Editor’s Note: The following article was first published in Forbes. After intervention by the Arizona State Bar it was removed.
Do Arizona lawyers really have lower ethical standards than lawyers in New York, Illinois, California and other states? Or is Arizona merely unique and not representative of the practice of law elsewhere?
Undeniably, our nation’s large law firms play a valuable role in our legal system by handling complex legal matters such as multinational corporate business transactions, IPO offerings, corporate mergers and acquisitions, patents and copyrights, international law, intellectual property rights, etc. However, due to the scope and magnitude of their work, large law firms also have the capacity to cause enormous harm when engaged in illegal or unethical conduct, either on their own behalf, or at the direction of unscrupulous clients.
Curiously, there are far more sole practitioners and small-firm lawyers who become the subject of disciplinary proceedings than big-firm lawyers. In addition to the possibility that big-firm lawyers may not be reporting unethical conduct among their own, one might also conclude that more sole practitioners and small-firm lawyers receive discipline for alleged ethical violations than big-firm lawyers because the ethical standards of big-firm lawyers may be higher than that of sole practitioners or small-firm lawyers. In one sense, this may be true because the large law firms generally do a better job of overseeing ethics among associates and frequently have “in-house” ethics counsel who “nip problems in the bud” before they become bar complaints. Also the big law firms carry malpractice insurance and are quicker to “lawyer up” to defend and litigate against complaints, while many sole practitioners and small-firm lawyers may not carry such insurance.
Also, a deeper exploration of this issue suggests that when firm-wide unethical conduct occurs in big law firms, it occurs as a matter of law firm policy and because of this may be of such enormous magnitude that for political, economic, social or other reasons, it has been totally ignored by the lawyer regulation system of the various state bar associations.
The role of large firm lawyer-lobbyists, raising substantial sums of money for members of state legislatures on behalf of clients seeking to influence a particular legislative agenda should be a matter of some ethical concern to the profession, not only in Arizona, but everywhere. In Arizona, we have also been occasionally treated to the spectacle of large law firms carrying on legislative lobbying activities for clients while their partners are, at the same time, active members of the legislative body they are seeking to influence.
Large firms’ “captive client” relationships
Over a number of years, two of Arizona’s largest law firms have gradually taken over control of the state’s two largest public utilities by placing their firm members, former firm members and relatives on their governing boards and executive offices, while at the same time each serving as their law firms. It is also a matter of some irony that while these law firms were taking control of their public utility clients, members of one of these law firms served for many years as the State Bar’s Chief Ethics Counsel.
When a law firm controls a public utility’s governing board and executive offices, this results in the creation of a “captive client” who is powerless to make independent decisions concerning what law firm should represent them, what legal services they require and, most importantly for the utility’s ratepayers, the size of the law firm’s legal bills. Not only is this an egregious ethical violation, but there is concern that excessive legal fees paid to these law firms over the many years that these arrangements have existed may have amounted to billions of dollars. If these practices did not exist, the cost of water and electricity would be considerably less for consumers than they are now. Are these practices limited only to Arizona or are the financial incentives for large law firms to impose their control over our public utilities so great that these practices exist everywhere?
Another unethical scheme that has long existed in Arizona that has gone unchallenged and, may also be ignored in other states, has been the practice of large law firms contributing bundled campaign contributions from firm members, relatives and friends to political candidates who, when elected, control government agencies at the state, county and municipal levels.
These contributing law firms are then generously rewarded by successful candidates through the referral of all of their agency’s outside legal business to the law firm. Such “pay to play” schemes also have many of the earmarks of a “captive client” relationship between the contributing law firm and the government agency, because the head of the government agency who has received gifts of campaign money is less likely to look out for the interests of taxpaying citizens.
Also, of concern are large law firms who have profited in real estate transactions from information supplied to them by firm members serving on committees entrusted by the public to select sites for county and municipal development projects. In addition, during the Arizona Savings & Loan scandal of the 1980s, an investigation revealed that members of large law firms acted as intermediate “purchasers and sellers” of their clients’ real estate in order to fraudulently boost the value of such land so that their developer clients could obtain higher sale prices and larger loans based on these artificially inflated values.
Large firms’ relationship to the bar
One would think that the intentional involvement in such egregious conflicts of interest would result in severe condemnation and drastic disciplinary sanctions, but the State Bar of Arizona has been strangely silent on such issues. It has been suggested that one of the reasons the State Bar, as well as bar associations in other mandatory bar states, may consistently turn their otherwise stern gaze away from the activities of the big law firms is because lawyers in the large law firms in these states constitute a substantial voting block which controls the election of candidates to the bar’s governing boards.
In addition, because large firms have such a significant financial stake in perpetuating these unethical money-making practices and have substantial resources to defend themselves against disciplinary charges, this serves as an effective deterrent to disciplinary action by the various state bar associations. Taking on one of the big firms over such issues would require an enormous expenditure of time, money and effort by state bar associations in pursuing such a task, which could quickly exhaust their financial resources. It is much easier for state bar associations to pursue sole practitioners or small-firm lawyers who rarely have the financial ability to defend themselves. With legal bills in such cases sometimes running as high as $50,000 or more, very few sole practitioners or small-firm lawyers can afford legal representation in disciplinary matters, not to mention the time that this takes away from their practice and, the emotional strain of undergoing a disciplinary proceeding without an extensive support system, such as exists in the large law firms.
Also, one disturbing feature of Arizona’s disciplinary system, which may be occurring elsewhere, is the assessment of fines, denominated by the bar as “costs” ranging from $1,200 up to $100,000 against lawyers charged with ethical misconduct.
These “costs” when collected are lumped together with the State Bar’s other revenues and used to pay the salaries of staff members in the Lawyer Regulation Office which average over $100,000 a year. Perhaps the most disturbing feature of Arizona’s disciplinary system is the perception on the part of many lawyers that the State Bar uses its disciplinary system as a device to intimidate lawyers to prevent them from speaking out against the State Bar’s policies and actions with which they disagree. This chilling perception was recently reinforced when several sole practitioners who openly advocated for the conversion of Arizona’s mandatory state bar to a voluntary bar at legislative hearings on this subject found themselves on the receiving end of “questionable” disciplinary charges pursued against them by the State Bar.
Flawed lawyer disciplinary programs
It is generally agreed that the core function of a lawyer discipline system is to protect the public against unethical lawyers and to instill a sense of confidence in the legal profession. This leads to a brooding concern among many who are involved in enforcing the profession’s ethical rules in the various states that if they do not demonstrate that they are being sufficiently “tough” on lawyers, the public may demand that state legislatures step in and remove the disciplinary function from state bar associations and set up their own disciplinary agency under the legislature’s control.
It may be for this reason that Arizona’s disciplinary system often functions in its pursuit of sole practitioners and small-firm lawyers much like the black holes in outer space—once you enter its orbit, “nothing escapes, not even light.” As a result, those lawyers in Arizona who specialize in defending other lawyers in disciplinary proceedings make it a routine practice to advise their clients to plead guilty and accept whatever plea agreement is offered by the State Bar’s Lawyer Regulation Office. This is so, because if lawyers demand an evidentiary hearing, they will almost without exception be found guilty, and punishment for the lawyer will usually end up being far more severe than if they had accepted the State Bar’s original offer for discipline.
One of the common misperceptions that is thought to fuel many of the attitudes and beliefs held by those involved in enforcing the various state bar disciplinary programs is that the public’s image of the legal profession has fallen to its present low level, primarily because of the conduct of unethical lawyers. However, public polling conducted a number of years ago by the American Bar Association on this issue suggests otherwise. Their study concluded that although individual acts of unethical conduct do clearly hurt the profession, this does not even approach the collective damage done to the image of lawyers by billboards and other mass media advertising, soliciting accident victims in order to bring personal injury claims and law suits. If lawyers seek to improve their public image as “ambulance chasers,” constitutionally valid restrictions imposed by state bars on personal injury advertising might be a far more effective way to do this than continuing to beef up their disciplinary programs.
Lawyer disciplinary reform
In order to promote fairness and to comply with basic “due process” requirements, it is necessary to ensure that those who administer state bar disciplinary programs be “fair-minded” individuals. One of the principal flaws in the way these programs have been administered is the jaundiced view that is frequently acquired by lawyers and others who serve, year after year, as hearing officers, members of hearing committees or as members of disciplinary commissions, who consider appeals from hearing committees. Also, many who fill these positions are recruited for these positions by the lawyer regulation offices of the various state bars.
Many of those who respond to such recruiting do so because of a desire to rid the bar of unethical lawyers, a desire which is too often psychologically “projected” on all lawyers who come before them, thereby creating a powerful negative bias when considering individual cases. Although, those who are accepted for appointment for these positions normally go through an orientation program, the program is usually conducted by the state bar’s disciplinary staff and recruits then serve year after year as hearing officers, on hearing committees and disciplinary commissions, working closely with the state bar’s disciplinary staff in deciding the fate of lawyers in disciplinary cases.
By comparison, if a county attorney or state attorney general solicited applications from those who were willing to serve as jurors in criminal cases so that criminals could be punished or eliminated from society and, who were then trained by the prosecutor for their duties and, only then were permitted to serve as jurors in case after case, year after year, surely there would be a thunderous outcry that such a system was grossly unfair and an outrageous denial of “due process.” Yet, this is precisely how many state bar disciplinary systems have always functioned in mandatory bar states. In the view of many lawyers in such states, the state bar acts much like a “Frankenstein Monster,” running amuck among the lawyers, far too often striking down the innocent as well as the guilty. Despite substantial revisions in recent years to the rules of procedure in disciplinary cases, it is believed by many that these changes have done little to tame the “Frankenstein Monster.”
One of the clearest indications that fairness and due process are frequently lacking in state bar disciplinary cases is the curious practice of imposing increased sanctions against lawyers who do not show remorse at their disciplinary hearings. In disciplinary matters, an expression of remorse is considered an important mitigating factor and, conversely, lack of it is considered an aggravating factor in determining an appropriate sanction for the lawyer. In one disciplinary case, In Re Shannon, 179 Ariz. 52, 81 (1994), Justice Thomas Zlaket, of the Arizona Supreme Court, much to his credit, recognized the absurdity of such a practice:
“I fear that today’s opinion sends an erroneous message to those facing the disciplinary process: that if they dare to challenge the charges against them, the consequences may be more severe than if they simply confess wrongdoing and pray for mercy. There is something demoralizing and destructive in such a message, something that violates the very spirit upon which our legal system is premised.”
Despite the adoption of recent reforms, including intake procedures designed to prevent frivolous complaints from entering the system and an “ethics school” for lawyers accused of minor violations, the lack of essential fairness in many parts of the lawyer disciplinary process has yet to be addressed. If efforts at lawyer selfregulation are to be honored and respected by the public and members of the legal profession, the basic inequities in the present system must be resolved and its foundations restructured consistent with essential notions of fairness and “due process.” There is widespread concern among lawyers in Arizona and elsewhere, that if state bar associations cannot provide a disciplinary system where justice prevails for lawyers, can lawyers seek it for others?
Jack Levine is a former member of the Arizona State Bar Board of Governors and a member of the State Bar of Arizona.