Our bar exam pass point is simply arbitrary

Two members of the Pepperdine law faculty have repeated their claim that those who score low on the California bar exam suffer a higher incidence of bar discipline, concluding that lowering the "cut score" will endanger the public. I spent five years studying the State Bar of California's discipline system as the State Bar discipline monitor, writing 11 reports to the chief justice and the California Legislature. The Pepperdine conclusion exhibits a non sequitur flaw.

The authors lack the actual exam scores of the exam takers, but they are correct that there may be more discipline of the grouping that is identifiable: those who have to take the bar exam more than once, obviously with lower scores. But there are four basic problems with their conclusion that the cut score should continue to eliminate 55 to 65 percent of bar exam takers from licensure in order to save consumers from dangerous or incompetent attorneys.

First is a misunderstanding of the discipline system. Bar discipline is not directed at incompetence itself. Commonly, errors by attorneys are left to malpractice coverage and private remedies. Indeed, the bar does not provide any competence check in the actual area of practice of attorneys, nor require continuing legal education in that area, nor require malpractice insurance, nor allow its Client Security Fund to cover negligence or even malpractice judgments.

There may be some obvious correlation between the bar exam score and discipline, as the authors contend. Those known by employers to have flunked (the grouping here analyzed) tend not to be hired by the larger and higher-end firms. Those who flunk are more likely to work with small firms or function as sole practitioners. Without supervision by experienced colleagues, they are more likely to run into discipline problems such as failure to comply with continuing education (such as it is), dishonesty issues, or substance abuse problems.

Further, the State Bar's discipline system is very much focused on the number of discipline filings (Notices of Disciplinary Charges, or NDCs) and backlog reduction. Lack of activity or delay causing backlogs over prescribed time limits dominate the data reviewed by the California Legislature and auditors - and indeed led to my appointment as discipline monitor. Understandably, the bar tends not to target large-firm practitioners. Granted, they have better checks from experienced colleagues overseeing calendars and client relations. But the bar is well aware that filing against big-firm lawyers can mean major resources and likely time lags, both antithetical to the basis of their annual evaluation. Nor does assessment of cost recovery from accused attorneys (of the bar's own considerable costs) favor the small practitioner.

The second problem with the erroneous conclusion about the need for an exam only a minority can pass is the seminal matter of "scale." California has about 200,000 active attorney licensees, with an average of 600 NDCs filed per year over the past two years. That is one NDC per year per 333 active attorneys, three per 1,000. Assume that those at the bottom of bar exam scoring suffer discipline 50 percent more than the top tier and 25 percent more than the average. So instead of three, we would have four attorneys suffering discipline per year among this bottom hypothetical group of 1,000. Over a 30-year career, that could be 120 disciplined attorneys versus the overall average of 90. The 30 additional attorneys amount to an additional 3 percent among the 1,000 in this sample. Understanding the scale in terms of the small number of attorneys disciplined reduces the actual impact, quite apart from the fact that discipline correlates with practice settings more than incompetence, as discussed above.

The third problem is the juxtaposition of that number (given the scale ignored by Pepperdine) against the benefits of having thousands of additional attorneys practicing, with effect on attorney supply for the poor and middle class (now largely excluded from our judicial system) and on prices. Attorney fees are rather high, and supply constriction is an obvious factor in the prices charged in any business.

To be sure, the Committee of Bar Examiners undoubtedly views its strict standards with pride - "we want to be the best state in assuring skilled attorneys." But that orientation ignores the trade restraint costs, and raises the fourth unconsidered factor: extraordinary "primrose path" applicant abuse. Many thousands of our youth spend seven years (not the five years as in most of the world) engaged in higher education for an attorney license. The cost of that travail in living expenses and tuition - now commonly at $50,000 per year - consumes the equivalent of the retirement and life savings of many if not most parents. It understandably involves the borrowing of many thousands, education debt that is not even dischargeable in bankruptcy.

And then we require them to pass an exam that has not been properly validated as a test of competence to practice in any sense for more than 30 years (unlike every other California regulatory agency where state law requires regular revalidation and a relationship to relevant competence). California examinees score well above the national LSAT average of bar exam takers, and well above the national average on the Multistate Bar Exam that all state bar exams include. Yet over the last two exams, 57 and 66 percent, respectively, of these examinees have flunked the California bar exam because of its arbitrary pass point. That supply constriction has not been subject to required "active supervision" by nonattorneys. The bar does not consider the consumer impacts of these per se unlawful supply constrictions - with the state flunk rate radically disparate from every other state but Delaware.

The California Supreme Court has ordered a study, finally addressing its longstanding obligation. Hopefully, it will not delegate to the antitrust-contaminated "active participants" the conduct of that study, or its recommendations. Such deferral is not the required "active supervision" the law requires after the U.S. Supreme Court's 2015 decision in North Carolina State Board of Dental Examiners v. FTC.

Here are the bottom lines: First, the bar exam is properly related to some assurance of underlying competence. As noted, the bar should be doing more than simply raising a drawbridge for the benefit of the cartel already in the castle. Without that correlation, it has no basis for arbitrary entry constriction, particularly while ignoring actual competence assurance post entry.

Second, this "active supervision" must examine the effects of supply constriction. Are legal services adequately provided to the poor and middle class? What is the effect on price, with $400 per hour rather a common fee? New York and other states that flunk 10 to 20 percent, not the majority of takers as does our state, hardly have markedly incompetent or dishonest attorneys vis-à-vis California. Licensing more California applicants, who score above the national average in both LSAT scores and on the multistate portion of the bar exam given nationally, hardly endangers consumers. Assuming this exam were to relate to competence, we could replicate the much different entry allowance along the average of the 49 other states and still accomplish superior filtering. In addition, as noted above, we would add needed services for our citizens, likely at a lower price. It will not harm consumers or overwhelm the discipline system. That last contention, here advanced by our Pepperdine colleagues, is palpably absurd.