California Bar Journal
OFFICIAL PUBLICATION OF THE STATE BAR OF CALIFORNIA - OCTOBER 2000
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In addition, the bar’s ethics committee, after exhaustive study, found no evidence the bar prosecutes such offenses where there is no harm, and said existing standards should be preserved since “there appears to be a direct correlation between misappropriation and poor record keeping.”

The board discipline committee, however, acknowledged the concerns of some lawyers, particularly sole practitioners or those working in a small firm, who might be subject to discipline for an inadvertent or technical violation of the trust accounting regulations. In addition, they said there is a perception among lawyers that the discipline system is unfairly skewed against that group of practitioners.

Former bar president Andrew Guilford said the potential for trust account-related discipline is biggest complaint he faced in visits during the past year to bar associations around the state. New president Palmer Madden added that lawyers are worried “that they’re going to get disciplined if they screw up their trust accounts in a way that doesn’t hurt any client.”

In addition, the bar’s Conference of Delegates passed two resolutions in 1998 providing that “failure to adhere to . . . technical record keeping requirements, in the absence of financial loss incurred by a party to whom a lawyer owed a duty, shall not be grounds for the imposition of discipline.”

Madden suggested a possible compromise, offering both prevention and education, would be a diversion program to the bar’s existing trust account record-keeping class. Those who refuse to attend could be subject to discipline.

Several board members agreed, including Valerie Miller, who said the existing rule “causes problems. We ought to be realistic about what it is we’re trying to accomplish.” The diversion suggestion, she added, “is an appropriate way to deal with impropriety.”

Acting discipline chief Fran Bassios said every year the bar receives from banks about 4,000 insufficient funds notices “telling us attorneys’ checks have been bounced or paid against insufficient funds.”

If prosecutors find the violation is not serious, the offending attorney may be required to attend the bar’s record-keeping class. On the other hand, what appears to be a technical or inadvertent violation may be just the tip of the iceberg, Bassios said, and further investigation may uncover commingling or misappropriation of client funds. “You don’t want to give them a pass on a technical violation when they’re on the way down a slippery slope to misappropriation,” he said.

Bassios said criticism of bar procedures in the cases in question is based on a lack of information.

Scott Drexel, chief counsel for the State Bar Court, also opposes any change, pointing out that the Rules of Professional Conduct set high standards which all attorneys should meet. “If an attorney conforms to the rules, there’s no problem,” Drexel said. “If you blur those lines, there’s a danger of other problems.”

Maintaining high standards goes a long way to preserving attorney integrity, particularly when other people’s money is involved, he added.

Any change in the Rules of Professional Conduct would have to be approved by the full board of governors and adopted by the state Supreme Court before taking effect.