Democracy 101 and the State Bar of California

The State Bar of California is controlled by what the U.S. Supreme Court calls “active market participants” in the profession regulated. The court held in its 2015 North Carolina State Board of Dental Examiners v. FTC decision that such a body does not enjoy any “sovereign status” for purposes of federal antitrust liability. It is a cartel structure that is legally precluded from such a role. Further, the “supply control” of entry licensure requires such sovereign “state action status” because without it we have a per se Sherman Act offense — meaning one that is unlawful as a matter of law.

This crucial Supreme Court decision is based on basic democratic principles: Our government must not be under the control of conflicted private interests. And the tribal allegiances of the trades and professions, now highly organized in trade associations, reflect such an impermissible conflict. Interestingly, the court went out of its way to describe the kinds of bias that result from trade control of a profession under the auspices of the state — a body that properly reflects the body politic — the people.

To be sure, those who are in any trade or profession and volunteer without pay to regulate it believe that they are performing a proper, indeed laudatory, function. They have the expertise to advance the public interest and to hold their colleagues to high standards. Of course, they do not recognize their own tribal empathy lines, notwithstanding Justice Anthony Kennedy’s uncommonly frank elucidation. In order to create an entry system that is not a continuing felony offense, there has to be “active” state supervision from another body. Ideally in our view, that would be the California Supreme Court.

This brings us to the current issues involving the State Bar: Our Supreme Court is now laudably requiring a study of at least one critical type of antitrust offense, the per se supply control of entry into the legal profession through the bar exam. And that involvement is none too soon given the extent of the bar’s abnegation. That failure includes:

1. Bar exam passage rates of 43 and 34 percent in the last two bar exams, lower than that of 48 other states, and about half the level of most major states, including New York. This has been the case notwithstanding the fact that our California test-takers have higher than national median LSAT scores and higher than national median Multistate Bar Exam results (that all states administer).

2. The bar exam itself, unlike the entry exam of every other California agency, has not been validated to ensure that it measures relevant competence to practice law at an entry level. Not in the 37 years we have been watching it function. Every other trade and profession does so under the provisions of Business and Professions Code Section 139. Not the State Bar.

3. The State Bar predictably claims that its sole concern is to protect the public from incompetent practitioners because of the irreparable harm they may cause and cites “public protection” as its basis. But this claim, although correct in theory, is disingenuous in practice. Yes, the entry exam can be relevant to competence and can have a laudatory purpose. Those incapable of functioning competently should indeed not be licensed. Probably 10 to 20 percent of applicants might suffer such a proper categorical rejection, as occurs in virtually every other state. But if our bar really had any concern about its stated rationale, it would not rely on an entry exam of dubious connection to competence, and it would actually test competence in the areas of practice most relied upon.

We should study the approximately 24 actual areas of law practice and prioritize those where a single representation can prove ruinous and where the client is unable to judge competence. For example, immigration, family law, and a dozen other areas of specialty should be selected for actual competence testing. Specialists so practicing should be so tested every 10 years to assure competence in what is actually relied upon.

But the tribal cartel has no interest in functioning consistent with its stated rationale. None at all. Indeed, the bar even allows practice without malpractice coverage and excludes negligence and malpractice judgments from recompense from its own Client Security Fund. Competence assurance is not, nor has it ever been, a bona fide exercise.

4. The State Bar has never measured the impact of its constriction on the thousands of students who have spent seven years of study and much or all of their family’s life savings. It has never measured or inquired into anticompetitive effects on prices or supply. These are the factors required by “active state supervision.” In addition to competence relevance.

Instead of the recognition of the above, we get the following themes manifested in recent opinion pieces:

We should look at law school performance because the low results from California bar takers simply reflects either lower quality law students or inadequate law school training. This likely minor factor may well warrant study, but it should not distract from the underlying issue of (a) examination content relevance and validity and (b) pass point setting, neither of which occurs. Nor does it account for California’s radical constriction vis-à-vis every other state save Delaware.

We should not raise the cut score because it is important to have competent counsel. The source here is an op-ed from a respected judge. Objection: States Facts Not In Evidence. There is no established connection between the exam and competence in courtroom practice. Objection sustained.

We should mourn the so-called reforms of pass point liberalization and the pending separation of the private “sections,” because we all want to improve the profession. Several former bar officials submit this. I belong to two sections, and I hope they do that. And I agree that any regulatory body seeks out relevant expert opinions on point. But Democracy 101 has not gotten through to a lot of people. Our most important check is not between the three branches, but in the underlying separation of public from private, a principle lost on those bemoaning current reforms and on the Trump administration. You can do that, my colleagues, without being cloaked as the state body — a cloak you do not properly wear.

We really need to survey practicing lawyers on their feeling about the “cut score” and whether it should be changed from 43 to 47 percent passing — heaven forbid, the infidels are at the gate! This allegedly proper source of advice underlines the grade of “F” warranted for “democracy understanding” by current officials and commentators. The fact that current members of the bar would prefer fewer competitors is hardly germane. We would stipulate to that. Maybe they would even be so generous as to approve an increase from 43 to 47 percent passing. But those who have the conflict and are removed from decision-making power are, a fortiori, not properly relied upon by the people whose interests are more seminally at stake.

The California Supreme Court is beginning to ask relevant questions, but it is relying excessively on “active market practitioners” to decide what to ask, the information to collect and the recommendations. Courts tend to be passive, but in this case the “active” in “active supervision” requires our state Supreme Court to tender the leadership, organization and key decision-making on the details of what is to be gathered, to its own staff of nonpracticing attorneys appointed for that task. That is not a minor suggestion; it is a condition precedent to compliance with the U.S. Supreme Court holding on point. You do not qualify for “active supervision” if you delegate to the very contaminated body the key functions that will determine the result.

Meanwhile, we have the question of where to put the cut score while we accomplish this. Leaving it at 144 — the second highest in the nation — is not ethically tenable. Nor is a symbolic reduction to 141 and an infinitesimal change in the current egregious restraint of trade. Set it at 139, or better still, the national average of 135. Then refine it a bit up or down as the final evidence warrants.

We have TROs and preliminary injunctions for a reason. In this case, the irreparable harm from having a line that is the national average is hardly Armageddon. Our organization represents consumers, and we have for 37 years. Serving for five years as the state’s only “State Bar Discipline Monitor,” I have seen firsthand the horror of attorney incompetence. I only wish the bar were similarly oriented. But they cite those concerns with little correlation to what they do and to what happens. If setting the bar exam pass point at the national average were to cause such consumer harm, we would be the first to complain. And, as noted above, we would like to see actual competence assurance.

The correlation of a passage rate close to that of New York or Oregon or Massachusetts will have a negligible effect on that dynamic. But it will avoid the irreparable harm to the young seeking entry in good faith and after great sacrifice, and it will lessen the harm from reduced access to legal services.