State Bar of California:
It Can Do More to Manage Its Disciplinary System and Probation
Processes Effectively and to Control Costs
July 2009 Report 2009‑030

CALIFORNIA
S TAT E A U D I T O R

The first five copies of each California State Auditor report are free. Additional copies are $3 each, payable by
check or money order. You can obtain reports by contacting the Bureau of State Audits at the following address:
California State Auditor
Bureau of State Audits
555 Capitol Mall, Suite 300
Sacramento, California 95814
916.445.0255 or TTY 916.445.0033
OR
This report is also available on the World Wide Web http://www.bsa.ca.gov
The California State Auditor is pleased to announce the availability of an on‑line subscription service. For
information on how to subscribe, please contact the Information Technology Unit at 916.445.0255, ext. 456,
or visit our Web site at www.bsa.ca.gov.
Alternate format reports available upon request.
Permission is granted to reproduce reports.
For questions regarding the contents of this report,
please contact Margarita Fernández, Chief of Public Affairs, at 916.445.0255.

Elaine M. Howle
State Auditor

CALIFORNIA STATE AUDITOR

Doug Cordiner
Chief Deputy

Bureau of State Audits

555 Capitol Mall, Suite 300

S a c r a m e n t o, C A 9 5 8 1 4

July 21, 2009	

916.445.0255

916.327.0019 fax

w w w. b s a . c a . g o v

2009-030

The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California  95814
Dear Governor and Legislative Leaders:
As required by Chapter 342, Statutes of 1999, the California State Auditor presents this audit report concerning
the State Bar of California’s (State Bar) disciplinary system, discipline costs, cost recovery efforts, probation office,
and responses to internal and external reviews. This report concludes that the State Bar’s costs for its attorney
disciplinary system, which account for nearly 80 percent of the State Bar’s general fund expenditures, escalated
from $40 million to $52 million from 2004 through 2008. Despite the rising costs, the number of disciplinary
inquiries that the State Bar opened declined. Because of the way the State Bar tracks its discipline costs, it cannot
fully measure the efficiency of its disciplinary system. Specifically, it does not account for its expenses by key
disciplinary function, such as investigations and trials. Additionally, because of the way the State Bar tracks the
time it spends to close investigations, it was unaware that, instead of the decreasing trend it had been reporting
in this area, its investigative case processing time has actually increased over the past five years. Moreover, the
State Bar has not reported its backlog consistently and has not included all pertinent information, and is therefore
limiting stakeholders’ and the Legislature’s ability to measure the effectiveness of its disciplinary system. We also
observed that by making some relatively simple changes to its billing procedures and conducting a cost-benefit
analysis of collection efforts, the State Bar could offset some of its discipline costs. Further, the State Bar’s probation
office could increase its ability to effectively monitor the growing number of probation cases by ensuring that its
staff have reasonable workloads.
The State Bar has received many recommendations as a result of internal and external reviews of its operations but
has not fully attended to some of these recommendations. For example, even though a consultant’s 2007 review
identified weaknesses in the State Bar’s cost recovery process, the State Bar has not yet fully implemented some
of the review’s recommendations. The importance of fully correcting internal control weaknesses was highlighted
subsequent to the consultant’s review when the State Bar discovered an alleged embezzlement of almost $676,000
by a former employee. Further, even though the State Bar formed an audit and review unit in 2004 to periodically
audit discipline cases, the State Bar does not have a formal process in place to ensure recommendations resulting
from these reviews are implemented. Additionally, as part of our current audit, we reviewed the State Bar’s
response to the 10 recommendations made in our April 2007 report titled State Bar of California: With Strategic
Planning Not Yet Completed, It Projects General Fund Deficits and Needs Continued Improvement in Program
Administration (2007-030). We determined that the State Bar fully implemented seven and partially implemented
three of these recommendations. While the State Bar improved its strategic planning efforts as we recommended,
work remains in reducing its discipline case backlog, improving cost recovery efforts, and adhering to internal
policies related to discipline case processing.
Respectfully submitted,

ELAINE M. HOWLE, CPA
State Auditor

State Bar of California:
It Can Do More to Manage Its Disciplinary System and Probation
Processes Effectively and to Control Costs
July 2009 Report 2009‑030

California State Auditor Report 2009-030

July 2009

Contents
Summary	

1

Introduction	

9

Chapter 1	
The State Bar of California Should Better Manage Its Discipline Costs	

19

Recommendations	

40

Chapter 2	
The State Bar of California Could Improve Its Cost Recovery Efforts	

41

Recommendations	

48

Chapter 3	
An Increasing Workload and Inadequate Staff Levels May Undermine the
State Bar of California’s Monitoring of Attorneys on Probation	
49
Recommendations	

55

Chapter 4	
The State Bar of California Could Increase Its Effectiveness by Fully
Addressing Internal and External Review Recommendations 	

57

Recommendations	

66

Response to the Audit
The State Bar of California	

69

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

79

vii

California State Auditor Report 2009-030

July 2009

Summary
Results in Brief
As a public corporation established by the California Constitution,
the State Bar of California (State Bar) administers a system
for disciplining attorneys who have failed to adhere to their
professional responsibilities. The costs for the disciplinary system,
which account for nearly 80 percent of the State Bar’s general
fund expenditures, escalated from $40 million to $52 million
from 2004 through 2008, while the number of disciplinary inquiries
that the State Bar opened declined. During the same five years,
the State Bar experienced noticeable increases in salaries, in the
number of cases sent to trial, and in the time necessary for staff to
process cases. However, because of the way that the State Bar tracks
its discipline costs, it is difficult to determine the efficiency of its
disciplinary system.
For example, the State Bar cannot easily measure its efficiency
or identify where it might be able to reduce its discipline costs
because it does not track its expenses by key disciplinary function,
such as investigations and trials. Further, although the State Bar
believes that salaries are a primary driver of the overall increase
in discipline costs, it is not able to break down the salaries by
each of its disciplinary functions. As a result, neither we nor the
State Bar is able to evaluate whether the salaries are the cause of
increased discipline costs of a particular function or whether it
may indicate inefficiency. Further, because the State Bar does not
track its discipline costs by function, it cannot determine whether
a policy change has a positive or negative effect on its expenses.
For example, while the number of overall cases declined, the
number of discipline cases proceeding to trial in the State Bar Court
rose from 65 in 2004 to 127 in 2008, nearly a 95 percent increase.
This trend is consistent with the change in policy in response to
a 2005 California Supreme Court case that criticized the State
Bar for failing to follow all of its own standards for disciplining
attorneys who have repeatedly violated professional and legal
standards. Nonetheless, administrators at the State Bar cannot
demonstrate that part of the surge in discipline costs relates to
changes in policy because its accounting methods do not correlate
costs with particular functions within the disciplinary system.
Contributing further to this problem is the fact that the State Bar’s
offices in San Francisco and Los Angeles calculate discipline
costs differently.
Moreover, the increases in case processing times may prevent the
State Bar from fulfilling its mission to protect the public because
some attorneys who are targets of complaints and whose cases are
moving through the disciplinary system will continue practicing law

Audit Highlights . . .
Our audit of the State Bar of California
revealed the following:
»» The costs of its disciplinary system
have escalated by $12 million from 2004
to 2008, while the number of disciplinary
inquiries opened has declined.
»» It cannot measure its efficiency or
identify where to reduce costs because
it does not track expenses by key
disciplinary function.
»» Its offices in San Francisco and Los Angeles
calculate discipline costs differently.
»» Because of the methodology it uses to
calculate the average time it spends to
close investigations, it reported a decrease
of 11 days from 2004 to 2007 when the
average investigation time has actually
increased by 34  days.
»» Relatively simple changes to its billing
procedures would probably yield
additional revenue that could offset some
of its increased discipline costs.
»» Its probation office’s workload has
increased from 791 cases in 2004 to
867 cases in 2008, yet the number of
probation deputies was only recently
increased by one.
»» It discovered an alleged embezzlement of
nearly $676,000 by a former employee
and is taking measures to strengthen its
internal controls.
»» It still needs to fully implement
recommendations made in a consultant’s
report, in the periodic audits conducted by
its internal audit and review unit, and in
our prior audit.

1

2

California State Auditor Report 2009-030

July 2009

longer than necessary. However, because the State Bar tracks the time
that it spends to close investigations by averaging the number of days
it took to close every investigation from 1999 through the most recent
year, it was unaware that the decrease in the average time that it took
to investigate a case from 197 days in 2004 to 186 days in 2007 that
it reported in its annual discipline report was not entirely accurate.
Rather, our review indicated that investigation time has actually
increased from an average of 168 days per case in 2004 to 202 days
in 2007.
Further, the State Bar does not include complete backlog
information in a consistent manner to allow for year‑to‑year
comparisons when it reports to the Legislature. Specifically,
although the State Bar excludes several different types of
disciplinary cases in its calculation of backlog, it does not always
identify these omissions in its annual discipline report. For example,
the State Bar does not identify how many cases that it designates as
complex. This information would be helpful because, even though
state law requires reporting all complaints over six months old,
the State Bar does not consider complex cases backlogged until 12
months after receipt of the complaint and considers noncomplex
cases backlogged after six months. Further, it has periodically
changed the types of cases that it includes, which makes
year‑to‑year comparisons difficult. By not reporting consistently
and not including all pertinent information, the State Bar is
limiting its stakeholders’ and the Legislature’s ability to measure the
effectiveness of its disciplinary system.
The State Bar also needs to make changes to its billing procedures
and its tracking of cost recovery. State law authorizes the State Bar
to recover only certain costs associated with disciplining California
attorneys found culpable during the disciplinary process. However,
although the State Bar billed about $1 million in discipline
charges in both 2007 and 2008, it only collected $550,000 and
$766,000 in those respective years and the vast majority of these
amounts represent collections from various earlier billing years.
The State Bar is unable to evaluate the effectiveness of its cost
recovery efforts because it does not track how much it expects to
receive annually.
Further, relatively simple changes to the State Bar’s billing
procedures would likely yield additional revenue that it could use
to offset some of the recent increase in discipline costs. The State
Bar’s weak cost recovery efforts occurred partly because it has not
adjusted since 2003 the formula it uses in billing attorneys to defray
their discipline costs and partly because it does not consistently
include due dates on discipline bills. In addition, the State Bar is
hiring out part of its collection efforts, but paid more in fees and
reimbursements to an outside collections attorney in one recent

California State Auditor Report 2009-030

July 2009

year than it received in collections. Conducting a cost‑benefit
analysis of its current efforts to collect on discipline bills could help
the State Bar to identify more cost‑effective alternatives for its cost
recovery efforts.
The State Bar also needs to analyze the staff workload in its
probation office, which has seen the number of cases rise
from 791 in 2004 to 867 in 2008, or nearly 10 percent, a situation
that created a workload that is difficult for its staff to successfully
manage. Specifically, at the end of 2008, the caseload for each of
the four probation deputies averaged 217. The attorneys subject to
probation are most of those who receive a type of discipline that
does not entail disbarment, and they must comply with specified
probation conditions that probation staff monitor. In most
circumstances, attorneys are still able to practice law during their
probationary period, which typically ranges from one to five years. If
an attorney fails to meet the terms of probation, the probation office
can either revoke the attorney’s probation or report the violation to
the Office of the Chief Trial Counsel for disciplinary prosecution.
Under the State Bar’s 2008 Long‑Range Strategy, the probation
office now attempts to protect the public by making referrals within
30 days of a violation. However, inadequate staffing levels may be
hindering the probation office’s ability to meet this goal.
The probation office believes that it is understaffed, but it has not
determined the appropriate caseload for each probation deputy to
monitor probationers effectively, nor is it sure whether a recently
approved probation deputy position will fulfill its needs. In our
review of 18 initial letters from probation case files, we identified
several case processing delays that could have occurred because of
inadequate staffing. Specifically, in eight cases, the probation office
did not send initial letters reminding disciplined attorneys about
the terms of their probation within the required seven days. Further,
in four of these cases, the probation office did not inform attorneys
of their probationary conditions until some of the conditions were
already past due. Additionally, for five of 11 cases we reviewed
that were referred to the Office of the Chief Trial Counsel for
a probation violation, probation deputies took between 96 and
555 days to make these referrals. In 2008, in an effort to increase
the timeliness of referrals, the probation office set a goal of making
referrals within 30 days of the violation. However, the probation
office later reported that it met this goal only 15 percent of the time.
Because attorneys are often still able to practice law during their
probationary period, unnecessary delays in referrals for violations
may allow errant attorneys to continue to practice law and represent
clients despite being in violation of the terms of their probation.

3

4

California State Auditor Report 2009-030

July 2009

The State Bar has missed opportunities to increase its effectiveness
because it has received many recommendations in internal and
external reviews of its operations, but has not fully attended to
some of them. For example, the State Bar received a consultant’s
report in October 2007 on its cost recovery processes. This review
identified several areas of high risk related to internal control
weaknesses in the oversight of cash receipts, some risks of data
discrepancies, and insufficient reconciliation processes. The State
Bar expected that its implementation of a new cost recovery
system would address these weaknesses. However, it is still in the
process of implementing the new system. The importance of fully
correcting internal control weaknesses was highlighted subsequent
to the consultant’s review when the State Bar discovered an alleged
embezzlement of nearly $676,000 by a former employee. The State
Bar’s chief financial officer told us that an employee was able to
reorganize and consolidate the process of invoicing building tenants
and receiving payments, which enabled the employee to intercept
rent checks and divert them to a personal account. In response
to this event, the State Bar contracted with an outside auditor to
evaluate the internal controls over the specific area in which the
alleged embezzlement occurred and other processes throughout
the State Bar. According to the chief financial officer, the State
Bar has already implemented some changes to its procedures and
plans to implement other recommendations once the auditor’s work
is complete.
In addition to addressing the recommendations from external
reviews, the State Bar needs to use the results from internal reviews
more effectively. Although it formed an audit and review unit
in 2004, the State Bar does not have a formal process to ensure that
recommendations identified by its periodic audits of disciplinary
case files are implemented in response to the unit’s concerns.
The audit and review manager stated that unit managers address
concerns less formally, such as discussing issues with their
employees. However, our review of the unit’s summaries of audit
results noted recurring deficiencies, suggesting the need for a
more formal process of ensuring corrective action. For example,
we found that because of repeated errors in following certain case
processing procedures, the unit recommended the same training
for investigators in the two most recent summaries.
Our April 2007 report, titled State Bar of California: With
Strategic Planning Not Yet Completed, It Projects General
Fund Deficits and Needs Continued Improvement in Program
Administration (2007‑030), included 10 recommendations to
the State Bar. In response to that audit, the State Bar has fully
implemented seven recommendations related to improvement of its
strategic plans and tracking and monitoring grant recipients under
its Legal Services Trust Fund program. However, the State Bar has

California State Auditor Report 2009-030

July 2009

only partially implemented the remaining three recommendations
related to improving its disciplinary system, including improving its
cost recovery efforts by entering Client Security Fund and debtor
information into its new disciplinary debtor database, reducing
its backlog of outstanding discipline cases at year‑end, and only
intermittently adhering to internal policies such as using checklists
and performing random audits. Finally, we recognize that the
State Bar updated its strategic planning efforts to comply with our
recommendations; however, we also note that the Information
Technology Strategic Plan (IT plan) cannot be fully implemented
without additional resources.
Recommendations
To explain and justify cost increases, and to measure the
efficiency of its disciplinary system as well as the impact of policy
changes, the State Bar should account separately for the expenses
associated with the various functions of the disciplinary system,
including its personnel costs. This can be accomplished through
a study of staff time and resources devoted to a specific function.
The State Bar should also ensure that its various offices track
expenses consistently.
To make certain that the State Bar provides accurate and complete
descriptions to its various stakeholders so they can evaluate the
effectiveness of its disciplinary system over time, the State Bar
should do the following:
•	 Adjust its methodology going forward for calculating case
processing times for investigations so that the calculations
include time spent to process closed and forwarded cases
for the relevant year only. For example, for its 2009 annual
discipline report, the State Bar should report the average
processing time for only cases it closed or forwarded to the
State Bar Court in 2009.
•	 Include additional information regarding backlog in its annual
discipline report to the Legislature. Specifically, the State Bar
should identify the number of complex cases over 12 months old
in its backlog.
•	 Identify in its annual discipline report the types of cases that it
does not include in its calculation of backlog and explain why
it chooses to exclude these cases. Specifically, the State Bar
should identify that it presents its backlog by case rather than
by member, and that it does not include intake, non‑attorney,
abated, and outside examiner cases.

5

6

California State Auditor Report 2009-030

July 2009

•	 Identify the composition of each year’s backlog to allow for
year‑to‑year comparisons, as the law requires.
To ensure that it maximizes the amounts that it may recover to
defray the expense of disciplining attorneys, the State Bar should
update annually its formula for billing discipline costs and include
due dates on all bills. Additionally, to report accurately its collection
amounts and to analyze the effectiveness of its collection efforts,
the State Bar should compare what it expects to collect against how
much it actually collects in payments for discipline costs each year.
To make sure that it is using the most cost‑effective methods
to recover discipline costs, the State Bar should complete a
cost‑benefit analysis to determine whether the benefits associated
with using collection agencies outweigh the costs. If it determines
that the collection agencies are, in fact, cost‑effective, the State Bar
should redirect in‑house staff to other disciplinary activities. Finally,
the State Bar should also research the various collection options
available to it, such as the Franchise Tax Board’s Interagency
Intercept Collections Program.
To fulfill its responsibility to protect the public and its mission
to assist attorneys to successfully complete the terms of their
probation, the State Bar should ensure that it effectively
communicates with and monitors attorneys on probation by doing
the following:
•	 Continue its efforts to determine the appropriate caseload level
for its staff to effectively monitor probationers and adjust staffing
as appropriate.
•	 Ensure that staff comply with procedures for promptly sending
initial letters reminding disciplined attorneys of the terms of
their probation.
To make certain that it does not create a perception of favoritism or
leniency, the State Bar should increase compliance with its goal to
improve timeliness and consistency of probation violation referrals
to the Office of the Chief Trial Counsel. If the State Bar believes
instances occur when probation staff appropriately deviate from the
30‑day goal, it should establish parameters specifying time frames
and conditions acceptable for a delay in the referral of probation
violations and clearly document that such conditions were met.
To ensure that it has adequate internal controls in place, the State
Bar should fully implement recommendations from audits and
reviews of the State Bar and its functions. Further, the State Bar

California State Auditor Report 2009-030

July 2009

should ensure that its new cost recovery system and related
processes fully address the issues identified in the consultant’s
2007 report on its cost recovery process.
To improve its effectiveness, the State Bar’s audit and review unit
should establish a formal process to follow up on and ensure
implementation of recommendations from its twice‑yearly audits.
The State Bar should continue acting on recommendations from
our 2007 report related to the following:
•	 Continue its efforts to enter all of the Client Security Fund and
disciplinary debtor information into its database.
•	 Take steps to reduce its inventory of backlogged cases.
•	 Improve its processing of disciplinary cases by more consistently
using checklists and performing random audits.
To ensure that it can justify requests to fund the remaining
information technology upgrades, the State Bar should follow
its IT plan.
Agency Comments
The State Bar generally agrees with most of our recommendations
and states that it will take corrective action to address them.
However, the State Bar did not specifically agree or disagree with
two of the recommendations related to establishing parameters
for referring probation violations and for consistently using
checklists for discipline case processing.

7

8

California State Auditor Report 2009-030

July 2009

Blank page inserted for reproduction purposes only.

California State Auditor Report 2009-030

July 2009

Introduction
Background
The State Bar of California (State Bar), established by the California
Constitution, is a public corporation within the judicial branch of
government for the State of California (State). The law requires that
every person admitted and licensed to practice law in California
belong to the State Bar unless the individual serves as a judge in a
court of record. According to its Web site, with a membership of
more than 217,000 attorneys, the State Bar is the country’s largest.
Commonly referred to as the State Bar Act, Division 3, Chapter 4, of
the California Business and Professions Code specifies the
State Bar’s responsibilities.
According to the State Bar’s 2008 Long‑Range Strategy (long‑range
strategy), its 23‑member board of governors (board) has the
fundamental fiduciary responsibility for the State Bar’s health and
success. The board’s responsibilities include setting a strategic
direction for the State Bar that reflects the needs of its core
stakeholders, who are the public, the state judiciary, and the
State Bar’s lawyer‑members. The long‑range strategy adopted by
the board identifies the State Bar’s mission, vision, and values. Of
particular interest is the first value listed in the
long‑range strategy, which recognizes the State
Bar’s obligation to handle the resources entrusted
Composition of the State Bar of California’s
to it with care and professionalism through prudent
Membership Fees
stewardship, economical use of resources, efficient
organization of activities, and effectiveness of
Building Fund: Pays the costs of financing, constructing,
undertakings. Finally, the long‑range strategy
purchasing, or leasing facilities to house the State Bar of
California (State Bar) staff and any major capital improvement
identifies four goals that the board considers
projects related to facilities owned by the State Bar.
necessary and appropriate to carrying out its
mission: public protection, administration of justice,
Information Technology Special Assessment Fund:
member services, and administration. The first and
Finances the costs of upgrading the State Bar’s information
third goals, public protection and member services,
technology systems, a process that includes purchasing and
encompass the various functions of the attorney
maintenance costs and for hardware and software.
disciplinary system.
Located in San Francisco, Los Angeles, and
Sacramento, the State Bar’s various departments
carry out its responsibilities, including admitting new
members, investigating and resolving complaints
against members, disciplining attorneys who violate
laws or rules, and performing various administrative
and support duties. The State Bar collects an annual
membership fee from each of its members to pay for
most of its operations. In addition to charging the
annual membership fee, state law authorizes the State
Bar to charge each member additional fees that fund
specific programs, which the text box describes.

Lawyers Assistance Program Fund: Finances costs
associated with identifying and rehabilitating attorneys
with impairments due to abuse of drugs, alcohol, or
mental illness.

Discipline: Finances a portion of the costs of the attorney
disciplinary system.
Client Security Fund: Satisfies claims from injuries caused
by dishonest conduct by members of the State Bar.
General Fund: Finances all remaining expenses, such as
administrative costs, and other disciplinary system costs.
Source:  California Business and Professions Code.

9

10

California State Auditor Report 2009-030

July 2009

Historically, to ensure effective legislative oversight of its functions,
annual legislation has given the State Bar the authority to assess
an annual fee, which it deposits into its general fund. For 2009,
the State Bar assessed an annual membership fee of $315 for active
members and $75 for inactive members. Under current legislation,
the State Bar’s authority to assess the annual membership fee
will expire on January 1, 2010, and will be subject to legislative
reauthorization for subsequent years.
The components of the State Bar’s active membership fees appear
in Figure 1. State law does not require inactive members to pay the
information technology special assessment of $10; however, inactive
members must pay the same amounts as active members for the
discipline and building funds. In addition, inactive members pay
only $5 to the Lawyers Assistance Program Fund and $10 to the
Client Security Fund.
Figure 1
The 2009 Components of Each Active Member’s $410 in Required Fees
Building Fund—$10 (2%)
Information Technology Special
Assessment Fund —$10 (2%)
Lawyers Assistance Program Fund—$10 (2%)
Discipline —$25 (6%)

Client Security Fund—$40 (10%)

General Fund—$315 (77%)

Source:  The State Bar of California’s 2009 Annual Fee Statement.
Note:  Percentages do not add up to 100 percent due to rounding.

Contributions in addition to the annual membership fee are
optional: A voluntary $5 payment funds some of the State Bar’s
legislative efforts and another voluntary $5 contribution is used to
address concerns of access and bias in the profession. Members can
also voluntarily pay specified amounts to join one or more of the
State Bar’s 16 sections—voluntary organizations of attorneys who
share an area of interest such as the Family Law Section or Workers’
Compensation Section.

California State Auditor Report 2009-030

July 2009

In 2008, the State Bar began assessing a $10 information technology
special assessment fee (IT fee) from each active member to upgrade
existing technology systems. However, the total annual membership
fees did not increase until 2009 because the State Bar’s fee increase
in 2008 was offset by its loss of authority to assess a $10 fee for
its Building Fund. For 2009, with legislative authority, the State
Bar assessed both the IT fee and the building fee, thus raising the
required membership fees for its active members from $400 to $410.
In Figure 2 we show the fluctuations in mandatory membership fees
for each active and inactive member from 1996 through 2009.
Figure 2
The State Bar of California’s Required Annual Fees for Each of Its Members
1996 Through 2009
$500
Active member fees

Fee Amount

400
300
200
Inactive member fees
100
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Year
Sources:  The State Bar of California’s chief financial officer and its audited financial statements.

As Figure 2 shows, over the past 14 years, the mandatory
membership fees for active members have decreased by $68 while
the fees for inactive members have increased by $75. Membership
fees for active members dropped sharply in 1998 because the
governor vetoed a bill in 1997 that would have authorized the State
Bar to continue to assess the annual membership fee. Consequently,
it could charge and collect only certain fees that statutes separately
authorized and that were not part of the annual membership fee.
Legislation in 1999 reauthorized the State Bar to assess the annual
membership fee for 2000.
The State Bar’s Disciplinary System
According to its 2008 Report on the State Bar of California
Discipline System (annual discipline report) to the Legislature,
one of the most important functions of the State Bar is to protect

11

12

California State Auditor Report 2009-030

July 2009

the public, the courts, and the legal profession from attorneys who
fail to fulfill their professional responsibilities. To carry out this
function, the State Bar established a disciplinary system that
includes receiving, investigating, and prosecuting complaints
against attorneys.

Definitions of the Types of Discipline That
California Attorneys May Receive
Admonition: A written nondisciplinary sanction issued in
cases that do not involve a serious offense and in which the
State Bar Court concludes that no significant harm resulted.
Either the Office of the Chief Trial Counsel or the State Bar
Court may impose an admonition.
Disbarment: A disciplinary action whereby the California
Supreme Court expels an attorney from membership in
the State Bar of California (State Bar). The attorney’s name is
stricken from the roll of California attorney, and the attorney
becomes ineligible to practice law.
Probation: A status in which a State Bar member retains
the legal ability to practice law subject to his or her compliance
with terms, conditions, and duties for a specified period of time.
Probation Revocation: Probation that was imposed in a
prior disciplinary case can be revoked when a member
violates one or more terms of that probation.
Reproval: The lowest level of discipline imposed by the
California Supreme Court or State Bar Court. An attorney
may receive a reproval that includes duties or conditions;
however, reprovals do not involve suspension. Reprovals can
be either public or private.
Summary disbarment: A disciplinary action in which the
California Supreme Court disbars a member—expels him or
her from the State Bar—without that attorney undergoing a
formal State Bar Court proceeding.
Suspension: A disciplinary action that prohibits a member
from practicing law or from presenting himself or herself
as a lawyer for a period of time set by the California
Supreme Court.
Termination: A proceeding closed due to an external cause,
such as the death of the member, his or her disbarment
in a separate matter, or the member’s resignation with
charges pending.
Source:  The State Bar of California’s 2008 Report on the State Bar
of California Discipline System.

In 2008 approximately 40 percent of the State
Bar’s total annual revenue—which constitutes
80 percent of its general fund—goes toward
financing the costs of the attorney disciplinary
system. According to the annual discipline report,
one division within the State Bar—the Office of the
Chief Trial Counsel—receives complaints against
attorneys, investigates those complaints, and
prepares cases for prosecution against attorneys
for whom allegations of unethical conduct appear
to be justified. A second division—the State Bar
Court—serves as the administrative arm of the
California Supreme Court in the adjudication
of disciplinary and regulatory matters involving
attorneys in the State.
As Figure 3 outlines, the disciplinary system
consists of four functions: intake (receipt of
complaint), investigation (investigation of case), trial
(prosecution of case), and the State Bar Court (venue
in which the case is tried).
Attorneys whom the State Bar Court finds
culpable of violating its Rules of Professional
Conduct or the State Bar Act, or attorneys who
settle a disciplinary complaint, may be subject
to several different types and levels of discipline.
The California Supreme Court must review
and may adopt more severe levels of discipline
recommended by the State Bar Court, but the
State Bar Court has the authority to impose
reprovals—the lowest levels of discipline.
The text box describes some of the various
disciplinary measures that California attorneys
may experience.
The State Bar’s Office of Probation (probation
office), located in Los Angeles, monitors attorneys
ordered on probation. According to the annual
discipline report, the probation office opens
approximately 500 case files each year, and the
terms of probation typically range from one to
five years. As the text box explains, an attorney

California State Auditor Report 2009-030

July 2009

can retain the legal ability to practice law subject to his or her
compliance with probationary terms. To comply with the terms
of probation, attorneys often have to maintain regular contact
with the probation office by submitting quarterly reports, making
required restitution payments, and completing ethics courses. Since
April 2005 the probation office has reported directly to the chief
trial counsel, but prior to that it reported to the State Bar Court’s
administrative officer.
Figure 3
The State Bar of California’s Attorney Disciplinary System

Complaint

The State Bar of California (State Bar) receives a written complaint—usually
concerning performance— from a California attorney’s client, a court, an
attorney’s opposing counsel, or another member of the public against
that attorney.

Intake
• The intake unit evaluates each complaint received to determine whether it can
resolve the complaint immediately or whether it should open an inquiry for
informal, preliminary investigation, and resolution.
• Resolution entails either opening a case by advancing the inquiry to the investigation
and trial unit or closing the inquiry.

Investigation
• Professional investigators in the investigation and trial unit receive and examine
inquiries and reportable actions forwarded from the intake unit.
• At the conclusion of each investigation, an attorney in the unit decides whether to
close the complaint or to resolve the complaint in another manner. For example, this
unit may impose an informal, confidential resolution or file a notice of disciplinary
charges in the State Bar Court.

Trial
The investigation and trial unit prepares cases for trial and prosecutes certain
matters in the State Bar Court.
State Bar Court
• The State Bar Court serves as the administrative arm of the California Supreme
Court in the adjudication of disciplinary and regulatory matters involving
California attorneys.
• The State Bar Court has the authority to impose public and private reprovals.
• In cases involving disciplinary issues more serious than reprovals, the State Bar Court
recommends appropriate disciplinary actions to the California Supreme Court for
review and adoption.

Resolution

Case disposition in the State Bar Court or the California Supreme Court can
include reproval, disbarment, suspension, discipline, and/or probation of the
attorney or attorneys named in the case.

Sources:  The State Bar’s 2008 Report on the State Bar of California Discipline System and the State Bar
of California Overview.

13

14

California State Auditor Report 2009-030

July 2009

Types of Case Files Monitored by the State Bar of
California’s Office of Probation
Probation files: Established for attorneys placed on
probation with certain terms and conditions and on
whom the California Supreme Court may have imposed
actual suspension.
Reproval files: Created for disciplined attorneys who are
reproved—the least serious level of discipline—by the State
Bar Court with certain terms and conditions attached to
the reproval.
Agreements in lieu of discipline files: Established for
confidential agreements between respondents and the
Office of the Chief Trial Counsel where certain required
terms and conditions exist.
Rule 9.20 files*: Opened for attorneys for whom Rule 9.20
is the only condition that the State Bar of California (State
Bar) is monitoring. Rule 9.20 requires a disbarred, resigned,
or suspended attorney to notify clients and other affected
parties about the attorney’s disqualification to act as
an attorney. The attorney must also file an affidavit of
compliance with all Rule 9.20 court orders.

The State Bar’s Strategic Planning Budget
describes the probation office’s function as
monitoring probationer compliance with court
orders, providing timely information for the
courts regarding noncompliance, and assisting
probationers to successfully complete their terms
of probation. These functions are implemented
through the work of the probation office’s
probation deputies. According to the probation
office supervisor, as of May 31, 2009, a staff of
five probation deputies monitor 815 open case
files. According to the probation office’s procedure
manual, probation deputies are responsible for
opening, maintaining, and closing complete and
accurate case files. As described in the text box,
probation deputies monitor several different types
of cases.

The State Bar has statutory authority to collect
some costs from attorneys who are disciplined.
The law further allows the State Bar to recover
from members any payments that it makes from
its Client Security Fund, which the State Bar
Alternative Discipline Program files: Opened when the
uses to satisfy claims from injuries caused by
State Bar Court orders an attorney to comply with certain
the dishonest conduct of its members. For those
terms and conditions during participation in the Alternative
costs it is allowed to recover from disciplined
Discipline Program, which addresses the substance abuse
attorneys, the State Bar uses a formula—a fixed
and mental health problems of attorneys facing formal
amount primarily based on how far the case
disciplinary proceedings.
proceeds through the disciplinary system before
Source:  The State Bar’s Probation Deputy Manual.
resolution—to bill attorneys who are publicly
* Pursuant to a reorganization of court rules effective
disciplined. The formula is based on a disciplinary
January 1, 2007, Rule 955 was renamed Rule 9.20.
fee model developed from a time study completed
in 1997. The time study provided the State Bar
with estimates of costs for State Bar staff to
investigate and prosecute cases based on the amount of time
spent on case‑related tasks, excluding attorney and expert witness
services. In 2002 the State Bar hired a consultant to update the
fee model to reflect increases in salaries and overhead expenses in
the relevant cost centers to account for changes in the disciplinary
system since 1997. The formula reflecting the 2002 costs became
effective in January 2003. Typically, the State Bar adds these costs to
the disciplined members’ next membership fee statements.
According to the annual discipline report, the State Bar’s audit
and review unit, which was created in 2004, gives complainants a
medium through which they can appeal decisions in cases that the
State Bar closed without disciplinary action. The annual discipline

California State Auditor Report 2009-030

July 2009

report indicated that for 2008, the audit and review unit resolved
1,307 requests for review during that year. This unit also conducts
random checks on approximately 500 closed cases per year to
ensure actions taken by the Office of the Chief Trial Counsel
are appropriate. These random checks may result in cases being
reopened or in recommendations for staff training. According to
the annual discipline report, the audit and review unit reopened
59 cases in 2008.
Scope and Methodology
The California Business and Professions Code requires the
State Bar to contract with the Bureau of State Audits to audit
the State Bar’s operations every two years, but it does not specify
topics that the audit should address. For this audit, we focused on
and reviewed the State Bar’s disciplinary system. To determine the
efficiency and effectiveness of this system, we examined the State
Bar’s discipline costs, the method by which the State Bar accounts
for its discipline expenses, the outcomes of cases, the length of
time that the State Bar takes to process cases, and the recovery
of discipline expenses. We also evaluated the State Bar’s attorney
probation system and its audit and review unit. Further, we
reviewed the State Bar’s responses to prior reviews of its operations
and the circumstances surrounding an alleged embezzlement by
a former State Bar employee. Finally we reviewed the status of the
State Bar’s implementation of recommendations made in our 2007
audit titled State Bar of California: With Strategic Planning Not Yet
Completed, It Projects General Fund Deficits and Needs Continued
Improvement in Program Administration. This report summarizes
our 2007 assessment of the State Bar’s strategic planning efforts,
projected general fund deficit, legal services trust fund, and certain
aspects of the attorney disciplinary system.
To determine the State Bar’s total discipline expenses, the
causes for increases in expenses, and the number of cases that
proceeded through the disciplinary system, we reviewed the State
Bar’s budgets, financial statements, internal financial reports,
case‑tracking data, and its 2008 Report on the State Bar of
California Discipline System. Additionally, we interviewed various
State Bar staff members, including the chief financial officer, deputy
chief trial counsel, assistant chief trial counsel, State Bar Court
administrative specialist, and the former and interim chief trial
counsels. Throughout our fieldwork, we obtained various assertions
from the chief trial counsel whose term with the State Bar expired
in June 2009. Because the State Bar no longer employs him,
we refer to him in this report as the former chief trial counsel and
refer to his successor as the interim chief trial counsel. To review
case processing times and disciplinary case backlog, we used the

15

16

California State Auditor Report 2009-030

July 2009

data tracked in the State Bar’s disciplinary tracking system. The case
processing time analysis that we present is based on data from
the year that the intake unit received a complaint. For example, if the
intake unit received a complaint in 2004 but the case did not close
until one year later, we included that particular case’s processing time
in our analysis for 2004. The backlog analysis is based on cases that
were open at each calendar year-end from 2005 through 2008.
Government auditing standards issued by the U.S. Government
Accountability Office require us to assess the reliability of
computer‑processed data. We assessed the reliability of the State
Bar’s disciplinary tracking system by performing electronic testing of
key data elements and by testing the accuracy and completeness
of the data. To test the completeness of the data, we judgmentally
sampled 40 files for disciplinary cases opened in 2004 through 2008,
and we ensured that those cases existed in the State Bar’s database.
To check the accuracy of the discipline data, we selected a random
sample of 29 intake cases, 10 investigation cases, and 10 State
Bar Court cases, and we traced key data elements to source
documentation. Using the results of that testing, we concluded that
the data were sufficiently reliable for the purposes of this audit.
To gain an understanding of the State Bar’s cost recovery of
discipline expenses, we reviewed billing procedures and obtained
printouts for all billed amounts to determine the total discipline
charges billed for 2006 and 2007. We then judgmentally sampled
28 billing files to examine more closely due dates and payment
receipts. We also obtained reports of discipline amounts received,
and we reviewed the State Bar’s disciplinary debtor pursuit
policy and its contracts with a collection agency and a collection
attorney. Lastly, we interviewed key State Bar staff, including the
billing manager and the acting general counsel.
To determine whether the State Bar’s probation office properly
documents its probation monitoring and complies with its own
procedures and strategic goals, we reviewed the Probation Deputy
Manual and strategic planning documents and judgmentally
sampled 20 case files for probationary cases closed in 2008.
According to the supervisor of the probation office, 29 probation
case files were lost during a move from one floor to another
in 2008. Of the 20 probation case files that we reviewed, two of
the original files had been lost, so we were only able to review
18 original initial probation letters. We obtained additional
assurance for our sample of the time it took the probation office
to refer matters to the Office of the Chief Trial Counsel through
confirmations from the supervisor of the probation office.

California State Auditor Report 2009-030

July 2009

To assess the State Bar’s responses to external and internal reviews
of its disciplinary processes, we obtained a prior consultant’s
review and reports issued by the State Bar’s audit and review unit.
We also interviewed the chief financial officer about an alleged
embezzlement by a former State Bar employee and reviewed
information related to the State Bar’s update to its internal controls
in response to this event.
To determine the State Bar’s status on implementing the
recommendations from our 2007 report, we interviewed key
State Bar staff, including the senior executive for member services
and the manager of planning and administration. We analyzed the
State Bar’s strategic planning efforts by examining 14 departmental
plans and assessing whether the plans aligned with the State Bar’s
overall strategic plan and its budget. We also reviewed in detail
a sample of performance measures from the 14 departmental
plans to evaluate whether they were meaningful. To examine the
State Bar’s current cost collection efforts, we reviewed its recently
implemented pursuit policy and its new disciplinary debtors
database. To determine whether the State Bar is receiving all of
the income possible from lawyers’ trust accounts, we reviewed its
efforts to contact nonreporting members and its plans for seeking
the authority to enforce compliance reporting. Further, to make
certain that the State Bar is properly monitoring recipients of grants
under its Legal Services Trust Fund program, we judgmentally
chose a sample of 10 monitoring reports from the program’s 2007
and 2008 monitoring schedules. Additionally, we assessed the
State Bar’s efforts to comply with its policies of conducting periodic
audits of open disciplinary case files and of using checklists for
key tasks. Finally, we reviewed the State Bar’s efforts to reduce its
inventory of backlogged disciplinary cases.

17

18

California State Auditor Report 2009-030

July 2009

Blank page inserted for reproduction purposes only.

California State Auditor Report 2009-030

July 2009

Chapter 1
THE STATE BAR OF CALIFORNIA SHOULD BETTER
MANAGE ITS DISCIPLINE COSTS
Chapter Summary
The State Bar of California’s (State Bar) total costs for its attorney
disciplinary system have risen from $40 million in 2004 to
$52 million in 2008, or 30 percent over five years. This upsurge in
expenses has outpaced both inflation and the growth in the State
Bar’s active membership, and it does not match the changes in
caseload size in most stages of the system for disciplining attorneys
who violate professional standards. For example, our analysis
found that the number of disciplinary cases that the State Bar
investigated decreased from 3,770 to 2,802 over the same five years.
Additionally, the manner in which the State Bar accounts for
discipline expenses does not correspond to the expenses incurred
by each function involved in the disciplinary system, and the State
Bar does not ensure that two of its offices record discipline expenses
consistently. Further, even though salaries for State Bar staff have
risen significantly over the past five years, because the State Bar
does not track its expenses by function of the disciplinary system,
it cannot determine how the salary increases affected the expenses
of each function. The State Bar thus has difficulty identifying the
specific causes of disciplinary system cost increases and monitoring
how efficiently it operates within its monetary resources.
Moreover, because it does not separately track expenses for each
of its key disciplinary functions, the State Bar cannot measure
the effects of any policy changes on the cost of the attorney
disciplinary system. For example, in 2005 the California Supreme
Court criticized the State Bar for failing to bring all possible
charges against an attorney who was ultimately disbarred, and for
failing to follow its own sanction standards—internal guidelines
that delineate the appropriate actions that the State Bar should
take against attorneys who have repeatedly violated professional
or legal standards. In response, the State Bar’s former chief trial
counsel issued a memo directing staff to apply sanction standards
consistently and to be willing to take more disciplinary cases to
trial if warranted. The trend in the number of cases that ultimately
went to trial in the State Bar Court each year has increased from
65 in 2004 to 127 in 2008, a 95 percent increase and is consistent
with the change in policy. However, because the State Bar does
not track the costs incurred for each function that plays a role in
the disciplinary process, it cannot assess the financial impact of the
new policy.

19

20

California State Auditor Report 2009-030

July 2009

We calculated that investigation
time has increased from an average
of 168 days in 2004 to 202 days
in 2007, while the State Bar’s
method of calculating the average
time it took to investigate closed
cases showed a decrease during the
same time period.

One way the State Bar could gauge its effectiveness is by measuring
the outcomes of its efforts, such as the penalties imposed at trial
and the time that it takes to process cases. In the five‑year period
from 2004 through 2008, two of the most severe actions that the
State Bar can take—disbarments and suspensions—increased from
35 in 2004 to 60 in 2008. In addition, possibly because the former
chief trial counsel insisted that staff thoroughly investigate more
cases, the case processing times have increased. Specifically, in 2004
there were 378 cases that took more than 360 days to investigate;
in 2007 the number of cases received that took longer than 360 days
to investigate had grown to 402. However, the State Bar was unaware
of this increase in long‑outstanding investigations because of the
way it calculates the average time to investigate complaints. In
computing the average time it takes to close investigation cases, the
State Bar includes as part of its average the number of days it took
to close every case from 1999 through the most recent year. This
makes it difficult to identify current trends. Our review indicated
that investigation time has increased from an average of 168 days
in 2004 to 202 days in 2007. Whereas using the State Bar’s method,
the average time it took to investigate closed cases decreased from
197 in 2004 to 186 in 2007. Although the State Bar’s efforts to more
strictly follow disciplinary standards may prove beneficial, increases
in case processing time may contribute to increasing costs and may
also allow attorneys whose cases are currently moving through the
disciplinary system to continue practicing law longer than necessary.
Further, the backlog of disciplinary cases that the State Bar has
reported in its Report on the State Bar of California Disciplinary
System (annual discipline report) to the Legislature omits key
information. California Business and Professions Code requires the
State Bar to submit an annual discipline report to the Legislature
that includes accurate and complete backlog information in a
consistent manner to allow for year‑to‑year comparisons. However,
the State Bar has not identified the types of cases that it chooses to
exclude from its backlog, which are significant in number, nor has
it consistently identified when it began to exclude certain types of
cases. By not reporting complete and consistent information, the
State Bar is limiting its stakeholders’ and the Legislature’s ability to
measure the effectiveness of the State Bar’s disciplinary system.
Discipline Costs Have Increased Consistently Over the Past Five Years
The State Bar’s costs to discipline attorneys have risen over the past
five years; however, the increases in these expenses have outpaced
inflation, the growth in active membership, and the decreasing
caseload for most stages of the disciplinary system. In particular,
the State Bar’s total discipline costs have increased 30 percent
from $40 million in 2004 to $52 million in 2008. However, as

California State Auditor Report 2009-030

July 2009

Figure 4 shows, the growth of the State Bar’s disciplinary expenses
exceeded California’s consumer price index (index), a measure of
inflation calculated by the State’s Division of Labor Statistics and
Research, during each year from 2004 through 2008. For 2008,
the most recent year, the index rose 3 percent, while the State Bar’s
total discipline costs rose 10 percent. Further, total disciplinary
expenses have increased an average of 6 percent per year over
the last five years, while the index’s average increase per year was
only 3 percent.
Figure 4
The State Bar of California’s Discipline Costs Compared to the State’s
Consumer Price Index
2004 Through 2008
Actual discipline costs
Expected discipline costs if
adjusted by California’s
Consumer Price Index

$60

Dollars in Millions

50
40
30
20
10
0

2004

2005

2006

2007

2008

Year
Sources:  The State Bar of California’s 2004 through 2008 audited financial statements and the
Consumer Price Index for All Urban Consumers published by the State’s Division of Labor Statistics
and Research.

Further, increases in active membership do not appear to be causing
the rise in total discipline expenses. As Figure 5 on the following
page depicts, the percentage increase in discipline costs exceeded the
percentage increase in the number of active State Bar members in
each year from 2004 through 2008. According to the membership
numbers reported in its 2008 annual report, the State Bar’s active
membership increased by an average of 2.4 percent per year while
total discipline costs increased by an average of 6.4 percent per year.

21

California State Auditor Report 2009-030

July 2009

Figure 5
Percentage Changes in the State Bar of California’s Discipline Costs Compared
to Changes in Its Active Membership
2004 Through 2008
Percentage change in
discipline costs
Percentage change in
number of active members

10%
8
Percentage Change

6
4
2
0
2004

2005

2006

2007

2008

Year
Sources:  The State Bar of California’s 2004 through 2008 audited financial statements and
2008 Annual Report.

We also found that discipline costs were increasing even though
caseloads in most stages of the disciplinary system decreased. For
example, as Figure 6 indicates, the overall number of inquiries
opened in the intake unit has decreased from 12,400 in 2004
to 11,700 in 2008.
Figure 6
Number of Inquiries Opened by the State Bar of California’s Intake Unit
2004 Through 2008
12,500
Number of Inquiries

22

12,000
11,500
11,000
2004

2005

2006

2007

2008

Year
Source:  The State Bar of California’s 2008 Report on the State Bar of California Discipline System.

California State Auditor Report 2009-030

July 2009

Additionally, as discussed in the Introduction, when the intake unit
concludes that an inquiry warrants further action, it will open a
case and forward it to the investigation and trial unit. However, as
Figure 7 depicts, the number of cases received in the investigation
and trial unit declined from 3,770 in 2004 to 2,802 in 2008. Further,
the number of cases filed in the next stage of the disciplinary
system, the State Bar Court, also decreased from 2004 to 2008,
dropping from 911 to 734 cases.
Figure 7
Number of Disciplinary Cases Opened in the State Bar of California’s
Investigation and Trial Unit and Filed in the State Bar Court
2004 Through 2008
4,000

Number of Cases

Investigation and Trial
3,000
2,000
State Bar Court

1,000
0

2004

2005

2006

2007

2008

Year
Source:  The State Bar of California’s 2008 Report on the State Bar of California Discipline System.

After asking the State Bar why discipline costs had increased
despite these factors, the chief financial officer and former chief
trial counsel noted that salaries are likely a primary contributor.
However, as we discuss later, the method the State Bar uses to track
its expenses precludes it from isolating which disciplinary function
was most affected by the salary increases. The only increase
we were able to identify in the State Bar’s disciplinary caseload
from 2004 through 2008 was in the number of cases that actually
proceeded to trial. As this chapter later explains, a 2006 policy
change shifted the State Bar’s focus to more consistently adhere
to its sanction standards, and it believes this shift has contributed
to a 95 percent increase in the number of trials that began in the
State Bar Court from 2004 through 2008.

23

24

California State Auditor Report 2009-030

July 2009

The State Bar Does Not Account for Discipline Costs so That It Can
Measure Efficiency
The State Bar asserts in its 2008 Long‑Range Strategy that it is
obligated to handle the resources entrusted to it with care and
professionalism through prudent stewardship, economical use of
resources, efficient organization of activities, and effectiveness of its
undertakings. However, because it does not track the costs of the
disciplinary system according to its various functions, the State Bar
cannot be certain that it is using its resources as efficiently as possible.
According to the State Bar’s financial statements, its disciplinary
system expenses arise from four program areas: enforcement, the
State Bar Court, fee arbitration, and professional competence.
As Figure 8 shows, in 2008 the enforcement program area
accounted for $39 million, or 75 percent of total discipline costs.
Enforcement accounts for most of the discipline expenses because
it encompasses most major functions of the disciplinary system,
including intake, investigations, trials, and audit and review.
Figure 8
The State Bar of California’s 2008 Discipline Costs by Program Area
(Dollars in Millions)
Fee Arbitration Program—$0.8 (2%)
Professional Competence —$2.3 (4%)

State Bar
Court—$9.6 (19%)

Enforcement—$39.1 (75%)

Source:  The State Bar of California’s 2008 audited financial statements.
Note:  Program area expenses are based on estimates from the chief financial officer. However, the
sum of the program areas materially agrees to total audited amounts.

Although the State Bar is able to account for its discipline costs
within various program areas as shown in Figure 8, because the
discipline functions are accounted for in various organizational

California State Auditor Report 2009-030

July 2009

areas, the State Bar’s ability to identify and track trends to measure
the efficiency of its disciplinary system is limited. Specifically,
as shown in Figure 9, according to the State Bar’s organizational
structure, the functions of the disciplinary system are included
in two distinct areas: public protection and member services.
However, these areas also include functions not related to the
disciplinary system.
Figure 9
Structure of the State Bar of California
Board of Governors

Board Committees

Public Protection

Includes the intake,
investigations, trials,
and audit and
review functions.

Executive Director

Administration of Justice

Secretariat

Member Services

Admissions

Governmental Affairs

Member Records
Service Center

State Bar Court*

Legal Services,
Access and
Fairness Programs

Professional
Development

Chief Trial Counsel*

Member Benefits
Insurance
Affinity Programs

Probation*

Bar Relations Outreach

Attorney Ethics and
Professional Competence*

Client Security Fund

Judicial Evaluation

Legal Education and
Meeting Services
Arbitration of
Fee Disbutes*
Lawyer Assistance Program

Administrative Support
Finance

General Counsel Human Resources

Information
Technology

Source:  The State Bar of California’s 2008 Annual Report.
*	 These areas represent the disciplinary functions accounted for in total discipline costs.

Expenses for the enforcement program area include both the
functions of the Office of the Chief Trial Counsel and those of
probation, and they also include the expenses associated with
cost recovery. The responsibilities of the Office of the Chief
Trial Counsel are discharged by the two State Bar offices located
in Los Angeles and San Francisco. The disparity between how
the State Bar accounts for its expenses and how it organizes its
functions makes it difficult to determine what drives costs and to
measure the efficiency of the disciplinary system.

Media and
Information
Services

Real Property
Operations

25

26

California State Auditor Report 2009-030

July 2009

The State Bar does not separately
track expenses by function such
as investigations, trials, and audit
and review, and thus it could not
readily differentiate the cost of its
various functions.

In an effort to evaluate the efficiency of the disciplinary functions
and to understand the reasons for the increases in discipline costs,
we asked the State Bar to provide us with expenses for intake,
investigations, trials, audit and review, and the State Bar Court.
However, the chief financial officer explained that the State Bar does
not separately track expenses by all of these functions. Although
the State Bar accounts for the expenses for the intake and the
State Bar Court functions separately, it combines expenses of
other functions such as investigations, trials, and audit and review.
Consequently, the State Bar could not readily differentiate the cost
of its investigation and trial functions.
Additionally, we found that the State Bar’s San Francisco and
Los Angeles offices do not track their enforcement expenses in
the same manner, which further contributes to the difficulty of
identifying actual expenses by function. Specifically, in its tracking
of discipline costs, including those for the investigation, trial, and
audit and review functions, the Los Angeles office combines all
such expenses together as one amount. This office further groups
all its administration expenses—those that support the disciplinary
system as well as those that support all the other functions
of the office—together as a second amount. In contrast, the
San Francisco office combines all its discipline costs as well as all
its administrative expenses to support the office as a single amount.
Therefore, not only is the State Bar unable to separately track and
monitor what it spends on key aspects of its disciplinary system,
such as investigations and trials, it cannot even make meaningful
comparisons between the two offices because it has no consistent
method of accounting for its operations. This fact inhibits the
State Bar’s ability to identify specific reasons for cost increases, and
if warranted, to take appropriate actions to contain them.
Even though the State Bar does not separately track its discipline
costs by function within the Office of the Chief Trial Counsel,
at our request, the chief financial officer was able to provide
approximations of these costs based on an estimate of the time
State Bar staff spent on each function within the disciplinary
system during a year. The intake and State Bar Court functions are
separately accounted for and therefore did not need to be estimated.
Once having arrived at these estimates for the functions, the
chief financial officer then applied the same percentage estimates
for each of the functions to the total discipline costs for each of
the preceding five years; therefore, this is not a precise estimate
because this is not a process that the State Bar normally uses in
its management of the disciplinary system. Although we were
not able to verify management’s estimates, we were able to match
the sum of the estimates for the investigation, trial, and audit and
review functions to the total discipline costs appearing in the State
Bar’s audited financial statements for 2004 through 2007. Based

California State Auditor Report 2009-030

July 2009

on the estimates, we determined that these three functions of the
Office of the Chief Trial Counsel—investigations, trials, and audit
and review—account for 48 percent of the enforcement program
area’s expenses.
As Figure 10 shows, the estimated costs for these three functions
of the Office of the Chief Trial Counsel show larger increases
in some functions than in others. For example, according to the
estimates provided by the chief financial officer, investigation costs
have increased nearly 30 percent from under $12 million in 2004 to
$15 million in 2008.
Figure 10
The State Bar of California’s Estimated Discipline Costs by Function
2004 Through 2008
Year
2004
2005
2006
2007
2008

$16
14

Dollars in Millions

12
10
8
6
4
2
0
Investigations

Trials

Audit and Review

Disciplinary Function
Source:  Estimates provided by the State Bar of California’s chief financial officer.

Had the State Bar previously tracked and reviewed this type of
information, it may have noticed that, for example, costs are
increasing for the investigation function despite the fact that
caseload is not. This type of analysis in the future could assist the
State Bar in determining the drivers of increased cost and aid in
measuring the efficiency of various components of its disciplinary
system. For example, increases in investigation costs could be the
result of increases in personnel costs in that functional area, or if
that was not the reason, it could be an indication of inefficiency.

27

28

California State Auditor Report 2009-030

July 2009

The increase in overall discipline
costs appears to be partly due to
personnel costs—total personnel
costs for discipline increased
from $27.6 million in 2004 to
$35.7 million in 2008.

In an effort to determine the reasons for the increase in overall
discipline costs, we asked the former chief trial counsel and the
chief financial officer why discipline costs are increasing. The
former chief trial counsel stated that many of the employees in
his office are long‑term employees and are at the high end of
their salary ranges. He stated that negotiated salary increases
and cost‑of‑living increases account for a significant portion
of the increase in discipline costs. However, when we asked
for a breakdown of personnel costs by function, for example,
investigations, trials, and audit and review, the chief financial officer
was only able to provide us with a summary by cost center, year,
and category. According to the summary, total personnel costs for
discipline increased from $27.6 million in 2004 to $35.7 million in
2008. This $8 million increase represents a 29 percent increase in
personnel costs and accounts for 68 percent of the overall increase
in discipline costs.
We also requested the State Bar to provide us with staffing levels
in the function areas of discipline to evaluate whether higher
personnel costs were a result of an increase in positions. Based
on staffing information—the number of authorized positions and
vacancies—provided by the chief financial officer at the end of
each year from 2004 through 2008, we determined that although
total authorized positions for the Office of the Chief Trial Counsel
slightly decreased, the number of those positions that were filled
increased by 10 from 221 to 231. However, similar to its salary
costs, the State Bar does not separately track positions by the
investigation, trial, or audit and review functions, and as a result,
exactly where the increases occurred is unclear.
According to the chief financial officer, growth in indirect costs
during the past few years also accounted for part of the increase in
discipline costs. Specifically, indirect cost allocations to discipline
increased from $8.6 million in 2004 to $12 million in 2008. This
$3.4 million growth represents a 40 percent increase in indirect
costs and accounts for 29 percent of overall discipline costs.
Some indirect cost increases in 2008 were related to increased
information technology and space‑related costs, as well as an
increase in the use of the Office of the General Counsel’s time.
Further, the former chief trial counsel told us that the number of
trials contested in the State Bar Court has increased significantly
in the last two years as a result of greater adherence to the sanction
standards adopted by the board of governors. Further, he stated
that this has increased costs related to witness fees and travel,
expert witness fees, and production of extensive exhibits for use
at trial. Because the State Bar does not track expenses, including

California State Auditor Report 2009-030

July 2009

personnel costs—the largest component of its expenses—by all
of its various functions, it cannot measure the cost impact of an
increased number of cases going to trial.
The State Bar Cannot Determine Whether Policy Changes Affect the
Costs for Its Disciplinary Functions
Because the State Bar does not track costs separately for each of
its key functions within the disciplinary system, it cannot measure
the cost impact of policy changes. In 2005 the California Supreme
Court criticized the State Bar for failing to bring all possible charges
against an attorney who was ultimately disbarred and for failing to
follow its internal guidelines that delineate the appropriate actions
that the State Bar must take against attorneys who have repeatedly
violated professional or legal standards. The former chief trial
counsel issued a policy memo in June 2006 in response to this
criticism. The memo directed staff to keep in mind a number of
considerations when negotiating a settlement or when arguing the
degree of discipline that should be imposed or recommended in
a contested proceeding. This memo provided guidance to staff to
ensure consistency in applying sanction standards and to take cases
to trial if they warrant more severe discipline than the respondent is
willing to accept in a stipulation. His memo further stated that the
Office of the Chief Trial Counsel must demonstrate a willingness to
take the more egregious matters to trial and, as necessary, to appeal
those decisions to the State Bar’s Court Review Department and to
the California Supreme Court.
Additionally, the former chief trial counsel provided staff further
clarification in August 2007 with the State Bar’s Statement of
Policies, Objectives, Procedures and Practices Governing the
Determination of Level of Discipline. Before this policy shift,
according to the former chief trial counsel, the State Bar settled
before trial about 90 percent of cases in which the accused
attorney participated. However, he recently estimated that this
percentage has decreased to about 75 percent. He also stated that
in the past, the State Bar was more willing to offer settlements at
lesser discipline levels to resolve cases, and he attributes the recent
decline in settlements to the State Bar’s unwillingness to agree to
dispositions that are not consistent with the sanction standards.
The recent trend in the number of cases going to trial is consistent
with these policy changes. The former chief trial counsel said that
he does not track the average costs of a case that proceeds to trial,
and explained that the decisions to prosecute are based on the
merits of the cases and not the costs. Although decisions may not
be based primarily on financial considerations, we believe the State
Bar would benefit from at least understanding roughly how much

The recent trend in the number of
cases going to trial is consistent
with policy changes that the
former chief trial counsel made
in June 2006.

29

California State Auditor Report 2009-030

July 2009

it spends on trials—especially since the number of trials has nearly
doubled in the past few years. As shown in Figure 11, the number
of trials commenced in the State Bar Court each year has increased
from 65 in 2004 to 127 in 2008.
Figure 11
Disciplinary Trials Begun in the State Bar Court
2004 Through 2008
130
120
110

Number of Trials

30

100
90
80
70
60
50
2004

2005

2006

2007

2008

Year
Source:  Trial dispositions summary prepared by staff at the State Bar Court, State Bar of California.

The chief financial officer noted that the State Bar does not account
for costs by the specific function of the disciplinary system, nor
does it ensure that both the San Francisco and Los Angeles offices
track expenses in the same manner. When we asked whether the
State Bar currently uses other methods to track the efficiency of
its disciplinary system, the chief financial officer noted that as part
of its strategic planning process, in 2009 the State Bar began to
estimate the percentage of staff time spent on processing cases
in the various functions of the disciplinary system. Although a
step in the right direction, this is only an estimate, not an actual
percentage of staff time spent on processing cases.
Key members of the State Bar’s management team have varying
views about the value of tracking expenses related to each function
of the disciplinary system. The chief financial officer agreed that
tracking expenses by function would be beneficial from a budgeting

California State Auditor Report 2009-030

July 2009

perspective and may help the State Bar to increase efficiency. The
former chief trial counsel said that from a functional perspective, it
would not be helpful in managing costs. He explained that the office
does not conduct a formal cost‑benefit analysis when deciding if it
should take disciplinary cases to trial, but it does consider whether
it can prove its case at trial and whether the case can be settled
with an acceptable level of discipline. He explained that the Office
of the Chief Trial Counsel bases its decision to take a particular
case to trial on the State Bar’s mission to protect the public as well
as on the merits of the case, and that his division operated within
its allocated budget. However, we believe that by knowing the cost
of each of its various functions, the State Bar will not only be able
to operate in a fiscally responsible manner but will also be more
accountable to the members who fund its operations.
The State Bar’s 2009 Strategic Planning Budget—assuming no dues
increase—projects a deficit of $4.7 million in 2010 and $5.4 million
by 2011, and it is currently considering options to cut costs. If the
State Bar plans on requesting an increase in its annual membership
dues in the future to address its deficit, it would be in a much better
position to justify such a fee increase to the Legislature and to its
members if it could demonstrate that it had measured the efficiency
of its systems by function and had already made efforts to address
any areas of identified deficiency. Additionally, by aligning its
functions with its expenses, the State Bar will be able to gauge the
impact of its policy decisions on costs, and will be able to assure
members that it is being efficient with its resources.
The Number of Trials Resulting in Severe Penalties Has Risen, but the
State Bar Was Unaware That Its Investigation Case Processing Time
Has Also Increased
Although the State Bar does not track costs separately for each
of its key functions within the disciplinary system to measure
efficiency, the effectiveness and efficiency of the disciplinary system
can be measured by the outcomes of its efforts—specifically, the
penalties imposed at trial and the time involved in processing
cases. According to a summary of trial dispositions provided by a
State Bar Court administrative specialist, the number of trials that
resulted in severe penalties—disbarments and suspensions—has
increased over the past five years. However, case processing times
have also increased. According to the former chief trial counsel,
factors contributing to increases in case processing times include
the State Bar’s handling of more complex1 cases and his insistence
1	

The State Bar designates a case as complex if the case meets certain criteria, such as difficulty
in communicating with witnesses or if the case involves extremely unusual or complicated
legal matters.

The State Bar is projecting a
deficit of $4.7 million in 2010 and
$5.4 million by 2011 if dues are
not increased.

31

California State Auditor Report 2009-030

July 2009

that more cases be thoroughly investigated. Figure 12 shows that
the number of disbarments or suspensions resulting from cases
that went to trial increased from 35 in 2004 to 60 in 2008.
Figure 12
Disciplinary Trials That Have Resulted in Disbarments or Suspensions
2004 Through 2008
60
Number of Trials Resulting in
Disbarments or Suspensions

32

50
40
30
20
2004

2005

2006

2007

2008

Year

Source:  Bureau of State Audits’ compilation from a summary of trial dispositions prepared by staff
at the State Bar Court, State Bar of California.

However, even though the number of severe penalties increased,
the State Bar is also taking longer to process its cases because of
its policy to more stringently adhere to disciplinary standards that
require more staff time to prepare cases for trial. According to the
former chief trial counsel, preparing and taking a case to trial entails
more work than settling earlier in the disciplinary process. Our
review of the State Bar’s processing times for complaints received
and completed in 2004 through 20072 is summarized in Table 1.
As the table indicates, the State Bar processes most cases from
the intake stage through the investigation stage within six months.
Additionally, the number of inquiries opened at the intake stage has
declined slightly from 2004 to 2007, and the average intake case
processing time has decreased in recent years. Specifically, the average
number of days in which the intake unit either closed an inquiry or
opened a case and passed it on to the investigation and trial unit
for further processing decreased from 48 days in 2004 to 43 days
in 2007, or 10 percent. However, our analysis demonstrates that the
length of time to process cases proceeding beyond intake is generally
increasing. Specifically, in 2004 State Bar staff took more than

2	

We did not include the processing times for 2008 because many of these cases are still pending in
the various stages of the disciplinary system.

 

0

Pending

378

9

361+ days

Pending

172
181‡

361+ days

24

23

27

25%

<1

10

22

68%

 0

24

76%

 

 

 

PERCENTAGE OF
TOTAL CASES

†

168

48

AVERAGE NUMBER
OF DAYS TO
PROCESS A CASE

37

728

18

271‡

22

22%

<1

12

26

62%

28

72%

 

 

 

 

PERCENTAGE OF
TOTAL CASES

131

163

163

3,249

6

390

838

2,015

13,324

0

3,695

9,629

NUMBER
OF CASES

2005

†

185

51

AVERAGE NUMBER
OF DAYS TO
PROCESS A CASE

†

†

†

†

†
†

†
†

 

3

14

27

56%

<1 

30

70%

 

PERCENTAGE OF
TOTAL CASES

†

3,139

85

446

852

1,756

13,414

2

4,041

9,371

NUMBER
OF CASES

2006

†

205

50

AVERAGE NUMBER
OF DAYS TO
PROCESS A CASE

†

†

†

†

†

3,142

271

402

943

1,526

13,905

7

2,784

11,114

NUMBER
OF CASES

†

†

†

†

 

9

13

30

49%

<1 

20

80%

 

PERCENTAGE OF
TOTAL CASES

2007

†

202*

43

AVERAGE NUMBER
OF DAYS TO
PROCESS CASE

Source:  Bureau of State Audits’ analysis of data from the State Bar of California’s disciplinary tracking database.
Note:  Some percentages do not add to 100 percent due to rounding.
*	 All of these cases are currently pending beyond 361 days, therefore the average processing time for cases received in the investigation and trial unit for 2007 will increase from what we have reported.
†	 Because the majority of these complaints are still pending resolution, we did not include State Bar Court processing times and the number of cases for 2006 and 2007, nor did we include average processing
times for all years.
‡	 Of the pending cases received in 2004, 160 were beyond 361 days and of cases received in 2005, 209 were beyond 361 days, an increase of 31 percent.

Totals

Case closed by the
State Bar Court

744

202

181-360 days

Pending

189

0-180 days

State Bar Court

Totals

3,853

845

181-360 days

Case closed or sent
to State Bar Court

2,621

0-180 days

Investigation and Trial Unit 

Totals

14,199

3,420

61+ days

Case closed or sent
to investigations

10,779

0-60 days

Intake Unit 

NUMBER
OF CASES

2004

Table 1
Case Processing Times Listed According to the Year That the State Bar of California’s Intake Unit Received the Complaint
2004 Through 2007

California State Auditor Report 2009-030

33

July 2009

34

California State Auditor Report 2009-030

July 2009

360 days to process 378 of 3,853 cases received in the investigation
and trial unit, or 10 percent. In 2007 the proportion of cases taking
longer than 360 days had increased to 13 percent. Additionally,
from 2004 to 2005, although Table 1 shows that the number of
cases taking more than 360 days to resolve in the State Bar Court
decreased from 172 to 131, or 5 percent, the number of cases already
pending for more than 360 days increased from 160 to 209 cases,
or 31 percent. Based on this analysis, a complaint received in 2004
could take more than two years to close or otherwise resolve.
When we asked the State Bar why it is taking longer to process
cases beyond the intake stage, the chief administrative officer of the
State Bar Court noted that one of the explanations could be due to
judicial turnover. Further, the former chief trial counsel indicated
that his insistence that cases be more thoroughly investigated might
be a contributing factor. However, in the same response the former
chief trial counsel noted that according to the State Bar’s analysis of
investigation processing time, the trend has decreased over the past
five years except for a slight increase in 2008.

The State Bar’s methodology
for calculating its average
investigation processing time
does not represent yearly trends.
For example, when it reports the
average for 2008, only 10 percent
of the total population from which
it calculates the average applies
to that year.

After discussing with the State Bar its methodology for calculating
its average investigation processing time, we determined that it
is not calculating this average in a way that fully represents yearly
trends. In its annual discipline report, the State Bar reports the
average number of days that closed cases spent in investigations
at year‑end. According to the program/court systems analyst
(systems analyst), the State Bar combines average processing
time to compute a single average for all cases closed since 1999
as opposed to calculating a separate average based on cases
closed for a particular year. According to the systems analyst, the
State Bar chose the 1999 date so that it would be able to reflect
productivity after the State Bar regained its authority to charge an
annual membership fee that year. However, this is not a meaningful
measure of current yearly investigative case processing times
because the number of cases from which the State Bar generates
the averages continues to grow and includes data from years that
do not apply to the relevant reporting year. As Figure 13 depicts,
when the State Bar reports the average processing time of closed
investigations at the end of 2008, only 10 percent of the total
population from which it calculates this average applies to 2008.
Further, because the population from which it calculates this
average consists of many years of data, a significant change in
processing time during more recent years would not notably change
the average. Thus, the State Bar is unable to detect notable annual
increases or decreases in case processing times using this method.

California State Auditor Report 2009-030

July 2009

Figure 13
Proportion of Cases Relevant to Yearly Case Processing Time as Reported by
the State Bar of California
1999 Through 2008
100%
90
80

Percentage

70
60
50
40
30
20
10
0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year

Source:  Analysis by the Bureau of State Audits.
Note:  These figures represent the proportion of cases closed each year compared to the total
cases closed since 1999. Because the State Bar of California includes the average processing time
for all cases closed since 1999, the proportion of cases that apply to the relevant reporting year
continues to decline.

Finally, according to the systems analyst, when the State Bar reports
its case processing times, it does not include the time it took to
process a case that eventually gets forwarded to the next stage of
the disciplinary system. Rather, the State Bar only includes closed
investigations. Even though the State Bar refers to processing times
for closed cases in its annual discipline report, including only
closed cases may be misleading and is an understatement of case
processing times for all investigations because forwarded cases
often take longer to process than the ones that are closed.
Using the State Bar’s method to calculate the average processing
times for closed investigations resulted in average processing times
that ranged from a high of 197 days in 2004 to a low of 186 in 2007. In
contrast, when we used what we believe to be a more representative
method that only considers the time investigations remained open
during a given year, whether eventually closed or forwarded to the
next stage, average processing times were generally longer. Using this
method, the average processing times for the State Bar’s investigations
ranged from a low of 168 days in 2004 to a high of 205 days in 2006
before declining to 202 days in 2007, as depicted in Table 1 on page 33.

35

36

California State Auditor Report 2009-030

July 2009

We are not making a determination as to the appropriateness
of the former chief trial counsel’s efforts to more strictly adhere
to the sanction standards. Although these efforts may prove to
be beneficial in imposing stricter penalties, increases in case
processing time may contribute to increased costs and may allow
attorneys whose cases are currently in the disciplinary system to
continue practicing law longer than necessary. Further, because
the State Bar does not track or report its case processing time in a
way that is completely representative of its efforts, its stakeholders,
including the Legislature, cannot fully measure the effectiveness of
its disciplinary system.
The State Bar Could Better Inform the Legislature by Including All
Relevant Information When It Reports Its Backlog

The State Bar has interpreted
the law relating to reporting the
backlog of disciplinary cases in such
a way that it reports less than what
the law permits and does not report
consistently from year to year.

Another possible means to measure the effectiveness of the
State Bar’s disciplinary system is through tracking its backlog of
disciplinary cases. The Business and Professions Code requires
the State Bar in its annual discipline report to describe the
performance and condition of its disciplinary system by reporting
on the existing backlog of cases, including, but not limited to, the
number of complaints as of December 31 of the preceding year that
were pending beyond six months after receipt without dismissal,
admonition,3 or the filing of charges. The law further specifies that
the State Bar should provide accurate and complete descriptions
of the backlog, and that the discipline reports should include
information in a consistent manner to allow for year‑to‑year
comparisons. However, the State Bar has interpreted this law in
such a way that it reports less than what the law permits and does
not report consistently to allow for year‑to‑year comparisons. The
State Bar was able to provide us with the types of cases that it does
not include when it reports its backlog as well as its rationale for
not including them. We believe that the State Bar’s stakeholders,
including the Legislature, would benefit from having this same
information, as it would provide more complete and clear measures
of the number of complaints and cases that were pending over
six months during the preceding year.
In its annual discipline report, the State Bar reports a case as
part of its backlog when its staff has not resolved the case within
six months of its receipt or when the State Bar designates the case
as complex and has not resolved it within 12 months of receiving
the complaint. However, as shown in Table 2, the State Bar does
not include or explain many other types of cases when it reports
its backlog.
3	

A written nondisciplinary sanction issued in cases that do not involve a serious offense and in
which the court concludes that no significant harm resulted.

California State Auditor Report 2009-030

July 2009

Table 2
Types of Disciplinary Cases That the State Bar of California Does Not Include or Identify as Part of Its Backlog in Its
Annual Discipline Report
TYPES OF
DISCIPLINARY CASES

DEFINITIONS OF THESE CASE TYPES

THE STATE BAR’S REASONS FOR NOT INCLUDING
THE CASES AS PART OF ITS CASE BACKLOG

Complex

The State Bar of California (State Bar) designates a
case as complex if the case meets certain criteria,
such as the staff’s difficulty in communicating with
witnesses or if the case involves extremely unusual
or complicated legal matters.

The State Bar does not include a case designated as
complex in its calculation of backlog until the case
is more than 12 months old. In its annual discipline
report, the State Bar does not identify the number of
cases that are complex.

Intake

The intake unit receives each new complaint and
does not forward the complaint unless it determines
that the complaint should be a case that warrants
further investigation.

The State Bar has interpreted the law to mean that it
only needs to report complaints and not inquiries in
its backlog, and does not consider an inquiry that has
never left intake to be a complaint.

Non-attorney

In accordance with a 2006 law concerning
non‑attorney cases, the State Bar is allowed to apply
to the court to intervene and to assume jurisdiction
over the practice of any individual who is not an
attorney but who engages in the unauthorized
practice of law in California.

The State Bar noted that although the California
Business and Professions Code mandates a report on
the existing backlog of cases within the State Bar’s
disciplinary system, individuals who are not attorneys
are not subject to discipline by the State Bar Court
and thus their cases do not fall within the State Bar’s
disciplinary system. 

Abated

In an abated case, the State Bar delays prosecuting
that case if another similar case is pending against
the same attorney.

The State Bar does not include abated cases when
reporting case backlogs because it takes no actions on
the cases until it has resolved prior matters.

Reopened

A reopened case is one in which the State Bar’s
audit and review unit has revisited a case because
a complainant has requested a review of a
decision to close his or her complaint without
disciplinary action.

Before 2006 the State Bar did include reopened cases
in its backlog calculation. However, it stopped doing
so because, according to the assistant chief trial
counsel, the State Bar felt that counting such cases
created an inaccurate impression that the State Bar
had not resolved the matters expeditiously.

Outside examiner Outside examiners are volunteers and handle cases
as special deputy trial counsel when the State Bar
has a conflict and cannot investigate or prosecute
the matter.

Cases with outside examiners always take longer
to process than the backlog goal of 6 months or
12 months for complex cases. Outside examiners do
not have dedicated staff or the time to complete the
cases within 6 or 12 months.

Member

It has been the State Bar’s practice to count its
backlog by case, rather than by member. As a
result, if four members were originally included on
one complaint, and three out of four members’ cases
were resolved in the investigations and trial unit after
six months, the State Bar would only count this as
one case in its backlog.

In some circumstances, multiple attorneys can be
named on the same inquiry.

Sources:  The State Bar of California’s 2008 Report on the State Bar of California Discipline System, the State Bar’s interim chief trial counsel, and assistant
chief trial counsel.

37

38

California State Auditor Report 2009-030

July 2009

We wanted to gain a better understanding of the total number of
cases, regardless of type, that were pending beyond six months.
To do this, we used data from the State Bar’s disciplinary tracking
database and calculated the total number of cases that were
not resolved within six months of receipt of the complaint and
remained open at year‑end for 2005 through 2008. These results are
shown in Table 3.
Table 3
Total Cases by Member Not Resolved Within Six Months at Year End
2005 Through 2008
 

2005

2006

2007

2008

TOTALS

74

57

43

32

206

226

239

309

226

1,000

74

80

106

95

355

Noncomplex

253

253

316

241

1,063

Non-attorney

0

53

143

200

396

Reopened cases*

21

30

15

2

68

Abated cases*

23

45

38

16

122

Complaint remains in intake
Complex 6-12 months
Complex over 12 months

Outside examiner*
Totals
Backlog as defined and reported
by the State Bar in its annual
discipline report (by case)
 

NA

NA

NA

21

21

627

682

917

794

3,020

315
 

246
 

327
 

290
 

1,178
 

Sources:  The State Bar of California’s (State Bar) 2008 audited financial statements, the
State Bar’s disciplinary tracking database, and its 2008 Report of the State Bar of California’s
Discipline System.
*	 These are already included in the totals for either complex over 12 months or
noncomplex cases. Because we did not separately identify these in our analysis, the
State Bar provided us with these numbers.
NA = Not applicable.

As shown in Table 3, the number of cases over six months old
that the State Bar excludes from the backlog it reports to the
Legislature is significant. Specifically, the State Bar only reported
1,178 of the 3,020 total cases, or 39 percent, that were not resolved
within six months from 2005 through 2008. Table 3 also shows that
the number of complex cases over 12 months old has increased
from 2005 through 2008 from 74 to 95, or 28 percent. According
to the interim chief trial counsel, cases have become more complex
over the past several years for reasons including accessibility to
the Internet, which allows California attorneys to provide services
in jurisdictions where they are not licensed. Because the State
Bar designates cases as complex and does not include them in the
backlog until they are over 12 months old, separately identifying
them from noncomplex cases would allow stakeholders to better

California State Auditor Report 2009-030

July 2009

understand reasons for fluctuations. Further, the State Bar does
not count inquiries in the intake unit that do not move on to the
investigations unit—even though these issues could remain in
intake for more than six months. Because the annual discipline
report notes that the investigation and trial unit strives to complete
investigations within six months after receipt of the complaint
(or 12 months if they are designated as complex), the State Bar
is not providing complete and clear information regarding its
backlog when it does not identify or explain its reason for not
including inquiries.
The State Bar has also changed the types of cases that it does
include in its annual discipline report over the past five years, which
makes year‑to‑year comparisons difficult. For example, the State
Bar changed its reporting beginning in 2006 to remove cases that
were reopened at year‑end from the backlog count. No explanation
was included in the 2006 report or in subsequent reports about
this shift. Additionally, beginning in 2008, the State Bar excluded
cases in its backlog that were being handled by special deputy trial
counsels, who are outside examiners. Although the State Bar noted
this change in its 2008 discipline report, it did not explain the
reason for the revision. Even though it explained to us the reasons
for excluding cases or changing the cases that it does include,
the State Bar has not explicitly clarified its rationale in its annual
discipline reports. Including such information would give the
Legislature more complete and accurate information regarding the
State Bar’s backlog and would allow the Legislature to better
measure the performance of the State Bar’s disciplinary system
from year to year.
Additionally, the State Bar reports its backlog by case and not by
member, which further decreases the number of cases that could
be included in the backlog count. In some circumstances, multiple
attorneys can be named on the same complaint, but the State Bar
only includes one in its backlog calculation, even if separate cases
are opened that would otherwise be included. The interim chief
trial counsel believes that it is appropriate to report backlog by
case and not by member because the complaint, whether it alleges
misconduct by one or more attorneys, is generated from a single
complaint made by one complaining witness, and for the most part
the issues and evidence are the same. However, the backlog table
in the State Bar’s annual discipline report does not indicate that
the backlog is reported by case rather than by member. Although
we understand the State Bar’s reasoning for excluding certain cases
from backlog counts, by not delineating what it does and does not
include, the State Bar is not providing a clear representation of its
backlog in its annual discipline reports.

The State Bar is not providing a
clear representation of its backlog
in its annual discipline reports
because it does not delineate what
it does and does not include.

39

40

California State Auditor Report 2009-030

July 2009

Recommendations
To explain and justify cost increases, and to measure the efficiency
of its disciplinary system as well as the impact of policy changes,
the State Bar should account separately for the expenses associated
with the various functions of the disciplinary system, including its
personnel costs. This can be accomplished through a study of staff
time and resources devoted to a specific function. The State Bar
should also ensure that all its offices track expenses consistently.
To make certain that the State Bar provides accurate and complete
descriptions to its various stakeholders so they can evaluate the
effectiveness of its disciplinary system over time, the State Bar
should do the following:
•	 Adjust its methodology going forward for calculating case
processing times for investigations so that the calculations
include time spent to process closed and forwarded cases for the
relevant year only. For example, for its 2009 annual discipline
report, the State Bar should report the average processing time
for only cases it closed or forwarded to the State Bar Court
in 2009.
•	 Include additional information regarding backlog in its annual
discipline report to the Legislature. Specifically, the State Bar
should identify the number of complex cases over 12 months old
in its backlog.
•	 Identify in its annual discipline report the types of cases that it
does not include in its calculation of backlog and explain why
it chooses to exclude these cases. Specifically, the State Bar
should identify that it presents its backlog by case rather than
by member, and that it does not include intake, non‑attorney,
abated, and outside examiner cases.
•	 Identify the composition of each year’s backlog to allow for
year‑to‑year comparisons, as the law requires.

California State Auditor Report 2009-030

July 2009

Chapter 2
THE STATE BAR OF CALIFORNIA COULD IMPROVE ITS
COST RECOVERY EFFORTS
Chapter Summary
By making relatively simple changes to its billing procedures and
its tracking of cost recovery, the State Bar of California (State Bar)
could improve its efficiency by making better use of its resources,
improve its collection efforts, and potentially offset some of the
recent increases in its overall discipline costs. State law authorizes
the State Bar to recover certain costs related to disciplining its
members, but the law prohibits collection of costs for attorneys’
or experts’ services. Because of this statutory limitation and other
factors, the State Bar’s recovery of its discipline costs remains
relatively low. The State Bar has only been able to recover $550,000
in 2007 and $766,000 in 2008, with the vast majority of these
amounts representing collections from various earlier billing years,
but it has billed about $1 million in each of these years.
For those costs it is allowed to recover from disciplined attorneys, the
State Bar uses a formula to bill attorneys, but this formula has not
been updated since 2003. Consequently, the State Bar has missed an
opportunity to bill more than it did over the past six years. Further,
because the State Bar does not generate reports from its billing
system that compare amounts received with amounts billed, and
because it does not consistently include on its bills the due dates for
disciplined attorneys’ payments, the State Bar cannot reasonably
predict the amount of recoverable costs that it should receive from
disciplined attorneys in a given year. By tracking the amounts that
it receives by the year that it billed for those amounts, the State Bar
may be able to identify trends related to its billing procedures and
identify ways to improve its collection efforts. Finally, the State Bar
has not conducted a cost‑benefit analysis of its current cost recovery
processes, which would allow it to consider more cost‑effective
alternatives to its current processes and thus potentially increase the
amount that it recovers.
State Law Prohibits the State Bar’s Recovery of Certain Expenses From
Disciplined Attorneys
The State Bar can recover from individual attorneys only some
of its costs for disciplinary activities. According to the State Bar’s
audited financial statements for 2008, $52 million, or 84 percent,
of its $62 million in general fund expenses was associated with
its disciplinary system. State law requires the State Bar to charge

41

42

California State Auditor Report 2009-030

July 2009

attorneys it has disciplined for certain costs related to their
disciplinary proceedings. Although the State Bar does bill the
attorneys it has disciplined, the amounts it can bill and ultimately
collect are substantially lower than the amounts it spends on
processing disciplinary cases. One reason is that state law limits the
amount of recovery by excluding costs for the services of attorneys
or experts, which, according to the acting general counsel, make
up a substantial portion of the disciplinary costs incurred by the
State Bar.
Changes to the State Bar’s Processes for the Billing and Tracking of
Discipline Costs Could Improve Collection Efforts

Although discipline costs have
increased 30 percent during the
last five years, the State Bar has not
updated the formula it uses to bill
for discipline costs since it became
effective in 2003.

Some of the increases in discipline costs could be offset if the State
Bar made changes to the processes it uses for billing and tracking
of these costs. As mentioned in the Introduction, for those costs it
is allowed to recover from disciplined attorneys, the State Bar uses
a formula—a fixed amount primarily based on how far the case
proceeds through the disciplinary system before resolution—to
bill attorneys who are publicly disciplined. The formula is based on
a disciplinary fee model developed from a time study completed
in 1997. The time study provided the State Bar with estimates of
costs for State Bar staff to investigate and prosecute cases based
on the amount of time spent on case‑related tasks, excluding
attorney and expert witness services. In 2002, the State Bar hired
a consultant to update the fee model to reflect increases in salaries
and overhead expenses in the relevant cost centers to account for
changes in the disciplinary system since 1997. Although discipline
costs have increased 30 percent during the last five years, the
State Bar has not updated this formula since it became effective
beginning in 2003.
When we asked the State Bar why it had not updated its billing
formula, the former chief trial counsel told us that the State Bar
updates this formula approximately every five years, and that it did
not do so in 2008 because of his office’s focus on other projects.
However, he also told us that the State Bar is planning to update
the formula later this year or early next year. Because it is likely
not cost effective to hire a vendor to perform a full study to update
the formula each year, the State Bar should establish a method for
calculating recovery costs in the interim years that would at least
include adjusting billing rates for any cost increases. For example,
the State Bar could increase recovery costs annually based on the
percentage increase of its total discipline expenses. Table 4 shows
how the recovery costs would have been adjusted annually had
this approach been used. While we acknowledge that this method
does not take all conditions into account since these averages
include attorney and expert expenses, which are not recoverable,

California State Auditor Report 2009-030

July 2009

we present this table as a concept for the State Bar to consider. We
presented this method to the former chief trial counsel, assistant
former chief trial counsel, and acting general counsel, and they
generally agreed with the concept of adjusting discipline charges in
years between formal studies.
Table 4
Possible Model for Adjusting Fees Charged to Disciplined Attorneys That Accounts for the Increases in
Disciplinary Costs
2003 Through 2008

2003

2004

2005

2006

2007

2008

TOTAL INCREASE
IN COSTS BETWEEN
2003 AND 2008

Before discipline charges
are filed

$1,983

$2,084

$2,218

$2,320

$2,463

$2,702

$719

During the first 120 days
of proceeding

2,296

2,413

2,568

2,686

2,852

3,129

833

Before pretrial statements*
are filed

3,654

3,840

4,086

4,274

4,539

4,979

1,325

Before trial, after pretrial
statements are filed, or
during a one‑day trial

4,920

5,171

5,502

5,755

6,112

6,705

1,785

During a multiday trial

11,107

11,673

12,421

12,992

13,797

15,136

4,029

After case proceeds to
review department

13,463

14,150

15,055

15,748

16,724

18,346

4,883

STAGE AT WHICH THE STATE
BAR RESOLVES THE CASE

Sources:  Bureau of State Audits’ analysis based on the State Bar of California’s discipline costs and audited financial statements.
*	 Pretrial statements detail key information such as a brief description of charges, undisputed facts, and disputed issues.

According to the amounts billed on the State Bar’s discipline
payments summary, from 2006 through 2008, the State Bar billed
$3.3 million in disciplinary charges. Had the State Bar added the
percent increase in total discipline costs from the preceding year to
the amount billed in the manner shown in Table 4, it would have
billed almost $850,000 more from 2006 through 2008.
Further, according to the assistant supervisor of membership
billing, the State Bar cannot reasonably predict the amount of
recovery costs it expects to receive from disciplined attorneys in
a given year because in many cases the bills do not include any
set due date for when payments must be made. Consequently, the
State Bar cannot adequately evaluate its discipline cost recovery
collection efforts or fully budget for such collections. To evaluate
the effectiveness of the State Bar’s collection efforts in recent years,
we requested a summary report of the amounts billed and received.

43

44

California State Auditor Report 2009-030

July 2009

As shown in Table 5, according to the State Bar’s discipline payment
summary report, in 2007 and 2008, the State Bar collected an
average of 63 percent of the amount it billed. Although these
percentages provide some context about collections, they are
somewhat misleading and not necessarily a useful measure of the
effectiveness of the State Bar’s efforts. This is because the State
Bar does not match the percent collected with the corresponding
amount billed. In fact, payments often are received years after they
are billed. Using detailed payment information provided by the
State Bar, we determined that of the $1.1 million billed for recovery
costs in 2008, only $229,000 was collected in that year, or about 21
percent, as shown in Table 5. The State Bar does not currently run
reports from its billing system to analyze this data, but the finance
manager noted that the State Bar’s current billing system has the
capability to run reports based on the year billed. Additionally,
he confirmed that the State Bar’s new system will be able to run
automated billing reports that include the percentage collected
and other billing measures such as tracking how late payments
are. The chief financial officer told us that the State Bar plans to
use automated billing reports in the future as part of its analysis.
According to the acting general counsel, this system will be fully
implemented in July 2009. By tracking the amount that it receives
by the year the amounts are billed, the State Bar may be able to
identify the effectiveness of its billing procedures.
Table 5
The State Bar of California’s Costs for the Attorney Disciplinary System
That the State Bar Has Billed and Recovered

YEAR

COSTS BILLED

2007

$1,000,000

$550,000

2008

1,100,000

766,000

$2,100,000

$1,316,000

Totals

COSTS RECOVERED

PERCENTAGE
RECEIVED
REGARDLESS OF
BILLING YEAR

PERCENTAGE RECEIVED
BASED ON YEAR BILLED

55%

13%*

70

21*

63%

17%

Source:  The discipline payment summary report generated from the State Bar of California’s
billing system.
*	 It is likely that some of the payments for amounts billed in these years will be received in
subsequent years.

Undermining any attempt to track the billing and payment of
attorneys’ disciplinary expenses is the fact that the State Bar does
not consistently include due dates for when payments must be
made when billing disciplined attorneys. Specifically, when billing
disciplined attorneys with no designated payment plan or for
some types of discipline orders, the bill states that the attorney
may voluntarily pay the disciplinary expenses immediately or at

California State Auditor Report 2009-030

July 2009

any time in the future. Our review of 28 bills sent to attorneys
in 2006 and 2007 found that attorneys promptly paid their discipline
bills at a much greater rate if the due date was explicitly stated on
the bill. For the 15 bills with specific due dates, 14 attorneys, or
93 percent, paid their bills in full by the due date. For the 13 bills we
reviewed with no specific due date, only one attorney paid by the
end of the next fiscal year. By not including specific due dates on
its bills to disciplined attorneys, the State Bar is much less likely to
recover costs as promptly as it could.
We discussed our results with the State Bar’s acting general counsel.
He stated that he is unsure why the letters to disciplined attorneys
did not include due dates and that during the next few months he
will work with staff to implement a policy to include due dates.
He also stated that specifying due dates may result in increased
payments of disciplinary expenses by disciplined attorneys with
suspensions who, as a group, are more likely to pay than those
who resigned with charges pending or who were disbarred.
By implementing a policy to include due dates on all letters
requiring payment, the State Bar will most likely see an increase in
disciplinary payments.
The billing issues described in this section are not meant to imply
that the shortcomings in the State Bar’s billing procedure would
allow attorneys who owe discipline costs to renew membership
or be readmitted to the State Bar. To the contrary, we found
that according to the State Bar’s internet‑based attorney search,
the 13 attorneys we reviewed who had outstanding discipline
recovery costs were listed as ineligible to practice law. This policy
complies with the Business and Professions Code, which states that
disciplined attorneys must pay disciplinary expenses before they
can return to the practice of law.
The State Bar Does Not Track How Much It Spends on Cost
Recovery Efforts
The State Bar should ensure that it spends members’ annual dues in
a fiscally responsible manner by demonstrating that it has evaluated
the costs and benefits of its undertakings. Specifically, the State Bar
may be able to increase its ability to more efficiently operate within
its resources by conducting a cost‑benefit analysis and evaluating
its current processes associated with its disciplinary cost recovery
efforts. Before April 2007, the State Bar’s efforts to recover costs
associated with disciplined attorneys typically included billing
the disciplined attorneys through annual membership bills and
contracting with a collection attorney. Effective April 1, 2007, the
State Bar received California Supreme Court approval of a rule
to enforce as a money judgment, disciplinary orders directing

By implementing a policy to
include due dates on all letters
requiring payment, the State Bar
will most likely see an increase in
disciplinary payments.

45

46

California State Auditor Report 2009-030

July 2009

payments of costs. A money judgment is an order entered by a
court that requires the payment of money. In July 2007 the State
Bar’s board of governors adopted a pursuit policy to implement its
new cost recovery authority for court‑ordered discipline costs and
Client Security Fund obligations.4 The policy outlines when the
State Bar will pursue debt and in what circumstances it will not.
Despite its new cost recovery
authority for court-ordered
discipline costs and Client Security
Fund obligations, the State Bar does
not expect an immediate material
increase in collections.

Despite its new authority, according to the acting general counsel,
the State Bar does not expect an immediate material increase in its
collections. Specifically, in its 2009 budget, the State Bar projects
only a $12,000 increase over the amount it collected in 2008.
The acting general counsel noted that the vast majority of Client
Security Fund cases involve payments to clients whose funds
have been misappropriated by their attorneys and that this type
of misconduct generally results in disbarment or resignation with
charges pending. These attorneys tend to be under financial stress
when they misappropriate client funds and have a greater likelihood
of not paying these amounts back after losing their license to
practice law. He also noted that the State Bar expects to collect only
modest amounts from disbarred members and those who resigned
with charges pending until five to 10 years after money judgments
have been filed. As a result, the State Bar has not established goals
related to its collection efforts of money judgments.
Before implementing its new pursuit policy, the State Bar
contracted with a collection attorney to pursue collections from
disciplined attorneys owing the largest unpaid amounts to the
Client Security Fund. The State Bar agreed to pay the collection
attorney 25 percent of the net funds recovered. Also, if no recovery
was obtained, the State Bar agreed to pay for the expenses the
collection attorney incurred. According to its discipline payments
summary report, the collection attorney collected $11,600 for the
State Bar in 2007, but he was paid $19,400 in recovery fees and
expenses. For 2006 through 2008, the collection attorney collected
$156,600, and the State Bar received $63,900, or 41 percent, of the
total amount recovered.
Subsequent to the adoption of its pursuit policy, the State Bar
contracted with a collection agency in March 2008 to pursue
collections of money judgments from disciplinary and Client
Security Fund cases. The State Bar agreed to pay this collection
agency 15 percent of amounts collected on money judgments.
Additionally, if the collection agency both obtained the money
judgment and collected on that judgment, the State Bar would pay
25 percent of the amounts collected.

4	

As noted in the Introduction, the Client Security Fund satisfies claims from injuries caused by
dishonest conduct by active members or legal consultants registered with the State Bar.

California State Auditor Report 2009-030

July 2009

According to the State Bar’s acting general counsel, the legal work
required to prepare a money judgment is labor‑intensive, and in an
effort to avoid having the collection agency conduct this legal work,
the State Bar is currently using its own in‑house staff. However,
when we asked about the cost of its in‑house efforts, the general
counsel told us that the State Bar does not specifically track all
of these costs. After our request, the State Bar identified some
estimates of in‑house costs to prepare the money judgments, and
the general counsel acknowledged that paying the higher 25 percent
of recovered costs might be more cost beneficial than having State
Bar staff conduct this work. He further stated that the results of
the preliminary analysis indicate further research is worthwhile.
Because the State Bar is not tracking all of the costs of its in‑house
efforts and comparing these costs to the additional 10 percent
it would pay the collection agency to perform these services, it
has not determined whether it is using the most cost‑effective
alternative for its cost recovery efforts.
Finally, the State Bar’s discipline payments summary shows that for
2006 through 2008, it collected $3 million in discipline costs and
Client Security Fund recoveries from its in‑house billing efforts, but
it does not track its costs associated with making these recoveries.
We acknowledge that because of the statutory restrictions on the
amount of discipline costs that can be recovered, the State Bar is
limited to recovering substantially less than its costs. However,
conducting a cost‑benefit analysis of its collection efforts would
allow the State Bar to evaluate and determine whether more
cost‑effective alternatives exist that could potentially increase the
net amount that it recovers.
In an effort to provide the State Bar with some alternative best
practices regarding cost recovery efforts, we asked two state
agencies about methods they use for collecting money owed
to them. A business tax compliance supervisor at the Board of
Equalization (Equalization) noted that Equalization does not
currently contract with any outside collection agencies. Although
it has contracted with collection agencies in the past, these efforts
were only marginally successful. He also stated that for debtors
located in California, Equalization obtains information to track
debtors from other governmental agencies, such as the Franchise
Tax Board (Tax Board) and the Employment Development
Department. He stated that these tracking activities are generally
not expensive.
We also contacted a representative at the Tax Board about various
programs available to state entities to recover costs, especially
those that are available for a nominal fee. The representative
told us about the Tax Board’s Interagency Intercept Collections
Program (intercept program) that offsets a debtor’s state tax refund

Because the State Bar is not
tracking all of the costs of its
in-house cost recovery efforts and
comparing these costs to what it
would pay to a collection agency
to perform such services, it cannot
determine whether it is using the
most cost‑effective alternative.

47

48

California State Auditor Report 2009-030

July 2009

by the amount owed to a state entity. According to the intercept
program participation booklet for 2009, the cost for the program
is approximately 25 cents per account. According to the State Bar’s
acting general counsel, in 2001 the State Bar attempted to obtain
legislative approval to use the Tax Board’s intercept program but
was unsuccessful. If the State Bar does conduct a cost‑benefit
analysis of its current collection methods and finds that they are not
cost beneficial, the State Bar may profit from attempting again to
seek legislative approval to use the Tax Board’s intercept program.
The Legislature may be more inclined to support passage of such
a proposal if the State Bar can show the results of a cost‑benefit
analysis. Because the State Bar has not evaluated the various
collection options available, it may have chosen collection methods
that are not the most cost effective.
Recommendations
To ensure that it maximizes the amounts that it may recover to
defray the expense of disciplining attorneys, the State Bar should
update annually its formula for billing discipline costs and include
due dates on all bills. Additionally, to report accurately its collection
amounts and to analyze the effectiveness of its collection efforts,
the State Bar should track how much it anticipates receiving against
how much it actually receives in payments for discipline costs
each year.
To make sure that it is using the most cost‑effective methods
to recover discipline costs, the State Bar should complete a
cost‑benefit analysis to determine whether the benefits associated
with using collection agencies outweigh the costs. If it determines
that the collection agencies are, in fact, cost effective, the State Bar
should redirect in‑house staff to other disciplinary activities. Finally,
the State Bar should also research the various collection options
available to it, such as the Tax Board’s intercept program.

California State Auditor Report 2009-030

July 2009

Chapter 3
AN INCREASING WORKLOAD AND INADEQUATE STAFF
LEVELS MAY UNDERMINE THE STATE BAR OF CALIFORNIA’S
MONITORING OF ATTORNEYS ON PROBATION
Chapter Summary
As described in the Introduction, the Office of Probation (probation
office) for the State Bar of California (State Bar) monitors disciplined
attorneys who have been ordered to comply with probation or
other conditions imposed by court orders issued by the California
Supreme Court or the State Bar Court. The number of attorney
disciplinary cases the probation office monitors has risen from 791 at
the end of 2004 to 867 at the end of 2008, or nearly 10 percent in
five years, resulting in a workload that is difficult for staff to manage
effectively. This increase resulted in an average workload, at the end
of 2008, of 217 case files for each probation deputy. The probation
office believes it is understaffed, and in February 2009 requested an
additional probation deputy position. However, it has not determined
what a reasonable caseload would be for each probation deputy to
effectively monitor disciplined attorneys and is therefore unsure
whether its recent request for an additional probation deputy
position will fulfill its needs. Until the State Bar determines that its
probation deputies have reasonable caseloads, it cannot be sure that
they are devoting the amount of attention necessary to effectively
monitor probationers.
In addition, although ultimately the probationer is responsible for
meeting the terms of probation, delays in the probation office’s
initial communications with probationers may prevent the State Bar
from fully meeting its goal of assisting disciplined attorneys in
fulfilling the terms of their probation. Our review of 18 initial letters
from probation case files closed in 2008 revealed that eight were
sent out late and four of the eight were not sent out until days
or weeks after the recipients’ respective probationary periods
had begun.
Further, according to the 2008 Report on the State Bar of California
Discipline System (annual discipline report), if a disciplined attorney
violates his or her probation, the probation office can either bring a
motion to revoke the attorney’s probation or report the violation to
the Office of the Chief Trial Counsel for disciplinary prosecution.
However, the probation office has not always made referrals
promptly or consistently. In particular, the probation office made
11 referrals to the Office of the Chief Trial Counsel for violations
related to eight of the 20 probation case files we reviewed that
closed in 2008. However, the probation office referred five of these

49

50

California State Auditor Report 2009-030

July 2009

cases between 96 and 555 days after the related violations occurred.
Further, the probation office was not always consistent or prompt
in referring the same types of violations. For example, the probation
office took three days to refer one attorney to the Office of the Chief
Trial Counsel, and it took 96 days to refer another attorney who
committed the same type of probation violation.
Until recently, probation office staff have had little guidance
related to timely referral of probation violations. However, under
the State Bar’s 2008 Long‑Range Strategy (long-range strategy), the
probation office now attempts to protect the public by making
referrals within 30 days of a violation. Because disciplined attorneys
are often allowed to practice law during their probationary periods,
unnecessary delays in making referrals for violations may allow
errant attorneys to continue to practice law and to represent clients,
and as a result prevent the probation office from meeting its goal
of protecting the public. In addition, such delays may generate the
appearance of favoritism.
The Number of Cases the Probation Office Monitors Has Risen in
Recent Years

The number of cases probation
staff monitor has grown from 791 at
the end of 2004 to 867 at the end
of 2008.

As described in the Introduction, the probation office monitors
disciplined attorneys who have been ordered to comply with
probation or other conditions imposed by court orders issued by
the California Supreme Court or the State Bar Court. According
to the 2008 annual discipline report, most attorneys who are
subject to discipline other than disbarment are placed on probation
that typically lasts one to five years. Over the past five years, the
probation office’s caseload has increased nearly 10 percent, making
it more difficult for its staff to manage disciplined attorneys
effectively. Specifically, as shown in Figure 14, the number of cases
probation staff monitor has grown from 791 at the end of 2004 to
867 at the end of 2008.
This increase resulted in an average workload, at the end of 2008,
of 217 cases for each of the probation office’s four probation deputy
positions. Although the State Bar generally had four probation
deputies working over this period, it experienced some turnover
during 2006 and 2007, with one or two positions remaining vacant
for a time. This likely contributed to the relatively higher number
of cases outstanding at the end of those years. In February 2009
the former chief trial counsel requested an additional probation
deputy position because four probation deputies could not keep up
with the increasing workload. He indicated that he had authorized
overtime for much of 2008 and for January 2009 so that probation

California State Auditor Report 2009-030

July 2009

deputies could work on their caseloads. This may explain the drop
in the number of cases from 940 at the end of 2007 to 867 at the
end of 2008.
Figure 14
The Number of Open Cases Monitored by Probation Staff at Year‑End
2004 Through 2008
1,000

Total Number of Cases

950
900
850
800
750
700
2004

2005

2006

2007

2008

Year
Source:  The State Bar of California’s disciplinary tracking system.

Table 6 on the following page provides a breakdown of the types
of cases the probation office monitored from 2004 through 2008.
The most notable increase in the probation office’s workload relates
to the number of Alternative Discipline Program cases (alternative
discipline cases). As the table shows, the probation office had only
five alternative discipline cases open at the end of 2004, but it had
94 open at the end of 2008.
The State Bar’s Alternative Discipline Program addresses the
substance abuse and mental health problems of attorneys against
whom formal disciplinary proceedings were initiated in the State
Bar Court. Starting in 2002 the State Bar Court implemented a
system for handling cases associated with the Alternative Discipline
Program, and attorney participation has increased steadily since
its inception. According to the probation office’s supervisor,
probation deputies’ responsibilities for monitoring alternative
discipline cases include additional work that is not typical of other
monitoring cases. Specifically, when the State Bar Court schedules
a status conference, probation deputies prepare a written report
for the court, and sometimes the reports can be time‑consuming

51

52

California State Auditor Report 2009-030

July 2009

due to the staff ’s need to gather information and documentation
from various parties. The supervisor told us that sometimes the
probation deputies also attend the status conferences.
Table 6
Type and Number of the State Bar of California’s Probation Cases at Year End
2004 Through 2008
 
2004

2005

2006

2007

2008

Probation

495

486

508

516

496

Reproval

210

200

174

204

176

Agreements in lieu of
discipline

47

49

64

74

76

Rule 9.20*

34

37

52

65

25

Alternative Discipline
Program
Totals

5

28

59

81

94

791

800

857

940

867

Source:  The State Bar of California’s disciplinary tracking system.
Note:  See the Introduction for a description of these case types.
*	 Pursuant to a reorganization of court rules effective January 1, 2007, Rule 955 was renamed
Rule 9.20, which includes a requirement for disciplined attorneys to notify their clients of their
ineligibility to practice law.

The Office of Probation Has Not Determined Appropriate Workload
Levels for Staff to Monitor Probationers Effectively
The probation office believes that it is understaffed, but it is unsure
whether its recent request for an additional probation deputy
position will fulfill its needs. In a memo to the deputy executive
director requesting an additional probation deputy position, the
former chief trial counsel noted that with existing caseloads, it
has become increasingly difficult, if not impossible, for probation
deputies to oversee probation in a timely, effective manner. The
memo further notes that an additional probation deputy will reduce
the current caseload and increase the probation office’s ability to
effectively fulfill its function. However, the additional probation
deputy will only decrease the overall caseload to around 175 cases
per deputy.
Despite these workload challenges, the probation office has not
determined what a reasonable caseload would be for each probation
deputy to effectively monitor disciplined attorneys. According
to the supervisor of the probation office, because of increases in
alternative discipline cases and other changes to the probation
office’s responsibilities, she is still in the process of monitoring
staff workloads and determining the appropriate caseload. The
supervisor stated that she uses the results of the State Bar’s

California State Auditor Report 2009-030

July 2009

internal reviews of open case files to assist her in determining how
effectively the probation deputies are monitoring probationers.
These reviews have highlighted several processing errors, which
could be an indicator that the deputies have too many cases. The
supervisor also stated that she plans to wait until the two newly
hired probation deputies—one hired to fill a vacancy and one to
fill the newly authorized probation deputy position—are trained
to complete her determination of whether five probation deputies
will be adequate to effectively monitor probationers. Until the
State Bar determines that its probation deputies have reasonable
workloads, it cannot be sure that they are devoting the amount of
attention necessary to effectively monitor probationers.
The Office of Probation Is Not Fully Meeting Its Strategic Goals to Help
Attorneys Successfully Complete Probation and to Protect the Public
The probation office has not fully met its mission of assisting
attorneys to successfully complete probation and of protecting the
public because it did not always promptly communicate attorneys’
probation terms and did not refer probation violations to the Office
of the Chief Trial Counsel consistently or promptly. Specifically,
for eight of the 18 initial probation letters that we reviewed from
cases closed in 2008, the probation office sent the initial letters
communicating the terms of probation to disciplined attorneys
between eight and 72 days after it received the related court orders.
However, the State Bar’s probation deputy manual requires its
probation deputies to send a letter to the affected attorney within
seven days of receiving the court order. These initial letters remind
probationers of their probation terms, deadlines for compliance
with probation conditions, and relevant contact information.
Further, four of the eight letters sent after the required date were
sent out days or weeks after the respective probationary terms
began. For example, one probationer was sent a letter dated 60 days
after the date the State Bar received the court order, and by that
time deadlines for two of the probation conditions were already
past due. This attorney was eventually disbarred for not complying
with one of those terms, Rule 9.20, which includes a requirement
for disciplined attorneys to notify their clients of their ineligibility
to practice law. According to its Probation Deputy Manual, the
probation office’s mission includes helping attorneys comply with
the terms and conditions required of them in order to complete
probation successfully. Although the probationer is ultimately
responsible for meeting the terms of probation, when the probation
office sends initial letters later than required by its own procedures,
it is not fully meeting its goal to assist attorneys in successfully
completing the terms of their probation.

For eight of the 18 initial probation
letters that we reviewed, the
probation office sent these initial
letters communicating the terms of
probation to disciplined attorneys
between eight and 72 days after it
received the related court orders.

53

54

California State Auditor Report 2009-030

July 2009

The supervisor of the probation office attributed the delays in
sending out the initial letters to inadequate staffing. As we discussed
in the earlier section, determining the appropriate caseloads for
staff to effectively perform their jobs is important.

For five of the 11 referrals of
probation violations that
the probation office deputies
prepared and sent to the Office of
the Chief Trial Counsel, probation
deputies took well over a month
after the violation occurred to refer
the violation.

The probation office has also not promptly referred attorneys
who have violated their probationary terms to the Office of the
Chief Trial Counsel, and in some cases, referred the same type of
violation inconsistently. According to the annual discipline report,
if a disciplined attorney violates his or her probation conditions,
the probation office is authorized to bring a motion in the State Bar
Court to revoke the attorney’s probation or refer the violation to
the Office of the Chief Trial Counsel for disciplinary prosecution.
Related to eight of the 20 probation case files we reviewed that the
State Bar closed in 2008, probation office deputies had prepared
11 referrals of probation violations to the Office of the Chief Trial
Counsel. Probation deputies made one of these referrals in 2004,
four in 2006, four in 2007, and two in 2008. For five of the
11 referrals, probation deputies took well over a month after the
violation occurred to refer the violation. In fact, the timing of these
five referrals ranged from 96 days to 555 days after the violation
occurred, with probation deputies taking more than 500 days for
two of the referrals. Additionally, the probation office was not
always consistent in referring the same types of violations. For
example, we reviewed two cases in which attorneys were referred
to the Office of the Chief Trial Counsel for violations of Rule 9.20,
which includes requirements for notifying clients and other affected
parties that they are no longer eligible to practice law. In one case
the referral was made after only three days; however, the other was
made 96 days after the violation occurred.
Until recently, probation office staff received little guidance
related to timely referral of probation violations. In particular, the
Probation Deputy Manual notes the probation office’s responsibility
to address noncompliance issues in an expedited manner that is
consistent with the fundamental values of fairness, effectiveness,
and public protection. The manual also provides general guidance
for staff about the circumstances that would warrant referral of
probation violations, such as when a probationer fails to submit
two or more quarterly or monthly reports. However, the probation
deputy manual generally does not clearly define acceptable time
frames related to referrals of various probation violations, nor does
it delineate when it might be appropriate to delay a referral of a
violation for a specified period of time.
The probation office supervisor told us that before 2008, the State
Bar did not track the number of days it took for staff to make
referrals and had not considered it as a performance indicator.
However, under the long‑range strategy, the probation office

California State Auditor Report 2009-030

July 2009

identified a goal to refer probation violations promptly—within 30
days—to the Office of the Chief Trial Counsel. In the State Bar’s
2009 Strategic Planning Budget, the probation office estimated
meeting this goal only 15 percent of the time for 2008. The probation
office indicates that one of its initiatives for 2009 is to significantly
increase this percentage.
The probation office’s supervisor told us that inadequate staffing
was the main reason that the probation office has not made referrals
more promptly. She also told us that delays occur as a result of
the amount of time that it takes for probation deputies to prepare
referrals and because of the time probation deputies spend getting
the probationers to complete court‑ordered conditions, even if the
conditions are past due.
Because attorneys are still often able to practice law during their
probationary period, unnecessary delays in making referrals for
violations may allow an errant attorney to continue to practice law
and represent clients. Further, when the probation office does not
make referrals promptly, it is not meeting its goal of protecting the
public. Finally, when staff are not consistent or prompt in referring
violations, it may create a perception of favoritism or leniency, and
could undermine the efforts of the Office of the Chief Trial Counsel
to enforce disciplinary standards.
Recommendations
To fulfill its responsibility to protect the public and its mission to
assist attorneys to successfully complete the terms of their probation,
the State Bar should ensure that it effectively communicates with and
monitors attorneys on probation by doing the following:
•	 Continue its efforts to determine the appropriate caseload level
for its staff to effectively monitor probationers and adjust staffing
as appropriate.
•	 Ensure that staff comply with procedures for promptly sending
initial letters reminding disciplined attorneys of the terms of
their probation.
To make certain that it does not create a perception of favoritism or
leniency, the State Bar should increase compliance with its goal to
improve timeliness and consistency of probation violation referrals
to the Office of the Chief Trial Counsel. If the State Bar believes
instances occur when probation staff appropriately deviate from the
30‑day goal, it should establish parameters specifying time frames
and conditions acceptable for a delay in the referral of probation
violations and clearly document that such conditions were met.

55

56

California State Auditor Report 2009-030

July 2009

Blank page inserted for reproduction purposes only.

California State Auditor Report 2009-030

July 2009

Chapter 4
THE STATE BAR OF CALIFORNIA COULD INCREASE ITS
EFFECTIVENESS BY FULLY ADDRESSING INTERNAL AND
EXTERNAL REVIEW RECOMMENDATIONS
Chapter Summary
The State Bar of California (State Bar) has received many
recommendations for improvement in internal and external
reviews of its operations. However, the State Bar has not fully
addressed some of these recommendations. For example,
in 2007, the State Bar hired a consultant to review its cost
recovery processes. The consultant notified the State Bar in
October 2007 about several areas of high risk related to its cost
recovery processes, such as internal control weaknesses in the
oversight of cash receipts, some risks of data discrepancies, and
insufficient reconciliation processes. The State Bar expected that its
implementation of a new cost recovery system would address these
weaknesses. However, it did not obtain the system immediately and
is still in the process of implementing it. The importance of fully
correcting internal control weaknesses was highlighted subsequent
to the consultant’s review when the State Bar discovered an
alleged embezzlement of almost $676,000 by a former employee.
In response to this event, the State Bar took steps to improve its
internal controls by contracting with an independent auditor to
review its processes throughout the organization.
Additionally, the State Bar’s audit and review unit could do
more to ensure that staff receive appropriate training in areas
that need improvement. The audit and review unit conducts
audits twice a year, reviewing 250 recently closed discipline
cases and subsequently preparing a summary of the results
and related recommendations. Our review of its most recent
five audit summaries found some recurring deficiencies and
related recommendations for training. However, according to the
audit and review unit manager, no documentation demonstrates
the implementation of recommendations. She further stated
that managers generally address concerns in other ways, such
as discussing specific issues with individuals. Without a formal
process to ensure that the recommendations from its summaries
are implemented, the audit and review unit is not maximizing
the value of its efforts to improve the quality of investigations
and prosecutions.
Finally, of the 10 recommendations in our 2007 audit report
focused on the State Bar’s strategic planning, general fund,
and program operations, the State Bar has fully implemented

57

58

California State Auditor Report 2009-030

July 2009

seven recommendations, but it has implemented only partially
the three remaining recommendations. The recommendations
that the State Bar has partially implemented relate to improving
its collection efforts for discipline‑related costs, reducing its
disciplinary case backlog, and developing consistency in the
State Bar’s processing of disciplinary cases through the use of
checklists and random audits of discipline files. Consequently, the
State Bar has not fully benefited from the recommendations, which
were intended to increase the effectiveness of its processes.
The State Bar Has Not Fully Addressed Concerns Identified in a Review
of Its Cost Recovery Process
Although the State Bar contracted with a consultant in
September 2007 to review interdepartmental processes
surrounding its cost recovery processes, including its planned
cost recovery system, the State Bar did not fully address
recommendations for improving internal control weaknesses that
the consultant identified. The consultant’s review included an
assessment of the State Bar’s procedures and processes, relevant
risks, and adequacy of internal controls associated with its cost
recovery process. In the October 2007 review, the consultant
identified several areas of high risk that affected various State
Bar units. Specifically, the consultant noted a weakness in the
oversight of cash receipts, some risks of data discrepancies due to
several manual data entry points, and insufficient reconciliation
processes. In one of the specific observations, the consultant noted
the lack of strong controls to prevent or detect errors in recording
and monitoring payments. Additionally, the consultant noted
certain risks associated with this weakness, such as payments
not being properly recorded, monitored, or received in a central
location. In response to these risks, the consultant recommended
that management consider centralizing all collections through
member billing.
Although the State Bar had
anticipated that the new cost
recovery system would resolve
deficiencies noted by a consultant it
hired in September 2007, the State
Bar is still in the process of fully
implementing the system.

In response to some of the concerns raised in the consultant’s
review, the State Bar indicated that it would achieve corrective
action through various functions and processes associated with the
new cost recovery system it was developing. Although it anticipated
that the new cost recovery system would resolve the deficiencies,
the State Bar did not obtain the new system immediately and is still
in the process of fully implementing it.
The importance of fully correcting internal control weaknesses
was highlighted subsequent to the consultant’s review when
the State Bar discovered an alleged embezzlement by a former
employee. In October 2008 the State Bar publicly reported that
one of its long‑term employees had allegedly embezzled almost

California State Auditor Report 2009-030

July 2009

$676,000 in rents received from tenants of its San Francisco
headquarters building. The State Bar’s chief financial officer told
us that the employee was able to reorganize and consolidate
under her sole control, the process of invoicing building tenants
and receiving payments—initially two separate duties involving
two staff—without the knowledge of the finance office. The chief
financial officer also told us that the employee verbally directed
several building tenants to make rents payable to an account under
the employee’s control. Because the employee had taken over the
responsibility for collecting the checks and submitting them to
the finance office for deposit, the employee was able to intercept the
checks and divert them to a personal account.
According to the chief financial officer, after the State Bar
discovered the possible embezzlement, it placed the employee
on administrative leave and subsequently terminated her. The
State Bar also requested a criminal investigation and filed an
independent civil action against the former employee. In response
to this event, the State Bar took steps to improve its internal
controls by contracting with an outside auditor to evaluate the
internal controls over the specific area in which the alleged
embezzlement occurred. According to the chief financial officer,
the State Bar has already implemented some changes to its
procedures and plans to implement other recommendations in
the near future once the auditor’s work is complete. For example,
different staff within the State Bar’s Office of Finance now send
invoices to building tenants and receive payments. In addition,
the State Bar’s Department of Operations now prepares a tenant
ledger summarizing the future expected rental incomes for each
tenant. We reviewed a sample of the changes the State Bar said it
made after discovering the alleged embezzlement and found it has
implemented them.
According to the chief financial officer, the auditor is currently
in the process of evaluating internal controls throughout the
organization, specifically those controls over cash receipts,
procurements and disbursements, payroll, budgeting, grants,
treasury functions, and financial reporting. After completion of the
first phase of the project, which focused on the risks and controls
related to the State Bar’s cash receipts process, the auditor began
providing training concerning those controls. The chief financial
officer stated that the State Bar expects the training sessions to
educate key personnel in how to identify risks to the organization,
communicate the importance of internal controls, and identify
and implement a process for State Bar personnel to assess and
monitor risks.

When the State Bar discovered a
possible embezzlement, it placed
the employee on administrative
leave and subsequently terminated
her employment, and took steps to
improve its internal controls.

59

60

California State Auditor Report 2009-030

July 2009

The State Bar’s Audit and Review Unit Could Be More Effective by
Ensuring Its Recommendations Are Implemented
In keeping with one of its goals to enhance the quality of the Office
of the Chief Trial Counsel’s investigations and prosecutions, the
State Bar’s audit and review unit has identified some recurring
deficiencies and related recommendations for training during
its periodic audits of case files. However, it could do more to
ensure that staff receive appropriate training in areas that need
improvement. In August 2004 the State Bar created an internal
audit and review unit to handle complainant requests for review of
a decision by the Office of the Chief Trial Counsel to close his or
her complaint without disciplinary action. In addition to its review
function, through which staff receive and review requests to reopen
cases from complainants, the unit serves an audit function.
According to State Bar policy, for the audit function, twice each
year staff in the unit review at least 250 recently closed disciplinary
cases and complete a checklist to determine whether staff followed
specific requirements and whether the files include appropriate
documentation. After each audit, the audit and review unit prepares
a summary report of the deficiencies found and submits it to the
Office of the Chief Trial Counsel for consideration. The summary
also identifies training opportunities. According to the audit and
review manager, she makes such recommendations in areas where
errors could be avoided by training staff to properly follow policies
and procedures.
Although the State Bar’s internal
audit and review unit identified
recurring deficiencies and related
recommendations for training
from September 2005 through
February 2008, the unit did
not have any documentation
that the recommendations
were implemented.

We reviewed five audit summaries covering September 2005
through February 2008 and noted several recurring deficiencies
and related recommendations for training. For example, the
audit and review unit recommended training for staff in the proper
procedures for filling out a document specific to cases that proceed
to trial in each of the five summaries. In the most recent of these
summaries covering September 2007 through February 2008, the
audit and review unit noted 31 instances when this document was
not signed and 26 cases in which this document was not prepared
at all. The summary also identified 36 instances in which staff did
not send appropriate letters to complainants, respondents, or
witnesses and the audit and review unit recommended that training
be conducted on the proper procedures for sending the appropriate
letters. Unit staff also noted this condition in the previous summary
covering March 2007 through August 2007.
When we asked the State Bar for documentation that it had
followed up on these and other recommendations from its audits,
the audit and review manager told us no documentation of the
implementation of recommendations exists. She further stated
that the managers within the units generally address concerns

California State Auditor Report 2009-030

July 2009

through a combination of discussing specific issues with State Bar
staff, discussing general issues at their unit meetings, informally
reminding unit staff, or raising the issues with supervisors.
When we asked about the possibility of conducting training to
address the issues identified in the audits, the audit and review
manager stated it is possible but unnecessary and potentially
inefficient. She stated that the major issues identified in the audits
have improved over time. However, based on our review, the
number of recurring deficiencies present in the summaries suggests
the need for a more formal process of ensuring corrective action.
The audit and review manager expressed concerns about the cost
of creating and implementing a formal process of following up
on the implementation of its recommendations. Nonetheless,
the audit and review unit itself made these recommendations for
added training. Moreover, without a formal process to ensure that
its recommendations from the audit summaries are implemented,
the audit and review unit is not maximizing the value it can add to
improve the quality of investigations and prosecutions.
The State Bar Has Partially Implemented Three and Fully
Implemented Seven of Our 2007 Audit Recommendations
Our April 2007 report titled State Bar of California: With
Strategic Planning Not Yet Completed, It Projects General
Fund Deficits and Needs Continued Improvement in Program
Administration (2007‑030), included 10 recommendations to the
State Bar. Table 7 on the following page summarizes the status of
the State Bar’s efforts to implement these recommendations. The
State Bar has fully implemented seven of the recommendations
related to improvement of its strategic plans and tracking and
monitoring grant recipients under its legal services trust fund
program. However, it has only partially implemented the three other
recommendations related to improving the State Bar’s disciplinary
system, which is also the subject of the current report.
In the following subsections we update the status of the
three recommendations from our April 2007 report that
the State Bar has not fully implemented. In addition, although
we believe the State Bar has successfully implemented our prior
recommendations related to its strategic planning efforts, we
highlight a continuing challenge related to the implementation
of the information technology portion of the strategic plan.

61

62

California State Auditor Report 2009-030

July 2009

Table 7
Implementation Status of the Recommendations From the State Auditor’s 2007 Report
 

RECOMMENDATIONS

IMPLEMENTATION STATUS

To ensure that the strategic plan is fully implemented in an effective and timely manner, the State Bar of
California (State Bar) should do the following:
1.

Complete revisions of the departmental plans that will serve to implement the board of
governors’ strategic goals and ensure that each departmental plan contains meaningful
performance indicators that will measure how successfully goals are being met.



2.

Limit performance measurement to indicators that can be accurately tracked on an ongoing
basis and measure desired outcomes.



3.

Ensure that departments, during their departmental plan revision process, identify the
objectives and performance measures that can be attained, considering existing resource
levels and information technology capabilities. In addition, on an ongoing basis the
departments should revise their annual action plans to update this information given
additional information technology upgrades.



4.

Take the steps necessary to ensure information technology systems can capture the
required performance measurement data to support the projects needed to accomplish
strategic‑planning objectives, or devise alternative means of capturing this data such as using
a Microsoft Excel spreadsheet.



5.

To ensure that it maximizes collection efforts and its ability to implement the Rules of Court
as soon as the California Supreme Court approves procedures allowing their use, the State Bar
should complete its database and input all available information on the Client Security Fund
and disciplinary debtors, implement its proposed policy for pursuing debtors, and complete its
assessment of the costs and benefits of reporting judgments to credit‑reporting agencies.



6.

To effectively allocate its resources and justify its membership fees, the State Bar should align its
budgets with the results of its strategic planning process.



7.

To ensure that it receives all of the trust account interest income available for its legal services
program, the State Bar should consider conducting activities, such as interviewing or surveying a
sample of members who do not report whether they have established trust accounts. This would
allow the State Bar to determine whether some members are holding clients’ funds without
establishing trust accounts and remitting the interest to the State Bar. If the State Bar finds that
nonreporting members do, in fact, hold client funds that are nominal in amount or are held for a
short period of time, it should seek the authority to enforce compliance reporting.



8.

To properly monitor recipients of grants under its legal services program, the State Bar should
ensure that it performs and documents all required monitoring reviews and should develop a plan
to perform the fiscal on‑site monitoring visits that were not performed while staying current with
its ongoing monitoring requirements.



9.

The State Bar should continue its efforts to reduce the backlog of disciplinary cases to reach its goal
of having no more than 200 cases.*

10.

The State Bar should ensure that staff use checklists of significant tasks when processing case
files and fully implement its 2005 policy directive for random audits of case files by the supervising
trial counsel.




Sources:  Bureau of State Audits’ (bureau) report, titled State Bar of California: With Strategic Planning Not Yet Completed, It Projects General Fund Deficits
and Needs Continued Improvement in Program Administration (2007-030), issued in April 2007, and bureau analysis during the current audit.
*  Since the 2007 report, the State Bar has changed its backlog goal to having no more than 250 cases in backlog at year‑end.
 = Implemented.
= Partially Implemented.



California State Auditor Report 2009-030

July 2009

The State Bar Needs to Continue Improving Its Cost Recovery Efforts
In addition to the new concerns we have raised in Chapter 2 of
this current report, the State Bar has also not fully implemented
our 2007 recommendation regarding its recovery of discipline‑related
costs. Effective April 2007, the California Supreme Court approved
a rule that authorized the State Bar to enforce as a money judgment,
disciplinary orders directing payments of costs. As previously
discussed in Chapter 2, a money judgment is an order entered
by a court that requires payment of money. Previous to this new
authority, the State Bar relied on billing attorneys through their
annual membership bills and contracting with a collection attorney
to recover discipline‑related costs. In 2007 we recommended that,
after the Supreme Court’s approval, the State Bar should complete
its cost recovery database and input all available information on
the Client Security Fund and on disciplinary debtors, implement its
proposed policy for pursuing debtors, and complete its assessment
of the costs and benefits of reporting judgments to credit‑reporting
agencies. According to the chief financial officer, the completion
of the database would allow the State Bar to track all discipline
costs and reimbursements, as well as the expenses associated with
billing and collecting these amounts, in a single program, enabling
all departments to be more efficient when performing their specific
job functions related to billing and collecting discipline costs.
Although the State Bar has implemented its pursuit policy and
obtained its new database that will capture amounts owed
and payments received from individual debtors, it has not yet
entered all of the Client Security Fund and disciplinary debtors’
information. In May 2009 the State Bar’s acting general counsel
stated that he expects the new database to be fully online within
60 days.
The State Bar Is Continuing Its Efforts to Reduce the Backlog of
Disciplinary Cases, but It Has Not Yet Reached Its Goal
The State Bar has only partially implemented our 2007
recommendation related to its reduction of backlogged cases.
Although the State Bar reported in its 2008 Report on the State Bar
of California Discipline System that it has decreased its disciplinary
case backlog from 327 cases in 2007 to 3115 cases in 2008, it has
still not reached its most recent goal of having no more than
250 backlogged cases. As discussed in Chapter 1, the State Bar
5	

In 2008, the State Bar discontinued including cases in its backlog where a special deputy trial
counsel was appointed to act in the chief trial counsel’s place, even though these types of cases
were included in previous years. For consistency, we include these 21 cases as part of the State
Bar’s 2008 backlog.

Although the State Bar reported
that it has decreased its disciplinary
case backlog from 327 cases in 2007
to 311 in 2008, it has not reached
its goal of having no more than
250 cases backlogged.

63

64

California State Auditor Report 2009-030

July 2009

considers a case part of its backlog when its staff has not resolved
the case within six months of its receipt or when the State Bar
designates the case as complex and has not resolved it within
12 months of receiving the complaint.
As reported in our 2007 audit, the State Bar told us that its
backlog goal of 200 cases was an aggressive goal and that it would
take additional effort to lower the number of backlogged cases.
Specifically, in our 2007 report, the State Bar asserted that the goal
was based on historical data about backlogged cases, 2006 staffing
issues, and the former chief trial counsel’s experience with handling
disciplinary cases. In response to our audit finding, the former chief
trial counsel noted that it revised its goal to 250 cases. Despite the
increase in its target, the State Bar has still not reached the new
goal. The former chief trial counsel told us that the office is taking
steps to reduce the backlog, such as establishing incremental goals
to reach its target and creating regular backlog reports to update
the appropriate staff.
The State Bar Should Use Checklists for Processing Discipline Cases and
Perform Random Audits More Consistently
The State Bar has not fully
implemented the recommendations
from our 2007 audit related to its
processing of disciplinary case files.

The State Bar has not fully implemented the recommendations
from our 2007 audit related to its disciplinary case files. In this
recommendation, we identified two State Bar policies established
in 2005 to improve its processing of disciplinary cases. The first
policy directs staff to use checklists to record significant tasks
completed during processing. In our current review of 10 case files
sent to investigation in 2007 or 2008, although checklists were
present, we found that eight were incomplete and supervisors
had not signed off on three. The second policy directs supervising
trial counsels to randomly audit one open investigation file each
month for each investigator under their supervision. The policy
also requires supervising trial counsels to report on May 1 and
November 1 of each year a summary of the results of these audits
to their deputy chief trial counsel. In our current review, we found
inconsistent compliance with the random audit policy. Specifically,
two of four units could not demonstrate that they had completed
all of the random audits. A deputy chief trial counsel acknowledged
that not all required audits had been performed in 2008 for one of
the four units. For another unit, an assistant chief trial counsel
stated that the State Bar did not have documentation for some of
the audits. Regarding the preparation of summaries related to the
results of the random audits, only one of the four units completed
the summaries on time. For another of the four units, the State Bar
could not provide any evidence that the summaries were ever
prepared. Although the remaining two units prepared summaries,
they did not do so in a timely manner. In one case, although the

California State Auditor Report 2009-030

July 2009

unit’s summaries were due May 1 and November 1, 2008, the
supervising trial counsel submitted both of them in February 2009.
For the other unit, the summary due on November 1, 2008, was
completed in March 2009.
The State Bar Has Improved Its Strategic Plan but Cannot
Implement the Information Technology Portion of the Plan
Without Additional Resources
Although the State Bar implemented the four recommendations
from our 2007 audit related to updating its strategic plan, as
shown in Table 7, it has only secured funding for a portion
of its planned technology initiatives. Of particular note, the
fourth recommendation on Table 7 reflects our recommendation
that the State Bar should either take the steps necessary to ensure
that its information technology systems can capture the required
performance measurement data to support the projects needed to
accomplish strategic planning objectives or devise alternative means
of capturing this data, such as using a Microsoft Excel spreadsheet.
During our current review we found that departments currently
use Microsoft Excel spreadsheets or other methods to capture this
information. The manager of planning and administration indicated
that the State Bar plans to implement a new information technology
system that will capture this strategic planning data and allow
centralized access to the departments’ performance indicators. For
purposes of the summary presented in Table 7, we noted that the
State Bar has fully implemented the recommendation because it is
using methods, including Microsoft Excel spreadsheets, to capture
performance measurement information. However, since it has yet
to implement the new information technology system, we examined
the status of its efforts in more detail as part of our current audit.
Overall, we found that the State Bar has developed detailed
plans related to its information technology needs. However,
it does not yet have funding to accomplish all of its planned
information technology goals and objectives. Specifically, we
reviewed the State Bar’s Information Technology Strategic Plan
(IT plan). In March 2009 a consultant hired by the State Bar
finalized the IT plan, which outlined the State Bar’s strategic
goals and objectives for information technology. It included an
implementation plan that identified steps the State Bar determined
were necessary to attain its vision for information technology. We
reviewed the IT plan’s strategic goals and objectives as well as the
implementation plan and verified that they are in alignment. In
addition, we determined that the IT plan’s goals and objectives
are in alignment with the State Bar’s 2008 Long‑Range Strategy.
Further, between November 2006 and April 2009, contractors hired
by the State Bar finalized business cases related to acquiring new

Although the State Bar has
developed detailed plans related
to its information technology
needs, it does not yet have funding
to accomplish them.

65

66

California State Auditor Report 2009-030

July 2009

admission, association management, case management, and court
case management systems. Planning for these new systems was also
included in the IT plan.
Although the planning efforts related to its information technology
needs are detailed, the State Bar has yet to secure funding for all of
its plans. According to its chief information officer, the State Bar
proposed a fee increase for the 2007 fee authorization bill to pay
for upgrades outlined in the IT plan. The chief information officer
estimated that these upgrades would cost $22 million. He told us
that the State Bar originally proposed an increase in member fees
of $25 per year over five years to fully fund these costs. However,
the Legislature approved only a $10 fee increase, which the State
Bar began assessing on each active member beginning in 2008.
The State Bar has determined that this amount would only cover
upgrades that addressed the most minimal needs, such as replacing
computers and printers. The chief information officer estimates that
the State Bar will receive a total of approximately $5.1 million over
three years from the $10 fee increase.
The chief information officer estimates that funding the
remaining phases of the IT plan upgrades will cost an additional
$17 million. He also stated that a request to extend the initial
information technology special fee assessment would be part of the
State Bar’s overall funding strategy based on needs and resources
available next year when the sunset of the current fee legislation
will come before the Legislature. If followed, the State Bar’s
implementation plan, which aligns with its IT plan, will prove
useful in justifying additional funding for the State Bar’s upgrade of
information systems.
Recommendations
To ensure that it has adequate internal controls in place, the
State Bar should fully implement recommendations from audits
and reviews of the State Bar and its functions. Further, the
State Bar should ensure that its new cost recovery system and
related processes address the issues identified in the consultant’s
2007 report on its cost recovery process.
To improve its effectiveness, the State Bar’s audit and review unit
should establish a formal process to follow up on and ensure
implementation of recommendations from its twice‑yearly audits.

California State Auditor Report 2009-030

July 2009

The State Bar should continue acting on recommendations from
our 2007 report related to the following:
•	 Continue its efforts to enter all of the Client Security Fund and
disciplinary debtor information into its database.
•	 Take steps to reduce its inventory of backlogged cases.
•	 Improve its processing of disciplinary cases by more consistently
using checklists and performing random audits.
To ensure that it can justify requests to fund the remaining
information technology upgrades, the State Bar should follow its
IT plan.
We conducted this review under the authority vested in the California State Auditor by Section 8543
et seq. of the California Government Code and according to generally accepted government auditing
standards. We limited our review to those areas specified in the audit scope section of the report.
Respectfully submitted,

ELAINE M. HOWLE, CPA
State Auditor
Date:	 July 21, 2009
Staff:	

Tammy Lozano, CPA, CGFM, Project Manager
Kathleen Klein Fullerton, MPA
Scott Herbstman, MPP
Josh Hooper
Nuruddin Virani
Benjamin Ward, CISA, ACDA
Benjamin W. Wolfgram, ACDA

Legal:	 Scott A. Baxter, JD
For questions regarding the contents of this report, please contact
Margarita Fernández, Chief of Public Affairs, at 916.445.0255.

67

68

California State Auditor Report 2009-030

July 2009

Blank page inserted for reproduction purposes only.

California State Auditor Report 2009-030

69

July 2009

(Agency response provided as text only.)
July 6, 2009
The State Bar of California
180 Howard Street
San Francisco, California 94105-1639
Elaine M. Howle, State Auditor*
Bureau of State Audits
555 Capitol Mall, Suite 300
Sacramento, CA 95814
Re: State Bar of California Response to State Audit Report of July, 2009
Dear Ms. Howle:
Please find enclosed the response of the State Bar of California to State Audit Report 2009-030 (July 2009).
Consistent with your request, we have submitted this written response in the envelope provided and the entire response,
including this cover letter, has been reproduced on the enclosed diskette, using a Microsoft Word file.
I wish to extend my thanks to the audit team and appreciate their hard work in preparing the report. We look forward to
working with you and your staff as this process continues.
Sincerely yours,
(Signed by: Judy Johnson)
Judy Johnson
Executive Director
Enclosure

*  California State Auditor’s comments begin on page 79.

70

California State Auditor Report 2009-030

July 2009

Chapter 1
Recommendation No. 1
To explain and justify cost increases, and to measure the efficiency of its disciplinary system as well as
the impact of policy changes, the State Bar should account separately for the expenses associated with the
various functions of the disciplinary system, including its personnel costs. This can be accomplished through
a time study of staff time and resources devoted to a specific function. The State Bar should also ensure that
all of its offices track expenses consistently.
•	 Response
1

The State Bar agrees. Beginning with its 2010 budget, the State Bar will explore ways to separately budget
and account for the various discrete functions of the disciplinary system.
•	Comments
The State Bar can only estimate the costs of each of its discrete disciplinary functions because from time to
time Office of the Chief Trial Counsel staff must be reassigned from one functional unit to another to meet
changing demands in public protection over which the State Bar has little control. Readjusting cost centers
at different times during the year to track actual costs of the functional divisions may be problematic.
Recommendation No. 2
The State Bar should adjust its methodology going forward for calculating case processing times for
investigations so that the calculations include time spent to process closed and forwarded cases for the
relevant year only. For example, for its 2009 annual discipline report, the State Bar should report the average
processing time for only cases closed or forwarded in 2009.
•	 Response
The State Bar agrees. Beginning with its annual discipline report in 2010, the State Bar will include the
average case processing time for cases closed or forwarded by relevant year.
•	Comments

2

3

Additionally, to comply with the requirements of Business and Professions Code section 6086.15,
subdivision (b), the State Bar will continue to use its current methodology for three additional years. The
State Bar agrees that it should use the most accurate method for computing the average time for resolved
investigations. Using the suggested methodology may improve tracking of year-to-year trends and provide a
more accurate method for computing the average time for resolved investigations. While the methodology
recommended by the state auditors differs from the one the State Bar has historically used, the data yielded
from these calculations varies only slightly. For example, using its methodology, the State Bar calculated
average time in days for resolved investigations in 2007 at 186. The state auditors’ suggested methodology
calculated the 2007 average case processing time at 202, a difference of 16 days. The State Bar believes

71

California State Auditor Report 2009-030

July 2009

Response to DRAFT Report of the State Auditor
July 6, 2009
Page 2

that the primary reasons for the relatively slight increases in case processing times over the four‑year
period reviewed by the state auditors is due to the more sophisticated and complex nature of attorney
misconduct cases.
Recommendation No. 3
The State Bar should include additional information regarding backlog in its annual discipline report to the
Legislature. Specifically, the State Bar should identify the number of complex cases over 12 months old in
its backlog.
•	 Response
The State Bar agrees. Beginning with its annual discipline report in 2010, the State Bar will specifically identify
the number of complex cases over 12 months of age within its backlog.
•	Comments
Historically, the State Bar’s annual discipline report has contained information about the age of
complaints at year’s end as well as the number of complaints between 13 and 21 months of age, and the
number of complaints that are more than 21 months of age. Moreover, all cases over 12 months of age
are—by statute—backlogged cases. (See Bus. & Prof. Code, section 6094.5.) The State Bar will clarify and
identify complex investigations over 12 months of age, stating that number in the aggregate and indicating
that such matters are backlogged.
Recommendation No. 4
The State Bar should identify in its annual discipline report the types of cases that it does not include in its
calculations of backlog and explain why it chooses to exclude those cases. Specifically, the State Bar should
identify that it presents its backlog by case, rather than by member, and that it does not include intake,
non‑attorney, abated and outside examiner cases.
The State Bar should identify the composition of each year’s backlog to allow for year-to-year comparisons,
as the law requires.
•	 Response
The State Bar agrees. Beginning with its annual discipline report in 2010, the State Bar will identify in each
annual discipline report the types of cases that are not included in the backlog and an explanation of
the legal, practical, and policy rationales for excluding certain types of matters from backlog calculation.
(See comment below.) The State Bar will also indicate that it presents its backlog by case and not by the
number of attorneys involved in the case.

4

72

California State Auditor Report 2009-030

July 2009

Response to DRAFT Report of the State Auditor
July 6, 2009
Page 3

•	Comments
The State Bar has not included the following types of matters in its backlog calculation:
•	 Non-attorney matters: While statutes provide for civil remedies that may be exercised against
unlicensed persons who are illegally engaged in the unauthorized practice of law, these remedies
are enforced in the state courts—outside of the State Bar’s disciplinary system—and generally
in conjunction with state or local law enforcement officials in related criminal prosecutions. By
definition, disciplinary proceedings apply only to attorneys who are members of the State Bar, and
the statutory term “backlog” is applicable only to those matters.
•	 Abated Matters: Cases are abated when it is unlikely they will be investigated or prosecuted due
to other circumstances. These circumstances include a lawyer’s serious mental or physical infirmity
or the lawyer’s disbarment or disciplinary resignation. A small number of cases are abated due to a
related pending proceeding in another court system. Once resolved, the State Bar can investigate
quickly, relying on the facts and evidence developed in the other proceeding.
•	 Cases Handled by Outside Examiners: Occasionally, the State Bar should not review or prosecute
some matters because of a conflict of interest, for example, complaints of attorney misconduct
involving a member of the Board of Governors or a staff attorney. Such matters are referred to
outside examiners and are pursued independently of the State Bar. The Office of the Chief Trial
Counsel has no control over these matters and is careful to avoid any perception of involvement.
•	 Re-Opened Cases: In calculating its case backlog since 2006, the State Bar considers only the
number of days or months a matter is actually under investigation. Often a case is closed after
several weeks or months. If new information is received later or a “second look” is indicated, the
same matter may be reopened. The six-month clock begins to run again from the time the matter
is reopened. The intervening days or months during which the case was closed should not be
considered as part of the backlog calculation.
We do not object to identifying the above-referenced matters in our annual discipline report. The State Bar
agrees that providing additional information about other types of cases it handles may be helpful to
stakeholders in evaluating the overall workload and performance of the State Bar.
Because a “complaint” arises out of a discrete set of facts and issues, varying little with the number of
respondent attorneys involved, the State Bar believes that counting and reporting its inventory by the
number of “complaints” on file and in backlog status—regardless of the number of attorneys listed in
the complaint— is the most accurate method of depicting workload.

73

California State Auditor Report 2009-030

July 2009

Response to DRAFT Report of the State Auditor
July 6, 2009
Page 4

Chapter Two
Recommendation No. 5
To ensure that it maximizes the amounts that it may recover to defray the expense of disciplining attorneys,
the State Bar should update annually its formula for billing discipline costs and include due dates on all bills.
Additionally, to report accurately its collection amounts and to analyze the effectiveness of its collection
efforts, the State Bar should track how much it anticipates receiving against how much it actually receives in
payments for discipline costs each year.
•	 Response
The State Bar agrees.
Recommendation No. 6
To make sure that it is using the most cost-effective methods to recover disciplinary expenses, the State Bar
should complete a cost-benefit analysis to determine whether the benefits associated with using collection
agencies outweigh the costs. If it determines that the collection agencies are, in fact, cost effective, the
State Bar should redirect in-house staff to other disciplinary activities. Finally, the State Bar should also
research the various collection options available, such as the Franchise Tax Board’s Interagency Intercept
Collections Program.
•	 Response
The State Bar agrees. The State Bar, however, notes a prior recommendation that it pursue participation
in the Franchise Tax Board’s Interagency Intercept Collections Program was unsuccessful for other public
policy reasons. (See comment below.)

5

•	Comments
In 2001, the State Auditor recommended that “the State Bar should pursue additional collection efforts,
such as participation in the State’s Offset Program.” (California State Auditor, Report No. 99030, p. 21.) The
State Bar’s proposed legislation for that purpose was rejected. After observing the public interest advanced
through the intercept program, the legislative analysis of the State Bar’s proposal stated: “It does not seem
that ensuring that Bar members repay their disciplinary and Client Security Fund costs, so that the annual
bar dues could be reduced, rises to the same public purpose, enough to use the Franchise Tax Board as a
collection agency.” (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 352 (2001-2002 Reg. Sess.) as amended
April 30, 2001, p. 7.) Since then, the State Bar has successfully pursued other collection methods, including
the use of collection agencies and the change in law to allow for automatic judgments on discipline orders
imposing costs and CSF restitution.

6

74

California State Auditor Report 2009-030

July 2009

Response to DRAFT Report of the State Auditor
July 6, 2009
Page 5

Chapter Three
Recommendation No. 7
The State Bar should continue its efforts to determine the appropriate caseload for its staff to effectively
monitor probationers and adjust staffing as appropriate.
•	 Response
The State Bar will continue its ongoing efforts to determine the appropriate caseload for its staff to
effectively monitor probationers and adjust staffing as appropriate.
•	Comments
7

In 2009, the Office of the Chief Trial Counsel sought authorization for and hired, an additional probation
deputy. The Office of Probation now has 5 full-time deputies.
Recommendation No. 8
The State Bar should ensure that staff complies with procedures for promptly sending initial letters
reminding disciplined attorneys of the terms of their probation.
•	 Response

8

In 2008, the State Bar revised its timeline for sending initial letters to a more realistic 14 days. The State Bar
has set policy and procedural guidelines for its staff and will continue to strive to ensure compliance.
•	Comments

9

It should be noted, however, that probationers are already fully aware of the obligations and conditions of
probation, having received either a written stipulation or a State Bar Court decision and, in all cases except
those imposing a reproval, a California Supreme Court order imposing discipline and probationary terms.
Lawyers are expected to obey court orders without reminders from the Office of Probation.
Recommendation No. 9
The State Bar should increase compliance with its goal to improve timeliness and consistency of probation
violation referrals to the Office of the Chief Trial Counsel. If the State Bar believes there are instances when
it is appropriate for probation staff to deviate from its 30-day goal, it should establish parameters specifying
timeframes and conditions acceptable for a delay of probation violations.

California State Auditor Report 2009-030

75

July 2009

Response to DRAFT Report of the State Auditor
July 6, 2009
Page 6

•	 Response
Timeliness and consistency in referring probation violations to the Chief Trial Counsel are important goals,
both in terms of public protection and rehabilitation. The probation staff bases a referral for probation
violations on the facts and circumstances as well as the exercise of appropriate discretion and judgment
in consultation with their attorney supervisors. An inflexible set of guidelines, parameters or timeframes is
neither reasonable nor practical. To impose rigid referral standards may also result in the expenditures of
resources when there is no reasonable expectation that the State Bar Court will revoke probation.

10

•	Comments
The State Bar has no additional comments regarding this recommendation.
Chapter Four
Recommendation No. 10
The State Bar should implement promptly recommendations from audits and reviews of the State Bar and
its functions. Further, the State Bar should ensure that its new cost recovery system and related processes
address the issues identified in the 2007 report on its cost recovery process.

11

•	 Response
The State Bar agrees.  The State Bar has implemented changes in its manual and automated processes
and controls to address issues raised in the 2007 report on its cost recovery process.  These processes and
controls apply to the new cost recovery system. 
•	Comments
The State Bar expects to complete uploading of data from its AS400 system to its new cost recovery system
before mid-July.
Recommendation No. 11
The State Bar’s audit and review unit should establish a formal process to follow up on and ensure
implementation of recommendations from its twice-yearly audits.
•	 Response
The State Bar agrees. We will establish a process by which the audit and review unit conducts twice-yearly
training sessions to review audit findings and advise staff regarding the unit’s recommendations.

12

76

California State Auditor Report 2009-030

July 2009

Response to DRAFT Report of the State Auditor
July 6, 2009
Page 7

•	Comments
The audit and review unit has found that the overwhelming majority of cases are handled appropriately
in all meaningful respects, even given the sheer volume of cases processed by the Office of the Chief Trial
Counsel. The practice of allowing individual unit managers to informally review problems has, to date,
paid off. As the most recent audit and review report concluded, many of the issues or problems that had
appeared previously “have been significantly improved and/or been corrected.”
The State Bar concurs that there is value in formalizing the process by which staff is informed of the findings
and recommendations of each audit. The State Bar believes this can be best accomplished by having the
audit and review unit conduct training sessions for the attorneys and investigators, rather than individual
unit managers, following the release of each audit report.

Recommendation No. 12
The State Bar should continue taking steps to reduce its inventory of backlogged cases.
•	 Response
Although the current backlog level is certainly reasonable, the State Bar generally agrees that it is important
to continue to take steps to reduce its inventory of backlogged cases.
•	Comments

13

The discipline unit’s primary goal is public protection. We therefore give higher priority to serious attorney
misconduct than less serious complaints that may be older. The case backlog is simply a measure of the
timeliness of the investigation process and should not be the only tool used to assess the State Bar’s
public protection efforts. At the end of 2008, the backlog number was 290, the second lowest in the last
ten years. Furthermore, in most years, despite increasing case complexity, approximately 80 percent of all
investigations are completed within the normative guidelines of the backlog statute.
Recommendation No. 13
The State Bar should continue improving its processing of disciplinary cases by more consistently using
checklists and performing random audits. The State Bar should also continue its efforts to enter all of the
Client Security Fund and disciplinary debtor information into its database.
•	 Response

14

The State Bar believes that there is some merit in the use of checklists, but that their importance has been
overstated. The State Bar believes that the audits conducted by Audit and Review— its so-called “second
look” procedure and monthly random audit of open investigations – are a better check to ensure quality and
proper case handling. Audit and Review should consider and review “checklist compliance” as well as other
quality assurance measures.

California State Auditor Report 2009-030

July 2009

Response to DRAFT Report of the State Auditor
July 6, 2009
Page 8

Recommendation No. 14
To ensure that it can justify requests to fund the remaining information technology upgrades, the State Bar
should follow its information technology strategic plan.
•	 Response
While allowing for modification of the plan to reflect continuing technological advancements and changes
in the Bar’s staffing levels and mission, the State Bar generally agrees that it should continue to follow its
technology strategic plan.
•	Comments
The State Bar’s ability to implement its technology strategic plan is obviously dependent on its ability
to obtain adequate additional sources of revenue to fund its IT efforts. Legislative authorization for such
additional resources can lead to long-term cost savings, especially if a member and stakeholder interface
can be made interactive and online.

77

78

California State Auditor Report 2009-030

July 2009

Blank page inserted for reproduction purposes only.

California State Auditor Report 2009-030

July 2009

Comments
CALIFORNIA STATE AUDITOR’S COMMENTS ON THE
RESPONSE FROM THE STATE BAR OF CALIFORNIA
To provide clarity and perspective, we are commenting on the
response to our audit report from the State Bar of California
(State Bar). The numbers below correspond to the numbers we
placed in the margins of the State Bar’s response.
Although the State Bar states that it agrees with our recommendation,
from its response it is unclear how it specifically intends to address
the recommendation. We look forward to the State Bar’s six‑month
response for specific proposals on how it will separately budget and
account for the functions of the disciplinary system. As stated in
our recommendation, the State Bar could conduct a time study of
staff time and resources devoted to a specific function. For example,
the State Bar could track the staff time and resources spent on a
sample of cases. This would not only allow the State Bar to more
effectively measure its costs based on empirical data, but would
also help it to identify any delays that may occur in its processing
of cases.

1

By stating that it will continue to use its current methodology for
three additional years, we take this to mean that the State Bar will
be reporting two separate case processing times in its 2009, 2010,
and 2011 annual discipline reports—one based on our suggested
methodology and another based on its current methodology which,
as we state on page 34, is not a meaningful measure of yearly case
processing time.

2

Although the State Bar is correct in noting the 16‑day variance
between its calculation and our calculation of its 2007 average
case processing time, we would not characterize the State Bar’s
understatement of average case processing time as slight given the
impact of the variances over multiple years. In particular, because
the State Bar averages the case processing time for every case
closed since 1999, it has reported a four‑year decreasing trend to
the Legislature, even though the trend has actually increased as
described on page 35 of our report. If the State Bar does not change
its methodology, it will continue to misrepresent its true case
processing time.

3

79

80

California State Auditor Report 2009-030

July 2009

4

We believe the information the State Bar intends to provide in
its annual discipline reports to the Legislature will be helpful
in evaluating the State Bar’s performance. However, we note that
the State Bar omitted in its response any discussion of the cases that
remain in the intake unit beyond six months. As shown in Table 3
on page 38, there were 32 cases that remained in the intake unit for
more than six months in 2008, and the State Bar reported a total
backlog of 290 for that year. We believe it is important for the State
Bar to inform its stakeholders, including the Legislature, that it does
not include these types of cases in its backlog calculations.

5

We acknowledge on page 48 of our report that the State Bar was
not successful in gaining legislative approval to use the Franchise
Tax Board’s Interagency Intercept Collections Program in 2001.
However, we also note on that same page that if the State Bar does
conduct a cost benefit analysis of its current collection methods and
finds that they are not beneficial, it may be worthwhile to again seek
legislative approval.

6

We are puzzled that the State Bar characterizes its current
collection methods as successful when it has not conducted any
cost benefit analyses, and when the costs of some of its collection
efforts outweighed the benefits. For example, on page 46, we
describe how the State Bar paid its collection attorney $19,400
in 2007, even though the attorney collected only $11,600 in
discipline payments.

7

Although we acknowledge the State Bar recently hired a
fifth probation deputy, as we state on page 53, the supervisor of
the probation office stated she has not yet determined whether
five deputies will be adequate to effectively monitor probationers.

8

Although the State Bar asserts in its response that in 2008 it revised
its timeline for sending initial letters to a more realistic 14 days, we
note that its Probation Deputy Manual dated March 2009 does not
reflect this revision.

9

The State Bar’s comment that lawyers are expected to obey court
orders without reminders from the Office of Probation (probation
office) is puzzling in light of the office’s mission and existing policy.
In particular, as we state on page 53, part of the probation office’s
mission is to assist attorneys to successfully complete the terms
of their probation. We understood that the State Bar viewed its
practice of sending initial letters to probationers as an important
step in accomplishing the office’s mission because it established a
policy for its probation deputies to send the initial letters within a
certain number of days. In contrast to this policy, the State Bar’s
comment here suggests that sending these letters is not important.

California State Auditor Report 2009-030

July 2009

We are not suggesting that the State Bar impose inflexible
guidelines or set rigid referral standards. Instead, we believe
that the State Bar would benefit from establishing a thoughtful
referral policy that allows for discretion while also maintaining
reasonable and consistent standards. As we describe beginning
on page 54, our concerns are based on the fact that probation
violations were referred a significant number of days after the
related violations occurred or the same types of violations were
referred inconsistently. For example, for five of 11 referrals we
reviewed, the probation office took from 96 days to 555 days after
the violations occurred to make the referrals. In addition, we noted
that the probation office took three days to refer one attorney to the
Office of the Chief Trial Counsel but took 96 days to refer another
attorney for the exact same violation. Discrepancies such as these, if
not properly justified or documented, can lead to the appearance of
favoritism or leniency.

10

Further, it is unclear why the probation office would have
established a goal of making referrals within 30 days if the State
Bar did not believe staff could meet this goal for a majority of its
cases. We appreciate that certain circumstances may prevent the
probation office from meeting its 30‑day goal. However, we believe
it is reasonable for the State Bar to establish a set of circumstances
where it is appropriate for staff to make a judgment to deviate from
the 30‑day goal, and to establish a reasonable time frame for a delay
in the referral. Equipped with such guidelines, probation office
staff would be able to document their rationale for deviating from
the policy.
Based on a concern raised by the chief financial officer while the
State Bar was reviewing our draft report, we changed the wording
in the recommendation from “promptly” to “fully.” We believe that
this change properly highlights the need for the State Bar to fully
address recommendations made in reviews.

11

We were not able to verify whether the changes the State Bar refers
to in its response adequately address the issues because it did not
inform us of these changes until after it had received a draft copy
of our report. Further, because the new cost recovery system is not
yet fully functional, we could not determine whether the system
will correct the identified issues, nor were we able to assess the
reliability of the data.

12

We do not suggest that measuring backlog is the only tool that
can be used to assess the State Bar’s public protection efforts. We
also disagree with the State Bar’s characterization of the backlog’s
importance. Promptly processing discipline cases is not only
fundamental to the State Bar’s mission of protecting the public,

13

81

82

California State Auditor Report 2009-030

July 2009

but also provides a key performance measure that informs the
Legislature of the effectiveness of the disciplinary system and allows
for year‑to‑year comparisons.
Moreover, because the State Bar has changed its methodology for
calculating its backlog twice in the past five years, it is not accurate
to state that 290 is the second lowest backlog in the past 10 years.
Specifically, as we mention on page 39, the State Bar began to
exclude reopened cases in 2006, and outside examiner cases in
2008. Because the types of cases that the State Bar has included in
its backlog calculations has varied over the years, it is difficult to
make a meaningful assessment of the progress the State Bar has
made in reducing its backlog during this period.
14

We have not attempted to rank the significance of policies designed
to improve the processing of disciplinary case files, as the State
Bar’s comments seem to imply. Instead, as described beginning on
page 64, we evaluated two of these policies and found that neither
was fully effective. In particular, we found that eight of 10 checklists
in our sample were not complete, and supervisors had not signed
off on three. Additionally, we found that two of the State Bar’s
four units could not demonstrate that they had completed all of the
random audits.

California State Auditor Report 2009-030

July 2009

cc:	

Members of the Legislature
Office of the Lieutenant Governor
Milton Marks Commission on California State
Government Organization and Economy
Department of Finance
Attorney General
State Controller
State Treasurer
Legislative Analyst
Senate Office of Research
California Research Bureau
Capitol Press

83