Dear state Supreme Court,

The sections of the State Bar of California help educate practitioners in areas of practice - but there are inherent structural problems in the mixing of a public agency and a private trade association. The public agency identity means that sunshine statutes properly apply, as they do now to the State Bar, including both the Public Records Act and the Bagley-Keene Open Meetings Act. The sections, however, are trade associations of competitors, who unsurprisingly find such transparency unnecessary and burdensome.

But the problem goes deeper. The American system rests on a bedrock of state independence. In our view, the state does not ideally own and operate private commerce, nor does private commerce operate the state. The two are properly separate and distinct. We can all argue about how large and intrusive the state should be, but we should not be supporting its capture by the private interests - particularly by the very interests regulated on behalf of the people.

By way of political background, the Noerr-Pennington doctrine, which protects certain private entities from antitrust laws, has allowed combinations of competitors - trade associations - to proliferate. See Eastern Railroad Presidents Conference v. Noerr Motor Freight Inc., 365 U.S. 127 (1961); United Mine Workers v. Pennington, 381 U.S. 657 (1965). Our Center for Public Interest Law has been monitoring these state agencies for 35 years, including the State Bar. We have borne witness to their expanding influence. But there is a final bright line necessarily drawn that stops short of delegating actual public authority to those with such a conflict.

The bar's Board of Trustees and other bar officials are admirable persons. And there are aspects of regulation that benefit from expertise, especially when relevant to an issue being decided. But where there is some occupational or compensatory conflict, particularly where restraints of trade are involved; they are not properly delegated the role of unilateral public decision-makers.

This basic precept is North Carolina Dental Board v. Federal Trade Commission, 135 S. Ct. 1101 (2015): "Limits on state-action immunity are most essential when the State seeks to delegate its regulatory power to active market participants, for established ethical standards may blend with private anticompetitive motives in a way difficult even for market participants to discern. Dual allegiances are not always apparent to an actor. In consequence, active market participants cannot be allowed to regulate their own markets free from antitrust accountability."

Of all the agencies of California, none is more controlled by those regulated than the State Bar. Its Board of Trustees has a supermajority of attorneys (13 of 19), and six are elected directly by the profession. Nor is the issue theoretical. For example, one State Bar decision determines the supply of attorneys by controlling supply. And that is one of many decisions that would trigger federal antitrust liability unless the actor is legitimately sovereign. In fact, supply control is a form of price fixing that is per se unlawful.

The reaction of the State Bar is to state that "the State Supreme Court" provides independent state supervision, and that cures the "active participant" control of licensed attorneys. It is correct that you are a legitimate overseer and capable of conferring "state action" immunity status. And I do not contend that there should be no admission criteria. Incompetent attorneys can cause irreparable harm. But the current system reflects the tribal assumptions and deferential values of our grouping, not the broader interests at issue. For example, the bar exam does not ensure competence in areas of practice. Continuing legal education does not test in the area of law practiced. Also, the bar allows 20 percent of practitioners to practice without malpractice coverage (making them substantially immune). Even the Client Security Fund does not cover malpractice judgments. If the State Bar licensing system's raison d'etre is to prevent incompetent practice that can injure consumers, is it really doing that? As the former State Bar discipline monitor, I did not think so.

Unconscious bias works in both directions. While it leads to raising the drawbridge once in the castle on the bona fide perception that lawyers must be specially trained and therefore "accomplished," it may lead to the absence of entry criteria where our own sensibilities are less involved. Take the bar's open season allowing any school, regardless of performance, to qualify for bar exam entry. While the bar exam sets up harsh but largely irrelevant entry barriers for its own kind, it errs in extremis in the opposite direction as to schools. It even itself "accredits" many schools that are denied ABA accreditation. For many years it has been leading thousands of these young over a cruel cliff. In 2015, well under 10 percent of initially enrolled students in California-accredited schools, with seven years of higher education, often at the expense of parental life savings, passed the bar.

In sum, we have "active participants" failing to restrain trade for public protection where it should, but where it involves its own exclusive status and competitive protection, it imposes harsh entry barriers which are largely unconnected to the stated purpose.

The argument that you - the State Supreme Court - provide immunity from federal restraint of trade liability does not satisfy Dental Board. Simply being above the "active participants" in an organizational chart does not qualify as active state supervision. No, Dental Board requires that you, to quote the U.S. Supreme Court, "provide 'realistic assurance' that a non-sovereign actor's anticompetitive conduct 'promotes state policy, rather than merely the party's individual interests'" and that you review "the substance of the anticompetitive decision, not merely the procedures followed to produce it" with "the power to veto or modify particular decisions to ensure they accord with state policy." Under Dental Board, "mere potential for state supervision is not an adequate substitute for a decision by the State."

You review the Rules of Professional Conduct and your approval is required before they are effective. But does even this satisfy Dental Board? Do you examine them for anticompetitive effect? Do you review other bar actions, such as its pursuit of "unauthorized practice of law" to where the bar pass line is placed? Do you change them as you believe appropriate? Do you measure whether the bar exam actually ensures competence? Do you then examine the supply of attorneys and measure how more of fewer competitors would affect prices and the provision of services to those who lack them? Do you conduct studies and then reject or amend the rules?

You must remember that the State Bar, consisting of persons licensed to appear before you, are biased, and with a fatal conflict in the assumption of a "state actor" role. They are no different than a private cartel. You do not properly assume anything or defer in a setting of "if we do not object, it is in." They can propose, advise, critique and recommend - but the "active state" reviewer is the decider.

I do not want to see the State Bar's role as a necessary and legitimate filtering system become problematic. Restraints of trade are warranted for many purposes. There are several ways to address this issue: One would be to have a Board of Trustees and Committee of Bar Examiners controlled by public members. They can have expertise, and include economists, dispute resolution experts and former judges. That would be my preference and is the legitimate American model. I would prefer not to see a Department of Consumer Affairs or some state entity outside of this court assume this "active state supervision" role. Currently, in Senate Bill 1195, legislation is now pending to create a bona fide review mechanism for all of the Department of Consumer Affairs regulatory boards. It follows the advice I offer here. But I do not want the bar to be subject to a review from that entity or any entity outside of the state high court.

You can make relatively inexpensive reforms, and both preserve and enhance your supervision of the profession. How? Set up a commission or advisory body, choose your own non-attorney licensed appointees (with experts in economics and antitrust and other areas of the law). I believe it would have support. Then have that grouping review the bar structure and propose to you a review process to ensure compliance as "active state" supervisors. Have them advise you, independent of practicing attorneys. Then make certain that any decision that restrains trade is either approved as "not having any significant restraint effect," or if it does, is subject to an active, fact-based and anticompetitive test. You can remand back, but the final version is yours.

How do the sections fit in? They do not. They are a part of the bar partially because the "state agency" status gives them antitrust immunity. Now they must be subject to "active state supervision" as with the bar boards and committees themselves.

These proposed changes not only comply with the law, but it will improve your decision-making, provide a balance between regulation and competition, and add to public confidence in the State Bar and your court.