in terms of the financial disclosures, both the compliance and enforcement, who is responsible for compliance and enforcement today?

Do you mean the form 700 financial disclosures? That's our Human Resources department working with the Office of General Counsel.

So if that is not accomplished, who do we look to to ask why that wasn't done. No, today.

Oh, today. So I should turn that over to our Office of General Counsel. Ms. Doffy again.

Okay

The reason I asked that question is that was a finding that there was basically little attention paid to financial disclosures. And to the extent that folks made disclosures, they were wholly inadequate.

I would say that the responsibility would be jointly between Human Resources Department and Office of General Counsel. We're actually just recently implementing audit sort of, ah, activities that we'll be partnering with HR to kind of review how many individuals have filed, did they file appropriately. Their FPPC actually has some guidelines around how to do that, so we are intending to fully implement those. And if my memory serves me correct, the annual form 700 period was upon us not too long ago. We had a high rate of compliance. I believe it was 98% of our state employees and filers that have filed the form 700. So we're going to go back and take a look at what was filed to ensure to conduct some audit activities around that.

Okay, so who would that be? In other words, a year from now, when we're still facing these issues, who do we ask to come testify?

If you're looking for someone to testify on staff completion of the form 700, I think that is me to make sure that they've actually done it. This is another area that we've automated. We're using a system that maybe some of you are familiar with. Only this year did we automate that facilitates auditing not just of compliance, which is the part that I think I am particularly responsible for. The Office of General Counsel talking about substantive review, are people complying with their requirements and actually doing it correctly, which is a whole nother level.

Right. And so for accountability purposes, you've just identified two issues. One is compliance. 98% have complied, so there's 2% that haven't complied. So that would be you, Ms. Wilson, would be responsible for ensuring that folks actually file the form, is that right?

Yes.

And then in terms of the substance, who is responsible to make sure that they provide the requisite material?

I think one person going to be.

First of all, under the rules that apply to the form 700 disclosure, the liability and the responsibility really lies with the filers. And so if we would conduct an audit and identify areas that would need to be referred to FPPC, FPPC is the commission that is charged with the oversight of the form 700 and disclosure requirement. So we'd probably conduct some audit activities and report and refer any form 700 filers that may have missed a beat Or should be referred.

Who would be responsible for the audit compliance?

So current plan is to work with our HR staff to conduct that audit.

Okay, and who would that be?

I don't have the name of the individual handy, but it would be under Steve Mazer's team, and they all report to Leah Wilson. So if we could get back to you on that, we'll be happy to get the names and kind of provide you with the actual individuals who will be conducting those.

One of the challenges just accountability. And that's what I'm asking about.

Sure.

And what is the penalty for not complying?

So there are financial penalties that extend to failure to report financial interest on your form 700, and there's also sanctions that FPPC may impose against those individuals that have not filed or reported.

And there are also employment related sanctions and consequences.

So in the last year, have there been any consequences to anyone at the State Bar for not filing or for not filing, basically with adequate compliance?

No, not that I'm no, but the audit function has not been done yet. I also want to clarify that the 2% that I'm referring to, those are individuals that may still be on leave and may not have the opportunity to file the form 700 because they're on protected leaves.

All right, well, we'll come back again. So in terms of conflicts of interest, same questions concerning conflicts of interest. Who's responsible for ensuring that there's adequate compliance with conflicts of interest?

Okay, so again, the conflicts of interest rules, they kind of extend, and the individuals are responsible on ensuring that they comply with the rules. Now, we as an organization and the panel spoke about this earlier, have put in appropriate safeguards. We're going to be doing an extensive training around that. I think we're going to roll out a survey to ensure that the individuals that are trained understand the subject matter. But I don't know that there is a way to police it just within the organization, from the exception of trying to educate individuals, be more proactive. For example, at the last Board Meeting, we flagged certain items that may have post conflicts through the board members. We spoke to them. We had recusals at the Board Meeting. So it's really changing the culture and really leaning into those requirements and educating around those.

So who's responsible for overall education, compliance, enforcement? Is there one person who's responsible for those things?

Again, enforcement wouldn't be necessarily with us because I think particularly after pursuing the legislation to include the state bar as part of the political reform act, that would be FPPC, but the Office of General Counsel, I could say myself along in partnership with Leah, and we'll be rolling out the training program for the State Bar as a whole.

Okay, so if there's a conflict of interest that's discovered the next year, we would come and ask you that question. So what happened?

I mean, we will try to answer, to the best of our knowledge, again, we can't control everything, but we could talk about what we've done and how we try to prevent potential conflicts of interest.

And I take your point. You can't control everything, but what you can do is you can have lines of authority and accountability for certain areas. And so that's what I'm asking about, is those lines of authority and accountability.

All right, Mr. Chair, if I may, just to add one perspective from a trustee, there's also moral authority, right. And leadership at the board level. And it really does require whoever's sitting in the chair's spot to lead by example to check in with your colleagues. Okay, we've got a deadline coming up. Have you filled out your form 700? Did you talk to the Office of General Counsel if you have questions? And the reference to the board meeting last week was, I think, illustrative of basically turning a page because it was a very formal process that the Office of General Counsel went through in preparing board members for the meeting to flag a conflict. I myself recused myself because there was an issue that would affect my law firm. And so again, it's one of these things where it's a change, right? And it's a change that's going to perhaps take some time to take hold, but between and among the three different people that we talked about here. Now, maybe we do have to formalize or institutionalize some reporting structure or some accountability outside of the FPPC because ultimately, under the Political Reform Act, it's the individual filer, at least for local electeds, who is responsible to the FPPC and who could face investigation and charges.

I will also George, let me start with the macro and you'll go to the micro. I do want to clarify in terms of employee responsibility to identify their conflicts with attorneys. This is vis-a-vis the discipline system. We are required to identify all of our conflicts. There's a very specific policy outlining who you identify. There is an online system for that. We are able to determine whether or not staff go in and identify their conflicts and if they have none, they have to affirmatively. So certify, that is audited and reviewed. In OCTC, there is an additional level of conflict checking which George can describe.

And that additional level is that any investigator or attorney, when they are assigned a case, has to, in our case management system enter a form in which they answer a series of questions to reveal whether or not they've identified a conflict. They then have to do that same thing before they close the case. So within OCTC, I would be responsible for ensuring that employees are complying with that, that the forms have been entered and would be responsible if someone has handled a case when in fact they have a conflict that they didn't disclose.

All right. Okay. Yes, you wanted to...

Going to chime in and say similar processes exist for the Conflicts Council to the 22 One program and also within other functions like the Complaint Review Unit. So the similar type of record keeping would be within our office.

All right, I have some other questions, but I know that other panel members or other Members of the committee have questions. Assembly Member Dixon and then Majority Leader Reyes Gomez. Assembly Member Dixon thank you. Just to follow up oh, I'm sorry. I meant Pappin. Go ahead. Let me go to Assembly Member Pappin first and then Majority Leader and then back to Assembly Member Dixon. Sorry about that one.

So I want to focus on the membership itself. And have you taken any steps with respect to the intricacies and the requirements that relate to the trust accounts and the various trust accounts to educate the membership, to make sure that they are in compliance, and that compliance is easy because ultimately it lessens the load on you. So I just wonder, what steps have you taken and in particular, have you considered making part of the continuing legal education? I know we have. The practice of law is one of the categories that one must fulfill. I'm just wondering, have you thought about perhaps practicing law is a business in a lot of ways, and I'm not sure every attorney is particularly successful at it. So I'm just wondering, have you thought about both with respect to the trust accounts and anything you got to do with a bank, as well as anything that deals with the finances and how one really runs their practice. So, any ideas?

Yes, I think you're really getting right at the heart of the client trust account protection program. So when it was rolled out, it was rolled out with a revised and updated handbook on client trust accounting. There's a toolkit coming out that is step by step instructions. It's intended for an attorney to do with sort of side by side on the screen or by hand with their actual trust account ledger to teach them how to do it. We have new MCLE that we've rolled out that's free. We've done a host of live sessions both directly and through partnerships with the California Lawyers Association and local bars. So we've made a significant investment in training and support. We also have a staff team that's answered, I would guess, here without looking at the numbers, but up to 3000 individual inquiries about how to get it right. So we're providing a lot of technical assistance and support. The intention is not to do a Gotcha game with attorneys here. And to your question about MCLE requirements, this is a hot topic in terms of the question of whether or not the state bar should further specify what kinds of MCLE attorneys are required to do, which I think is what you're suggesting. I think we on the staff side think that's absolutely appropriate and we need to move in that direction. You can imagine that many attorneys or members, as I think you're referring to, don't necessarily welcome that idea. But we do intend to bring forward proposals to the Board on precisely the issue you raised, because I think it is time for mandatory training in certain areas. Certainly if you are a certain type of practitioner.

Already. Thank you Assembly Member Pappin Majority Leader Reyes Gomez.

Thank you, Mr. Chair. I got to tell you, it's frustrating just hearing the questions from Senator Umberg asking the question, who is responsible? Who is responsible? And the question was repeated so many times. And to not have somebody say, I am responsible, that's frightening. If we're talking about the trust of the public, the trust of the attorneys as well I mean, we're licensed by you all, and if we can't trust the organization that licenses us, then how can the public be expected to trust you as well? It was very frustrating just hearing that interaction. In one of our subcommittees, Dr. Shirley Weber came to testify. And I repeat this story because it is exactly what we should be doing. It was a budget subcommittee. And Dr. Weber said in that committee hearing that one of the first things that she did when she came in as the Secretary of State is to find out who was responsible for what. And she wanted to be able to say to somebody, if something went wrong, she knew exactly who she was going to she wasn't going to say, I wonder who might be. She knew who was responsible. And there were a lot of areas where she didn't know who was responsible, but within a very short period of time, she knew exactly who was responsible. Not to be able to answer the question of the chair as to who is ultimately responsible for each of these things, it's frustrating. It's frightening. It's embarrassing, quite frankly. We're talking about people's money. We're talking about for attorneys. We're talking about attorneys licenses. And I also, as was mentioned by a colleague, I don't want us to try to compensate by going completely the opposite way. And now everybody is getting dinged on this. Earlier, also, there was a comment about that we finally have a robust conflict of interest policy about receiving gifts. I say we're talking about common sense. We're talking about character. We're talking about integrity. If we don't know and I'm sure that when Dunn and the others were receiving this money, there were others around who knew that this was happening, and yet nobody spoke about this. The fact that we have these complaints that are being filed, they're not being investigated. The fact that this happened, for me, this was an active cover up. This wasn't just a mistake, and we didn't nobody knew what was happening. This was an active cover up. That is of serious concern. I know that there has and I made a note when we're talking about transparency and accountability, what's happening with Justice Clarence Thomas and his wife, the fact that money is going to people and we're not being told about it has to do with character. If somebody is allowing this to happen, it is a problem. It is a problem. Of great concern is where does the buck stop? Who is responsible for each of these things, making sure the 700 form is filled out by every single person and to hear the response, they may be on active leave. They may be. Either they are or they aren't. Even if it's 2%, by the response, it tells me that it used to be a whole lot more that had not turned in their 700 form. But even if it's 2%, okay, then, such a small number. Let's find out. Why didn't you fill it out? You've got until close of this day to take care of it. But even with that, there wasn't a response that told us that it's like here we are after this May report. We know what a serious problem we have and yet we still have some people who haven't filled it out. And whether or not there's a conflict or there isn't, we still don't know. There's a comment also that there's the board, I believe on the board there's no one there who has a current relationship with Gerardi or any judge that is related. I think there's something that was said about that. Is it just the board? What about staff? Do we still have staff that somehow has this relationship with Gerardi?

May I respond, mr. Chair? Mr. Chair. Good. Aaron May's investigation concluded for us that there is no one currently employed by the State Bar. Essentially with what you've described Member Gomez-Reyes.

I understand from the board no.

No one on the staff either in the Office of Chief Trial Counsel or on our non OCTC staff.

Wonderful. My notes didn't reflect that. Thank you very much. Again, I go back to the amount of money that was spent, over half a million dollars on just the one person and the fact that nobody had said anything about it. And I appreciate, Chairman Duran, that you're new and you came in after this. None of the fault falls on you. That isn't true of everybody. And that is of great concern. But I go back to my first comment, and that is that the questions could not be answered because I am assuming the executive director is ultimately responsible. And if the Executive Director cannot point to someone and say, oh, for that question, here is the person, or for counsel to say, well, it may be under this particular person. I'm not trying to believe me, I'm speaking out of frustration at this point because it shouldn't be this way. It shouldn't be this way. We have someone who's responsible and that person should be able to say you are responsible. Now, if we are ever asked about 700 forms, I need you to give me a report. There has to be a change. And you're right, it's difficult to make a culture change. Somebody's got to make it. And difficult as it is, if it doesn't happen by one person, it will happen by somebody else. It has to be done. And it can't be done in five years. It has to be done now. I have no question. Just wanted to voice my absolute frustration specifically with this exchange about who is responsible, who is responsible, who is ultimately responsible, who is responsible, and getting nothing counsel. You did say at one point you were the person responsible on one of the questions. And I appreciate that we need to take more responsibility and maybe take a lesson from Dr. Shirley Weber. Thank you.

Thank you, Majority Leader, Assembly Member Dixon, did you have a question?

Yes. Just to follow up to all of this, just to kind of clarify my frustration and my astonishment about the lack of people understanding, let me focus on the Board of Governors for a moment. My understanding and reading the investigative report is that Mr. Miller was a law partner of Mr. Girardi. Is that correct? So for issue number one, conflict. Issue number question number two. What is the role of the Board of Governors in understanding the I'm sure like all boards, whether it's a Board of Directors or a Board of Governors or Board of Trustees, there's an Executive Director report at every board meeting that gives a report of the in this case, in your case, in the past, in your predecessor, the number of complaints against lawyers, the number of filing misfilings, was that done under the I guess current? I don't know if the entire board has changed over. Are there current members of the Board of Governors that are still on, serving out their term that were during this period of time?

If I may, Mr. Chair.

Mr. Durant.

Go ahead.

So the Board of Trustees, 13 members, all now appointed, as I mentioned, by the various appointing authorities, we do have two of our members who were subsequently appointed by the Supreme Court, having been, I believe, elected under that prior. And I stand to be corrected if I've mistaken, Mr. Broughton and Mr. Stallings, but otherwise that election era process is gone.

Okay. So under the new procedures, which I hope have been implemented, I mean, just on the basis of the LA Times coverage of this, you knew there were a lot of things to fix. But I would think it'd be fundamental in terms of the bylaws of the organization or rules of procedure, that these kind of staff, operating statistics, data, performance data would be routinely every meeting reported to the board. So knowing that a former law partner or current law partner of Mr. Girardi was on the board at the same time these complaints were filed, were there red flags?

Yes. I mean, there certainly should have been. And I think Mr. May's report tells us that they just weren't raised well enough in the way that you've described. Certainly if that were the case today, most certainly red flags would be raised.

Because it just leads to what my colleague to my right was saying, that there has to be accountability, process and procedures. And maybe there is. A cultural intimidation factor that the staff did not want to challenge or surface red flag behavior activities that members of the board of Governors or trustees were performing. My recommendation is so we can allay a lot of this frustration is going forward. It shouldn't take legislative action to say, get this house in order quickly because there's been, as Mr. Assaile was saying, potentially criminal activity that was going on between Mr. Dunn and the organization and Mr. Girardi. It is a cover up, as my colleague said. Are we even going to get to this? How do we know we're going to remedy the COVID up as well as going forward under new management? That's great. I do want to make a comment. Just we're all public officials elected, whether elected or appointed in many cases, we all are familiar with form 700s. We all do it. Why is this so hard to administer and report on and tabulate form 700? I mean, on local city planning commissions, they fill out form 700. It's not rocket science. So I just hope, just to follow up on semi member Ray's comment that we could get that minor procedure, but that's a very common place procedure with anyone serving in a public role to get that situation cleared up. Okay, thank you very much.

Let me ask the panel who would like to respond to that.

I think I would like to because I'm sorry if I misrepresented something or I agree that exchange was confusing. I do see myself as accountable for completion of the form 700 and for completion of what we call the 22 one conflicts checks. There's two processes internally. One is that form 700 that you're very familiar with, one is internal to the State Bar. This is identification of conflicts. For example, my family member who's a lawyer, I have to identify that I am responsible for that. I do not the way the State Bar is structured, I do not supervise the Chief Trial Counsel. The Chief Trial Counsel has indicated that he's established his own internal policy for an additional level of conflict identification when a case is opened and when it's closed, he's responsible for making sure that his staff comply with that. In all instances. If a staff member fails to comply and obviously we have to provide due process, but there are remedies that include employment related remedies. And in that instance, whether it's an OCTC staff member or someone else in the State Bar I working with the Office of General Counsel would deal with effectuation of those personnel remedies. So I want to be clear about that. I am perfectly willing and think it's appropriate to take responsibility. Not trying not to. I think what you're hearing is we do work well as a team and it is a complex organization and the leadership structure of the organization is complicated. You have the three reports to the board here speaking to you and we work together, and I think we work together well. But sometimes you might see us stumbling a bit, as you did earlier. But I do want to make it clear that I take the responsibility unwillingly.

Thank you. Did you want to further respond, Mr. Duran?

I'll let Mr. Cardona go, Mr. Chair.

Just going to respond to your question about kind of accountability to the board and reporting to them on cases. That is something we do. You heard Mr. Duran refer to the disciplinary liaisons who are two board members who are appointed as liaisons to the disciplinary system to OCTC. I meet with them on a regular basis to keep them advised of our caseloads, how those caseloads are working. And then we do do reports to the board as a whole on our metrics and statistics and how our cases are being handled. Some of that is occasionally in closed session where we discuss particular cases and then in open session the broader view of how the system is working.

There's just one follow up question to that. So do you anticipate a cultural problem? If the president of the Board of Trustees, in this case it was Mr. Miller and he's a law partner, Mr. Girardi, how would you deal with that?

I would have no problem with that because as Ms. Wilson has indicated, I don't answer to the executive director or the president of the bar. I answer directly to the board. And I would go to board members who were not that conflicted board member and report whatever I saw. You also heard reference to the new whistleblower program that's been put in place that's precisely to address that type of situation, to ensure that we have an outside avenue to allow employees within the bar to report conduct by hires up who they might not feel comfortable reporting to those higher ups. So that's something new. That was just approved by the board in response to some of the recommendations in the May report. But I think that's a very important thing to ensure. For example, one of the examples that the May report cited was an instance where there were OCTC employees who were recommending action against Gerardi, but they were overruled and ultimately fired. That couldn't happen. Now, if that happened, a complaint could be made to this outside agency to investigate what would be a traditional whistleblower or whistleblower retaliation complaint.

So they were fired by Mr. Dunn.

If I've read that well, yes, according to the May report.

And did the board know of that?

I assume that the board had to have known of it since the action was taken and it wasn't concealed action. But again, I wasn't there. I don't know precisely who knew what.

Okay. All right. Thank you very much. Appreciate it.

Thank you.Assembly Member Dixon I just have two questions, and if no one else has questions, we'll turn to the next panel in the May Report. There was an issue raised concerning Acting Director Robert Hawley. You may recall that the acting director, in reference to cases that have been referred to outside counsel because there was a conflict that Director Hawley actually ghostwrote the report. Do you recall? I see heads shaking in the affirmative, and so I don't know how many times that happened, but what's going on today to look or relook at the cases where Mr. Holly referred things to outside counsel kind of, and then actually wrote the report.

So the May Report recommended that the Bar engage in an investigation of that conduct to determine how many there were and how far it went. That investigation is ongoing. There's been an outside firm retained by the Bar to conduct that investigation. We don't yet have the results of that, but it's underway.

When do you expect the results?

That retention was done by our Office of General Counsel. So I will ask, what's the time frame?

It's an initial stages, and as you know, the bar is also facing fiscal challenges, and retaining external counsel is expensive. So we are beginning the process, and as of now, I don't have a time frame for the review.

Do you have any expectation, are you thinking a year, two years, three years?

I actually don't, because we just engaged the Counsel and we have not developed the investigative plans. However, to the extent possible, we'll be happy to keep your legislative staff apprised at the timing.

I don't want to know the terms of the engagement, but was there any time frame put on it at all?

It's not customary to include time frames, in my experience, for these types of investigations, particularly when the investigator hasn't had a chance to review all the records and develop an investigative plan. And so it would be unfair to ask of that. But it will be reviewed expeditiously and again, within the constraints of the fiscal constraints that the organization is facing. Now.

Can you give us a report in six months as to when you think that report will be complete?

Yes, we can give you an update within six months.

And then one other thing. We would like to see that report to the extent you need to redact material, we'd like to see that report when that report is complete. Is that okay?

I can raise that issue with the Board and discuss, and if there's appropriate decision made by the Board, we can certainly respond back to that. All right, thank you. If you could let us know that too, in six months.

All right. Last question is that we in the legislature have basically been accused of overstepping our balance. There's a clear separation of powers issue here because we're actually asking questions of the state bar. The state bar is a function of the judiciary ultimately responsible to the Supreme Court. Obviously, we think we have a responsibility here, and that's why we're having this hearing. And I'm very grateful for you in cooperating, I think, quite expeditiously to our inquiries in connection to this hearing. But what has the Supreme Court suggested in terms of reforms, if anything? I don't know.

Yeah, I think you've seen publicly the Supreme Court do a number of things. It's issued orders directing us to update the conflicts of interest policies that apply to the Board as well as to State Bar Court Judges. Most recently, it issued an order directing the state bar court to change a practice regarding notification of suspension attorneys required to notify their suspension status of their clients. So they've taken individual action in that direction. We've also had conversation. This is at the staff level, not with the Justices, but about this issue of oversight of the discipline system, and specifically discipline monitor or IG type of position. We, Board leadership and myself, the General Counsel and Mr. Cardona will be meeting with the Chief Justice in June. This will be our opportunity to talk very specifically about some of the reforms outlined in your background paper, as well as others that we've been talking about internally. So we've gotten formal directives via orders from the court and then more informal conversations about the need to potentially enhance the visible and direct oversight over the discipline system.

All right. Thank you, Ms. Wilson. All right, seeing no further questions or comments, we can turn to the next panel. Thank you very much. We look forward to our continuing conversation. Chair Maienschein,

Thank you very much, Chair. Umberg, we will move on to our next panel. We're running a little bit behind, so we'll kind of try to make sure we try to keep this as concise as we can. This is on proposals for reform. We've invited a number of ethics experts and others to weigh in, and this is where we're going to discuss proposals for reform to the state bar and its discipline system. As noted in the background document, more than a half dozen significant reforms may make the state bar more accountable to the public. They include revising the disciplinary system, eliminating the Bar's status as a nonprofit corporation, and modifying employment practices. These reforms are designed to make the state bar more accountable to the Supreme Court, the public, and the legislature. Our first panelists will be Professor Scott Cummings to discuss the legal ethics that should guide reforms. Then we'll hear from Anita Lee of the Legislative Analyst Office about their recent findings about the Bar's discipline system and how the state bar's annual budgetary request can be incorporated into the annual state budget process. And then finally, we'll hear from current Board of Trustee members who are focused on reforms to the state bar Arnie Sowell, Melanie Shelby, and Hailyn Chen. So, Professor Cummings, welcome. And you may begin.

Thank you. Can you hear me okay? Yes, thank you. So I'd like to start by just thanking the Assembly and the Senate Judiciary Committees for convening this important hearing and for permitting me to share these remarks on strengthening oversight for the California State Bar. I have spent the last 20 years studying and teaching legal ethics and professional regulation as a professor at the UCLA School of Law, where I hold a Chair in Legal Ethics and am the founding faculty director of the UCLA Program on Legal Ethics in the profession. I'm also a proud member of the California State Bar. So in these roles, I have reviewed and written about bar regulation and disciplinary processes nationwide, and I follow the Tom Gerardi matter closely. I'd like to take advantage of the great privilege of being here today to share some insights from research on the disciplinary system and discuss implications for the California State Bar. I think my bottom line take is that while it is certainly distressing that California now holds the dubious distinction of being a leading symbol of Bar dysfunction, the state bar has the unique opportunity, in combination with its state legislative partners, to emerge from this scandal as an innovator in regulation that institutes evidence based reforms that strengthen oversight and public protection. This hearing is clearly a step in that direction, and the Bar leaders have already indicated that they're moving in that track. In this regard, I think it's important to start by saying that although the Girardi case is stunning in the specific details of corruption, the broader regulatory weaknesses that it has revealed, lack of transparency on bar policy and practice. Over broad investigative discretion, over reliance on non public measures and lack of equity in the attorney discipline system. Are familiar to anyone who studies the bar. One consistent theme from these studies is that the bar and the Bar's reputation are in fact harmed deeply by the lack of transparency of bar discipline. This problem is not new. In 1992, an ABA commission found that, quote, secrecy in disciplinary proceedings is the single greatest source of public distrust in the Bar and the reason that, quote, prominent lawyers and law firms routinely evade discipline. In a similar vein, a 2012 study found that only one third of the public surveyed believed that the Bar did a good job disciplining lawyers, instead producing results that were viewed as, quote, too slow, too secret, and too soft. I commend the Bar for taking important steps since the Gerardi revelations toward greater openness and deeply value. The recommendations made by the background paper, the report of the board chair and chief trial counsel indicate that crucial policy changes are already being developed and implemented. They nicely track many of the proposals made in the national research on discipline and specific reviews of the California process that I want to share here. Therefore, the ideas that I offer will hopefully be a complement to some of what you've already heard, an endorsement of the excellent work already done, and perhaps food for thought for additional directions, the first idea that I would share is that complaints should be easier to file. Although there were roughly 16,000 complaints filed last year in the California state bar system and we know over 200 against Girardi, most research suggests that there are far more instances of reportable lawyer misconduct that does not get reported because of client ignorance or intimidation. More systematic public education is needed to inform consumers about disciplinary standards and processes. Most people don't know when violations have occurred and what to do about them. Information posted on Bar websites has been found to be grossly inadequate. Second, lawyers should have to report on other lawyer misconduct. In the Gerardi case, it ultimately took co-counsel suing Gerardi for his firm's financial house of cards to collapse. Of course, it's impossible to know whether mandatory lawyer reporting under the current Aba Model Rule 8.3, standard versions of which are currently being debated in California would have made a difference and ferreted out misconduct earlier. But we do know that lawyer reports, like those of judges tend to carry more weight in the disciplinary process. The third point that I would raise is one that Mr. Cardona already addressed to some degree, which is that the confidentiality of bar complaints should be revisited. In California, as in most states, complaints are confidential until there is a finding of probable cause, and there are good reasons for this. Confidentiality is needed to safeguard the integrity of investigations and to ensure that lawyers are not harmed by frivolous complaints. However, the problem revealed by the Girardi case, documented in the May and State Auditor reports, is that most cases are closed before the trial counsel referral stage, which means that multiple complaints may accumulate over the course of years without ever reaching the public view. Mr. Cardona indicated that the bar is developing practices and technology that will help address this problem, including a proposal to appoint a special counsel to review attorneys with multiple complaints pending, and I very much applaud this move. More could be done to provide the public with information about dismiss complaints. Some states do, in fact, have so called sunshine requirements that require releasing all complaint information after their dismissal, and researchers of these requirements have found that they do not produce any negative effects in terms of filing rates or lawyer consequences. As the background paper and the bar leaders that have already spoken have made clear, the policy and practices around non-public measures must also be made more transparent in this regard. It's important to just emphasize that in California, roughly 85% of cases are closed before the filing stages when charges are brought to the state barcode. In many of these cases, even though they are dismissed, lawyers are in fact issued warning letters, which we've heard about, which indicate that a lawyer has in fact violated the disciplinary rule, the one deemed to be minimal in nature. The 2022 Discipline Report found that there are roughly 600 warning letters issued per year, making it by far the most frequently used form of bar discipline. The state audit found that some of these letters should not have been issued in the first place, something that sounds like it's being already addressed. An additional issue is that even when warning letters may be appropriate, there is little evidence that the letters actually prevent future lawyer misconduct. To the contrary, there is significant evidence of lawyer recidivism after receiving such warning letters, and we don't know that, in fact, these letters address the minor concerns that they're targeted at. So the lesson from the research is that although these warning letters can be a helpful tool in a small number of cases, they should be used with great restraint. The research suggests that private reprimands or removals, in contrast, really should be eliminated. There are cases that these are cases, these private reprimand cases or approval cases in California that, by definition have resulted in a finding of significant lawyer misconduct. But there's no mechanism for the public to find out. These cases are relatively small in number in California, I think the statistics are roughly 20 per year, and there are insufficient policy justifications for keeping them from public view. There are similar concerns, again, as Mr. Cardona indicated, with settlements that result in diversion in lieu of discipline. Again, more transparency is critical here. A leading national study from 2018 found that there's little empirical evidence that diversion agreements are appropriately entered into in the first place, and virtually no evidence of whether they work to put lawyers on the right path once they're in the programs. Because many of these agreements do not have to be disclosed. Again, they raise concerns about lawyer misconduct being trapped inside the system. And these transparency concerns are connected to equity concerns. We don't know which lawyers are receiving diversion if they are more elite, better resourced, able to gain deals, less well off lawyers cannot. Which leads to the next idea, which is that sanctions should be scalable according to clear policy and procedures. Something, again, that the Bar is already seeming to move forward. As I've suggested, research on discipline in other states has shown that lawyer recidivism after low level sanctions is a significant, ongoing problem. It often takes multiple private reprimands for a lawyer to receive a public one and several public reprimands before there's more serious sanction like suspension. The problem is that when the standards for imposing increasing discipline are not clear, it gives too much discretion to Bar counsel in courts to permit problematic lawyers to avoid public scrutiny. Other states have experimented with more transparent rules in this regard. Washington and Connecticut, for example, have instituted something like a three-strikes rule requiring more serious discipline under clear guidelines. When lawyers receive three reprimands within five years, something more flexible but still clear is in order. Finally, information about sanctioned lawyers should be easier to access and disciplinary statistics more fine grained. Again, it sounds like there are important innovations in the works here. This is great, because currently the Bar website for attorney discipline is not easy to use, particularly for unsophisticated people to see bottom line results. There are some helpful ideas in the sort of beta testing stage out there, such as user friendly apps that provide clear codes or aggregate scores that indicate lawyer risk based on disciplinary record. I was pleased to hear from Chair Duran that the Bar is developing an easy to use dashboard that perhaps could facilitate this type of information sharing. I was also happy to hear that the Bar is aggressively collecting more data. This is essential to assessing the fairness and effectiveness of the system going forward. Right now, the aggregate data about cases and outcome that is reported in annual discipline reports only tell part of the story. We know that discipline is not meted out equally. A review by California in 2001 showed that although solo practitioners were roughly a quarter of California lawyers, they were subject to almost three quarters of disciplinary actions. The more recent studies Ms. Wilson referred to have highlighted race disparities. Getting good data takes resources. But for the system to address issues of equity and enforcement, information about discipline in relation to demographics and practice sites is really necessary on a year to year basis. So, in conclusion, I just want to underscore what others have said that the problems revealed by the Gerardi scandal are, at bottom, problems of the corrupting influence of wealth and power. That influence gains its scope to the fullest degree when allowed to fester under the cloak of secrecy. Again, I commend what the bar's leadership has done to provide a fuller accounting of what's happened and the important steps toward rebuilding trust. To cement and deepen these changes, I think it's crucial that they be done in partnership with and responsive to the public and the bar's legislative partners so that there are appropriate checks and balances in the system to reduce the risk of future catastrophic failures that harm the public. I leave this conversation with hope that out of crisis will come enduring change. And thank you all again for your leadership on this issue and allowing me to participate.

Thank you very much, Professor Cummings. Next we will turn to Anita Lee from the LAO. Ms. Lee.

Thank you. Good afternoon. Anita Lee with the Legislative Analyst Office. Really appreciate you having us here today. Before we hit the meat of our comments, we thought we'd start by providing a little bit of context of our role here today. So we actually work for you all. We serve as the eyes and ears for the Legislature to ensure that legislative policy is being enacted in both an efficient and effective manner. We do that in various ways. One of those ways is through our budget work annually, our analysis, our testimony and hearings, et cetera. But another way is also through either statutorily required or self initiated topics of legislative interest. And so, related to the State bar, in the past five years, we've actually conducted two statutory required reports on the State Bar at the joint request of both committees. The first report was in 2019 and was an examination of the State bar's request for a fee increase in 2020. And then the second report was submitted earlier this year and was an assessment of the State bar's proposed caseload processing standards and staffing requirements for attorney discipline cases processed by the Office of Chief Trial Counsel, or OCTC. And so our comments today really stem from our experiences in completing those two reports. So in both of the reports, we indicated that increased legislative oversight could be beneficial to ensure that the fee revenues were provided and used in a manner that was consistent with legislative expectations for State Bar operations. And so in line with that, we suggested that the Legislature might want to consider what level of oversight it wanted to exercise over state bar processes and funding and one of those examples that we gave was to consider including the State Bar as part of the annual budget process. And so committee staff thought it could be helpful if we spent a little bit of time walking the committees through how that would increase legislative oversight. And so I'm going to spend some of my comments related to that in bringing the State Bar into the annual state budget process. It would actually be treated similarly as many other state licensing departments. So for example, the State Bar would still be subject to the oversight and jurisdiction of the judiciary committees. You'd still have the authority to set fee levels, change statute to reflect policy decisions, require reporting and conduct oversight hearings. It would be very similar to the role that the Business and Professions committees have over other state licensing departments and those committees routinely conduct sunset hearings, set fee levels and engage in other policy-making decisions. But bringing the state bar into the annual budget process means that the legislature is more equipped to evaluate the funding requests as well as to monitor the use of the funds in a manner that's similar to other state departments. This allows for greater oversight of the technical aspects of the requests, to make sure that there is sufficient justification that's provided to compare them to kind of the statewide policies and also what other departments are doing and also to identify areas where particular legislative interests might be merited. So there are really five kind of key benefits that we think legislative oversight would be improved and so I'll walk through those five. So the first is since the state bar is not part of the annual budget process, it has flexibility in its budget practices and in the information that it submits to the legislature. So for example, the state bar operates on the calendar system rather than on the state's fiscal year. And the level of documentation and justification and the manner in which it's submitted is actually not the same as any other state departments. And so this can make it challenging to assess the state bar's request without first spending kind of significant time making sure that all of the parties are effectively speaking the same language, that we're using the same key terms. In the same way that we're aware of how things are documented and calculated, but also then to just how we request the information that we need to assess those proposals. So second, while the policy committees would retain their jurisdiction, the Budget Committee would also be able to examine and monitor whether or not policy decisions were being implemented and funding was used efficiently and effectively to implement those policy decisions. And so of particular concern in recent years the state bar has been able to make major policy decisions without legislative input or approval. Examples of that include the purchase of the la building starting of it projects as well as in certain collective bargaining potentially agreeing to policies that would have longer-term fiscal implications. And so the challenge with that is if it would put the Legislature in a difficult situation if those costs could not be afforded without a fee increase. So bringing the state bar into the annual budget process really provides the Legislature with an opportunity to identify some of those expenditures before they occur. But it also provides an opportunity for the Legislature to prohibit some of those or to limit or how when they are engaged in. So, for example, the Legislature can put conditions that need to be met before certain projects move forward. Third, including the State Bar in the annual state budget process can help ensure that the State Bar's decisions are consistent with statewide policies and that they're treated similarly to other state departments. So, for example, in 2019, we found that the salary increases for state bar represented employees were actually consistent with similarly situated state employees. But we also found that the state bar was actually requesting to provide more generous retirement benefits than the state provided to its employees. We also identified for the Legislature that the state bar's request to cover five years of building and it costs in a single assessment, as well as a request to adjust the annual renewal fee and the disciplinary fee annually to account for inflation, was actually inconsistent with statewide policies and raised some other concerns. Fourth, inclusion in the annual budget process could require that the state bar provide more thorough justification before changes to operations occur or before decisions are made. Since the state bar is generally able to use their funding based on their priorities without legislative approval, it can result in changes being made rapidly without necessarily thoroughly evaluating the impacts of those changes or justifying them or consulting with the Legislature on them. So, for example, in 2019, both our office and the California State Auditor's Office found that it would be premature to provide the state bar with a full complement of additional OCTC staff that the state bar was requesting. And this was because various operational changes had just been implemented and the impacts of those changes were unknown. And so subsequently, in 2021, the California State Auditor's Office actually identified that one of those recently implemented changes specifically changing OCTC trial teams from teams that specialized in certain case types to generalist teams that handled all case types actually significantly reduced case processing efficiency. Fifth, we would also note that the budget framework includes some built in tools that can be used for ongoing oversight during the year. For example, funding can be limited by provisional language or by line item budget schedules to be used for particular purpose or to insist on particular conditions being met before the funding can be actually accessed and used. The budget also includes notification requirements for when funding can be shifted to be used for other purposes and lays out the conditions for which those shifts can occur. And so this effectively provides the legislature with more tools to monitor any unexpected costs that are emerging, as well as to ensure that funding is used consistent with legislative expectations and priorities. To the extent the legislature does not include the state bar in the annual state budget process, we note that there are other ways legislative oversight could be increased that achieves some of those benefits that I talked about, and I'm just going to briefly highlight four of those in the last few minutes of my comments. So, one option is that the legislature could consider changing the existing fee structure to instead approve separate fees for particular purposes, and that would ensure that that funding was used for those legislatively desired purposes. A second option is to specifically require the state bar to seek legislative approval before engaging in certain expenditures. So, for example, before beginning an It project that potentially has costs that exceed a certain threshold or other policies that would have longer term fiscal implications. A third option is for the legislature to incorporate employee compensation guidelines that must be followed in order to inform state bar collective bargaining. And then the fourth and final option is for comprehensive and thorough performance and outcome measures to enable legislative monitoring of how funding was used, but also to help evaluate whether legislative expectations were met, whether additional policy changes are needed, and what future funding levels would be appropriate. So we'll conclude our comments there and are happy to answer questions at the appropriate time. Thank you.

Thank you, Ms. Lee. We'll take all the questions at the end. Next, we'll go to Arnie Sowell, a member of the board of trustees of the state bar, please come forward. I've just been informed we're going to take all three at one time. So also Melanie Shelby, and Hailyn Chen, all members of the Board of Trustees of the State Bar. So, welcome to the three of you.

There we go. Good afternoon, Chair Umberg, Chair. Maienschein, Members of the Senate and Assembly Judiciary committees. My name is Arnie Sowell, and I am a public non-lawyer appointee of the State Senate to the State Bar Board of Trustees. In my day job, I run Next Gen Policy, an equity and justice-focused nonprofit organization. And prior to joining NextGen, I spent almost two decades in this building as the Policy Director for five speakers. I was appointed to the State Bar about two years ago and currently serve as the Chair of the Finance Committee. Additionally, along with Trustees Shelby and Chen, I serve on the Board's three-member ad-hoc commission on our oversight and accountability reforms. I just want to thank the chairs, the members, and the staff for holding this Joint Oversight Hearing and engaging with the Board, our staff, and other experts to examine the State Bar operational, ethical and governance issues in light of Girardi, as well as other persistent shortcomings. While no entity likes to be hauled in front of the legislature for public scrutiny, I truly appreciate the opportunity to talk about the commitment of the board to public protection and the work of the ad hoc committee. Honestly, reading the litany of the bar's past problems and failures as outlined in the Committee analysis still shocks me. Even though I have lived with them for two years, they are hard to stomach and they haunt every member of the Board of Trustees. Our history is deeply troubling and our issues have been many. The May Report unearthed deep fissures of corruption that are diametrically at odds with the Board's mission of public protection. And although it really doesn't matter, the current board of trustees inherited many of these issues, took proactive actions to uncover many others, and under prior leadership was provided advice that and self inflicted other wounds. Nevertheless, I say to you, we own our failings, to you, our stakeholders and the public, though, we must own our flawed history, our future does not have to be defined by it. And the current board, and there are six members of the Board here today are united and unwavering in our commitment to right these wrongs, change our culture, restore your trust, and unequivocally adhere to our mission of public protection. To that end, here's what we've done and here's what we're doing. And some of this you've already heard. Last December, we established a special committee, the three-member Ad hoc Committee on Oversight and Accountability Reforms. This committee is charged with making recommendations to the full board on structural and other reforms to improve oversight, transparency, accountability in the discipline system, and recommend definitive actions to respond to the May Report findings about undue influence. We held our first meeting in late December, a couple of weeks after our formation, and have been meeting roughly once every three weeks ever since. Many, many hours of staff and board time have gone into this work, and over the course of numerous committee meetings and board meetings, we have considered a long list of reform proposals. As a matter of fact, many of the reform proposals that the Ad Hoc Committee has deliberated and recommended to the full Board mirror recommendations delineated in your Committee Analysis. Last week, the full board adopted a comprehensive list of ad hoc committee recommendations specifically to explore the creation of an Inspector General increase conflict of interest policies and requirements for Board Members and staff initiate conversations about becoming a part of the state budget process improve the whistleblower protection process offer statutory changes to clarify public disclosure and transparency responsibilities establish a two-year term for the board chair and advance attorney misconduct reporting requirements to the Supreme Court. My ad Hoc Committee colleagues will comment in more detail on these recommendations. But we have not concluded our work and there are still a lot more that we planned on evaluating and moving forward. Just on the Inspector General concept, clearly the Board believes that the Office of the Chief Trial Counsel should be retained at the State bar. However, the Committee deliberated whether the Board had sufficient insight into and oversight of the discipline system. And as part of our deliberations, we heard from the Inspector General of the California Prison System, as well as the head of the Office of Ethics, Compliance and Audit Services at the UC Office of the President. We concluded that the Board should establish an independent Inspector General responsible for monitoring, auditing and making recommendations regarding the performance of the various investigative and prosecutorial functions of the bar. Independence is a critical aspect of the Inspector General and given the various appointing authorities to the Board, I believe, and I'm not speaking on behalf of the full Board, that it should not report to a single entity. It should be a panel. I look forward to discussing the Inspector General reporting structure, an Inspector General reporting structure that would have generated the trust and confidence of the Legislature at the appropriate time. I know we've been here for a while and we're running over time, but in the African American church tradition, I am coming to my close. But as the Board's Finance Chair, I must comment on our fiscal situation. Simply put, we are in dire budget straits. We have implemented a hiring freeze forgone much needed it upgrades, met our labor contract requirements, raised fees, voted to sell the San Francisco building, and still find ourselves with a deficit looming and unable to fund the fundamentals necessary to improve our discipline system and implement other important fundamental programs. I think we can all agree that simply throwing more money at the Board without corresponding reforms, or instituting reforms without corresponding means to the means to fund the fundamentals is not a prudent way to proceed. Let's work together to establish the requisite policy and operational reforms needed, but also to determine the resource levels required to conduct the fundamental business of the State Bar, we stand ready to have that conversation. One of the important lessons I learned from my tenure here in the State Capitol, and there were many, is that the most meaningful and impactful policy making occurs when key stakeholders are at the table. And I just want to say thanks again to the chair, the chairs, members and staff for allowing the board and its staff to be at the table today. We look forward to working together to institute the reforms necessary to improve oversight of our discipline system and restore the trust and confidence of this body in the State Bar Board of Trustees. As I sat in the audience just very quickly listening to the line of questioning from Chair Umberg and other members on issues of follow up and accountability, I couldn't help but think, and I think I have this correct, that the CPUC under state law, is required to report annually to the Legislature in a joint public hearing. It seems like that would be a reasonable way to ensure that you're getting the accountability and the follow up that you need. And finally, I would just also just like to thank Pro-Tem Atkins for appointing me and Greg Knoll to the State Bar and believing that our skill sets could be of value in helping to initiate reforms and deliver on the bar's mission of public protection. And I'll now hand it over to my colleague, Hailyn Chen.

Good afternoon, chairs and members of the committees. My name is Hailyn Chen. I am a member of the State Bar board of trustees. I was appointed by the California Supreme Court. As has been mentioned, I'm one of the three members of the Ad Hoc Committee on Oversight and Accountability Reform. I'm also one of the discipline liaisons. So you've heard that term mentioned a bunch of times. Today we have two discipline liaisons that oversee and monitor the work of the Office of Chief Trial Counsel. One of those members is here today in the audience. He arrived a little bit late, but Mark Tony, one of our members of the Board, is out here in the audience. He's one of the discipline liaisons to the Office of Chief Trial Counsel. I, together with Greg Knowle, am one of the two Discipline Liaisons to the Rule 22 One program, the Special Disciplinary Trial Counsel, which is the Conflicts Council. When cases are conflicted out of the Chief Trial Counsel's office and get sent to outside counsel, those go to this, what we call the SDTC or Rule 22 One Program. I'm one of the discipline liaisons and I want to mention briefly some of the reforms that we are undertaking with that program. I have to agree with so many of the comments made today. The failings of the State Bar has shattered public trust. I take that very seriously. I take that seriously as a member of the board. In my day job, I am the co-managing partner of Munger, Tolles & Olson, a 200 member law firm based in Los Angeles. We take integrity and ethics of the highest order very seriously. We understand it's going to take time to rebuild public trust, and we're grateful for this opportunity to work together with the legislature to do so. As Professor Cummings mentioned, it's important that reforms are responsive to the needs of the public. We are here to make sure we protect the public, and we're grateful for the insights that have been provided by the Legislative Analyst Office. I took a look at that report on the SB 211 case processing standards. We're grateful for the insights provided by the State Auditor Report and in the background paper for this oversight hearing. We as a Committee are going to take all of those to heart and continue to recommend reforms to the full board. One of the things that we heard today is this idea that there's been a cover up. And absolutely how could there not have been for that conduct to have gone on for so long? We failed. And in response to that, the board has approved a new whistleblower program administered not by us, not by the State Bar, but by the California Department of Justice, so that when people see something going on that's wrong, they have someone outside the State Bar to report it to who can investigate and address it. Another thing that we heard about is strengthening conflicts of interest policies. And the questions from Senator Umberg and from Assembly Majority Leader Gomez Reyes, they really spoke to the need for more work. We need to be able to answer the question of who is responsible? Who in the organization is accountable for form 700, who in the organization is responsible for strengthening conflicts of interest policies? We will make sure we have an answer to that. One of the things that we are doing, and the last thing I will mention is on the 22 One program, the Special Disciplinary Trial Counsel, that's the Outside Conflicts Council, we're taking steps to make sure that their conflicts policies align with the policies and procedures that the Office of Chief Trial Counsel is putting in place. Most recently, the Special Deputy Trial Counsel Administrator issued policy directives to ensure that conflicts of interest were being checked on. When cases get sent out to these Special Deputy Trial Counsel, and they're working on cleaning up the data and to address the errors that were identified in the State Auditors Report, we take these reforms very seriously. They matter to me. As a board member, as an attorney, and as the leader of Munger, Tolles and Olson. We really welcome further input and look forward to working together with the legislature on these important reforms. And with that, I'll turn it over to Miss Shelby.

Good afternoon. My name is Melanie Shelby, and I am not an attorney. I have spent the last 25 years as a serial entrepreneur, a small business advocate and a corporate executive. And I come to you today as a gubernatorial appointee. In December of 2020 I was appointed with Trustee Mark Tony. Public Trust is important to me. Oftentimes as I sit in our State Board meetings, I'm always the one that talks about optics, narrative and relationships. And so we are here today, I think Arnie started out the comments with unwavering United and committed and we are unwavering united and committed to getting it right. One of the newest things that I want to bring to you. I also chair the audit committee, one of the newer roles in relation to reform that we did not get a chance to talk about. And I'm pulling up my phone. Here is if you go to the website of the State Bar right there in the banner, it talks about the public trust liaison. And so of course that is at California Gov. But that role becomes very important because that is the public's opportunity to interact with an individual who has the opportunity to steer them through conflicts and challenges and be proactive and independent and impartial and confidential. And what is so wonderful about the gentleman who was in this role is that he has spent over 15 years, I believe collectively at the State Bar from answering the phones to working in OCTC. So he has a really true complement of the organization and really being able to steer people in the right direction. The other piece that I want to talk about and my colleague, Trustee Chen, accountability, respectfully, member Reyes, talked about who was accountable. We are accountable as the board of trustees. I mean, the buck truly starts with us. And so I appreciate the comments that were made today in terms of who is accountable. But it's the Board of Trustees, accountability, all three of the leaders at the State Bar report directly to the Board of Trustees. And so we have to figure that out. So I accept responsibility for that on behalf of our colleagues today in the inability of answering that question quickly. You know, it's interesting, you've heard from the LAO, you've heard from Mr. Cummings. We want to be a part of the state budget process. Actually last week in our legislative priorities at our board meeting that was something that was discussed and talked about and so we absolutely welcome that and appreciate the LAO's report. The other thing that I want to underscore in the interest of time is we need help. Relationships require help. A, we need to get it right. B, we need to restore public trust. But the other piece is this with accountability and transparency, we understand that they are essential and there is no flexibility in either area. We also understand that we have to be committed to our core mission because that is critical to rebuilding trust. But we need your help. We need your help to get it right and make it happen. And how does that happen? How do we get your help as it relates to an Inspector General position, as it relates to the Client Trust Accounting Protection Program how it relates to reducing racial disparities? It's through a funding increase. That's how we need your help. And it would be wonderful to be able to this funding increase would allow us to address the need of funding stability and then predictability, which is what the LAO talked about as it relates to us being engaged in the funding process. Also, we need your help as it relates to moving forward while holding the state bar accountability accountable excuse me to fully addressing past challenges. I feel like I've just kind of run through everything in the interest of time. But I hope the message is clear is that we come here in partnership. We have an incredible board. I was brought to the organization to really share. I've had the opportunity to sit on a tremendous amount of boards. And I am not an attorney, but I feel honored and privileged to serve with the people that are sitting here with me and with the people who are behind me in this room because we are committed to getting it right. And so we want to thank you today for your time. I also want to say thank you to the staffs of both the judiciary staff on both sides because you all have kept the door open in terms of making sure that we are transparent and that we are accountable and that we get it right. And so I want to thank you.

Thank you. I will just make a quick observation. The three of you were particularly refreshing. So I really do I want to say thank you for your testimony here today. That was refreshing. It's really the word I'm going to use, so thanks. And I also, too I think I mispronounced your last name, Mr. Sowell. I get it right, yet I'm Maienschein, so I get a little leeway because I've always heard my name mispronounced, but that's correct.

Thank you for your testimony. I also know I've had the opportunity to work with Mr. Knoll in my past life work and he's excellent too. So I'm really pleased to hear that he's also working on this and the work you're doing. The la o's office. Thank you. Do we have any questions or comments from the committee I know we're running? Mr. Niello?

Seems to me the Board of trustees is really key in everything that we're talking about here. And I'd agree with the comment. These are refreshing comments from people obviously very self responsible. So we've got sort of three classifications of members of the board of trustees. We have attorneys who are supported by appointed by the Supreme Court, two attorneys appointed by the legislature. And the report indicates six public members. It doesn't say who appoints them or who selects them. But my question is, number one, from where does the Supreme Court get candidates for them to suggest an appoint to the Board of Trustees? And they're probably largely from larger firms, as Ms. Chen is, but are there sole practitioners among that group? And number two, from where does the legislature gather its candidates for its appointments? And the third is from where do the public members come? Do they apply and who appoints them? And what's the sort of procedure and rationale for appointing them.

If I may?

Sure, Ms. Chen.

I think I can answer the question as it relates to Supreme Court nominees and there is a committee that vets them and makes recommendations to the Supreme Court on folks who apply or who are nominated. My understanding is that the Supreme Court does strive to have a diversity of views and backgrounds represented amongst the appointees. As Chair Duran mentioned, we currently do have a solo practitioner attorney Supreme Court appointee on the board right now, Mr. Mark Broughton. We have government lawyers. So it's not accurate to say that it's all big firm lawyers. I believe I may be the only big, big firm lawyer. And so there are diversity views, there are government lawyers. The State Bar does provide a matrix to the board that shows the geographic distribution, the expertise, the types of law practices that the various current board members have, and that's to ensure that the Supreme Court can make sure their appointments reflect a diversity of backgrounds and viewpoints.

I was interestingly enough, I was approached by one of your former colleagues, Senator Holly Mitchell. I never even knew the State Bar existed, had no interest in coming to the State Bar, and through her recommendation, found myself in conversation with the Governor's Office. And quite honestly, I share this story. So I don't think I'm speaking out of turn. I said, absolutely not. I don't think that I'm duly tasked for that. But I shared that I've spent a career fixing, building and connecting. And it has been an actual pleasure, an absolute pleasure, to be able to bring those skill sets to bear. I also serve my colleagues from the Governor's Office are Mark Tony, who is the Executive Director of the Utility Ratepayer Network, and then also Jose Cisneros, who serves his day job as the treasurer of the City and county of San Francisco. Currently, there is a vacancy as it relates to a gubernatorial appointee. The other piece that I would add, Mr. Niello, is that I also serve as the appointment, one of two appointment liaisons. And so the same diversity that we ensure to now reflect on the Board of Trustees is what we aim for as it relates to the commissions and the sub entity appointments that we make. And I believe it's about 14 to 16. And so my colleague behind me, the Vice Chair of the Board, Mr. Brandon Stallings, who is from the Central Valley, and I am from here in Northern California, Sacramento, to be exact. We have the honor to make recommendations, go through the applications, and we look for geographic diversity. We look for ethnic diversity, orientation, professional diversity, socioeconomic diversity, because those things are important, particular as the person who was there to protect the public interest. So thank you.

So who does appoint the public members? You mentioned three from the governor, so.

The Governor appoints four. And then I'll turn it over to my colleague.

Both the Senate and the assembly each have one as well, one public member each that gets appointed. And I'll just comment to you, Mr. Neelo, that I work for Pro-Tem Atkins. When she was I was on her staff when she was a speaker. In relatively short order, I did not, similar to Melanie, come looking for this. She came looking for me. And it's hard to say no to the Protem when she asked you to do something.

And what are the term limits.

Four years. I'm sorry, sir. I'm sorry. I apologize. One four year term.

One four year term.

And that's all.

Yes, sir.

You can be reappointed. Our colleague, Mr. Cisneros, was recently reappointed.

Sequentially, or do you have to go off the Board for a period of time?

It can be sequentially.

And is there a limit of terms.

That I'm uncertain there is for Supreme Court appointees? I believe there is a limit of two terms.

But we can get that answered for you, sir.

Okay, thank you.

Any other questions, comments? Senator Umberg, did you have?

Thank you, Chair Maienschein. Just a couple of comments and a question. First, with respect to fees, and this is a question to some in the audience as well. Chair Duran and I have had a number of conversations as well as others concerning increasing the bar dues. The bill this year is in my hands. I don't believe that there's a member of the legislature who is interested in increasing bar fees. That doesn't mean that's forever. It means that both as to the general public as well as to members of the profession, there is a crisis of confidence. There's a crisis of confidence even within the profession. And so we need to as a member of the profession, we need to correct that, number one. Number two, the question is that this is a unique organization, the state bar. I don't think there's any other organization that exists like this in the state because, as I've indicated before, there are dual. You respond to the profession, you respond to the Supreme Court. In addition to the legislature, the Supreme Court can also authorize fees. In addition to fees, I'm wondering if there's been made a request to the Supreme Court to increase dues. I don't know. Perhaps Chair Duran or Ms. Wilson might know. I think you're going to have to approach the microphone.

There's been no formal request. No, but through the staff level communication, we have discussed the idea of a special assessment as you know, in the past when that's occurred, that's when the legislature has not authorized a fee at all. So I think this would be a fairly unique circumstance where we might get the base fee, but then seek a special assessment from the court. But there have been staff level discussions with that.

I assume you're not advocating that we not authorize any fees in order to let the Supreme Court decide what that should be.

I'm not. I'm just noting that that's something that's come up is the uniqueness of the potential circumstance.

All right, so let me also conclude by thanking all of you. I think it's wonderful that we have public members here who can give us a different perspective on our responsibilities and how we're viewed by the general public as well as members of the profession. I want to also thank the staff, staff member Amanda Matson on the Senate side. And I know that your staff, also Chair Manchein, Alison Merlies and others have devoted a tremendous amount of time and attention to this hearing. I'm grateful for your participation and I look forward to continuing conversations. I'll take your suggestion that we do this on a periodic basis. I know the State Bar would really enjoy that. So all right, thank you very much.

Thank you very much...

Thank you.

I apologize. Before we adjourn, we do want to open it up. We have public comment on the agenda. So I apologize. Yeah, please approach. You were so patient. I could never forgive myself if I thank you.

I did drive 3 hours to do it, so I'm Benjamin Kohn, I'm a disability rights attorney from Mountain View. And you heard and just addressed the request for funding. I think that residual boondoggles aside, they probably do need more funding, but it should be conditional. There's a lot of issues that need statutory oversight as a condition of getting that funding reapproved increased or whatnot. One I particularly wanted to address is testing accommodations. They will tell you that they are addressing it, that they have a rules revision initiative in progress out for public comment. But that is belied by two problems. One, the rules revision initiative, even its current form, does not address most of the problems, such as response times and deadlines to seek appeal that provide procedural equal opportunity even when all the accommodations are granted, among other procedural issues that I believe currently violate the ADA. And the other problem is that even that was a response of hundreds of people from about, I think, 78 organizations or groups or coalitions, a public comment opposing the initial genesis of the rules revision initiative of admission, staff trying to use that as a pretext for things that would reduce their workload. And the original version had actually made the rules revision, the rules even more discriminatory. It's also undermined by the fact that as this revision is being done, the State Bar is in the 9th Circuit challenging the constitutionality of the Ada and saying that it does not require any procedures as to timelines for. Granting making a decision on a request, how much explanation must be given about the reasons for a denial, what procedural requirements are in place to receive requests, and how the request decision making should be adjudicated internally, which a belief about the ada is really reflected in the current rules and in the continuing defects in the rules that are out for public comment right now. And I hope that there will be statutory directives, such as codifying some of the procedural reforms into the fee bill or the State Bar Act or however that should be done, and by clarifying that California civil rights law applies to all public entities, including the Unruh Act. Thank you.

Thank you. Any other members of the public wish to speak?

Rebecca Marcus, representing the Consumer Protection Policy Center at the University of San Diego School of Law. I was looking forward to just letting Professor Felmuth know that I wasn't allowed to make public comments. I will highlight several of our recommendations to improve the State Bar's protection of the public to now and then provide further comments, written comments to the Committee. We recommend that the bar puts in place interim remedies for cases that will likely take 90 days or more to complete. Such remedies should include requiring an accountant to handle monetary funds connected to questionable spending and concealment of client funds. In the Gerardi case, this would have meant hundreds of thousands of dollars going to intended beneficiaries rather than to counsel. Other remedies could include the assignment of an independent counsel. If the subject matter is complex and competence is at issue, there's a myriad of other possible remedies that may sway continuing harm from negligent practice. While the bar's investigation is underway, we recommend identifying all counsel with multiple serious complaints. These repeat offenders should be subject to a coordinated wholesale inquiry. Based on earlier testimony today, it appears that these efforts are already underway at the State Bar. The legislature has rightly blamed the State Bar for many failures. However, unless they provide adequate resources, we can't expect much improvement. When Professor Felmouth served as a discipline monitor, the annual fee for attorneys was approximately $410.30. Years later, it is essentially the same. Mere inflation would bring that to $900. Whether it's through a license fee or general fund, we have no opinion as long as the increase is earmarked for enhanced discipline. And finally, we support the recommendation that was brought up today by Assembly Member Pappin. She asked a question about MCLEs. We think that attorneys should be required to have MCLE credits in their area of practice, so family law attorneys should have credits in family law, bankruptcy, et cetera. So we look forward to continued conversations. Thank you.

Thank you. I'm please let my friend Professor Felmouth know I did not screw up public comment, so I don't have. To hear from him with that. I don't see any other members of the public that wish to speak. Seeing none now I think we're safe. Mr. Chairman, on behalf of the Senate Judiciary and the Assembly Judiciary in concluding today's meeting, thank you all for attending.