Cases Against Lawyers Pile Up After Bar Layoffs

SAN FRANCISCO —  “You have reached the State Bar of California attorney complaint hotline. We are sorry we cannot take your call. Because of lack of funding, the hotline has been closed.”

--Recorded message on the state bar’s consumer hotline.

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Gloria Meza, 36, says she lost her Los Angeles County home after the lawyer she hired failed to file a bankruptcy petition in time and missed a court hearing.

Although the State Bar of California filed charges against the bankruptcy lawyer, who is accused of similar conduct in nearly a dozen other cases, there is no one to prosecute her.

The state bar, the agency that regulates California’s 130,000 practicing lawyers, laid off 90% of its staff in June after Gov. Pete Wilson’s veto last year of a bill that would have allowed the bar to continue levying $458 in annual dues from lawyers to fund the agency’s work, primarily lawyer discipline. Wilson favors disciplining rogue lawyers but he and the bar have long been at odds over a variety of other issues.

With no one minding the store, victims of errant lawyers in California are nursing their losses and venting their anger. “I put my heart and soul into that house,” lamented Meza, who lost her home in a foreclosure.

The bar now has about 6,556 pending complaints against California lawyers, 2,000 of them filed since the agency announced that it no longer had the money to investigate cases.

“We don’t have the staff to sift through these complaints, to read them and investigate them and take action,” said Victoria Molloy, the bar’s chief assistant trial counsel. “So we warehouse the complaints.”

At the end of last year, the bar had 253 complaints that had been pending for six months or longer. By the end of this year, it expects to have some 5,000.

With no legislative solution possible until at least next year, when the Legislature comes back into session, the bar has appealed to the California Supreme Court for emergency relief. The court rejected an initial bar petition when the Legislature was still in session, but will reconsider the matter in the next few days or weeks.

But even if the Supreme Court intervenes, the bar will not be able to return to work quickly because most of its staff has found jobs elsewhere.

“I don’t think they will be able to fix this organization before the turn of the century,” said Molloy. In the meantime, she said: “Legal consumers are just victims waiting to happen.”

Wilson also recently asked the court to ensure that lawyers are disciplined, but he opposed the restoration of higher dues to pay for policing the profession. Instead, Wilson suggested the bar could reshuffle its already limited funds or take out loans on its property. The bar is still allowed to charge lawyers $77 in dues--an amount unaffected by Wilson’s veto--but by law, $50 of that amount must go to purposes other than discipline.

Normally, the bar disciplines about 2,400 lawyers a year. About 200 attorneys are stripped of their law licenses or resign with charges pending. Before its near shutdown, the bar had disciplined about half the lawyers it sanctioned in 1997.

Staffing Gutted in L.A., S.F. Offices

The bar’s Los Angeles office now has only four prosecutors, compared to 40 before the funds ran out. The San Francisco staff of 15 prosecutors has been slashed to two. The bar court has put on hold all but 50 cases that were scheduled to go to trial this year.

With the bar out of commission, consumers have little recourse. A person who believes that he or she has been cheated by a lawyer could file a malpractice lawsuit. Some unhappy legal clients have turned to district attorneys or small claims courts to resolve their complaints.

But those approaches have drawbacks--particularly the time and uncertainty involved. Filing for malpractice requires hiring yet another lawyer--something many clients can ill afford.

Moreover, only the bar can revoke a lawyer’s legal license to appear in state court, where the vast majority of cases are heard.

State bar officials have turned over some cases to local volunteer bar associations, and California Chief Justice Ronald M. George has called on lawyers to donate their time to help victims of unethical lawyers. But bar officials note that many lawyers lack the experience to tackle these cases.

“To ask a lawyer to serve a stint as a volunteer prosecutor, in this day and age, is like having a volunteer fire department,” said Judy Johnson, the bar’s chief trial counsel.

The complaints on file with the bar run the gamut. Lawyers placed on probation before the bar’s troubles are failing to comply with the terms of their discipline, such as making restitution to clients, said bar prosecutor Jan Oehrle.

“It’s a free-for-all out there, where lawyers figure we are not here, so why bother?” bemoaned Oehrle.

In Meza’s case, the bar has charged Riverside lawyer Carole Ann Gearhart with accepting fees from clients, failing to do the required work, and then refusing to refund the fees. Gearhart has attracted hundreds of clients to her office with fliers and other advertisements, a bar official said.

JoAnne Robbins, an attorney with Karpman & Associates, which is representing Gearhart, said Gearhart was a victim of others in her office and hopes to make amends to her former clients. Robbins said she has been in touch with bar officials to try to resolve the charges.

‘She did not abandon any of these people,” Robbins said. “There were circumstances beyond her control. . . . She is going to do everything she can to try to help them out of their situations.”

Charges stemming from nine cases are pending against Los Angeles immigration lawyer James R. Valinoti. The bar accuses Valinoti of botching the cases of several illegal immigrants.

After accepting their money, Valinoti missed crucial court appearances and failed to file documents vital to his clients’ protection, according to the charges. Some of his clients have been deported, bar officials said.

A spokesman for Valinoti said the charges are “not true” and he will be vindicated. “He diligently represents his clients . . . and he does a very good job,” said John Castro, general director for Valinoti’s law office.

Castro said the charges stem from notaries and community activists who made immigrants unrealistic promises before Valinoti became involved in their cases.

In another pending disciplinary matter, a Fresno attorney is believed by the bar to be mishandling client funds. Since the bar layoffs in June, the lawyer has bounced about 35 checks on accounts he holds in trust for clients.

Many legal consumers are probably unaware that unscrupulous lawyers are stealing from their settlements or funds set aside for legal costs because discovery usually takes a year, said Martha Gonzales, director of the bar’s client-security fund.

“The fact that the bar has shut down doesn’t mean that theft has stopped,” she said. “It just means that whenever we open up again, it is going to be an avalanche.”

The vacuum in lawyer discipline stems from a standoff between Wilson and bar officials. Unhappy with what he sees as the bar’s liberal bent and extravagant style, Wilson failed to reach a compromise with bar leaders and legislators in time to restore the bar’s dues before the legislative session ended in August.

“I just wonder what Gov. Wilson’s background is?” said a 61-year-old woman who said she lost her Highland home after she hired Gearhart to file bankruptcy on her behalf.

“Is he an attorney?” the woman asked. Told that Wilson is a lawyer, she fumed: “Well, that figures.”

Bar’s Leaders Criticized

Members of the bar’s board of governors also have been blamed for the collapse of the lawyer discipline system. Some opposed a potential compromise to replace the bar’s largely elected board with a panel appointed by the California Supreme Court, the governor and the Legislature.

Besides complaints, the bar also receives about 75 calls each year for assistance from family members of attorneys who died without leaving plans for the closing of their practices.

“The widow will say, ‘I am in John’s office. I don’t know what to do with the client’s files,’ ” said Johnson.

The files may contain cases that have statutes of limitations that require immediate legal work or original wills. Typically, the bar goes into a Superior Court and obtains orders to take over the practices. The bar then files original wills with the court and notifies clients of their lawyer’s death.

Unfortunately for Joel Gayman, 53, the bar was shutting down when he needed such help. The Los Angeles computer and political consultant lost his wife, Arlene Hayashi, a 37-year-old lawyer, in June. Her death from a cerebral aneurysm left Gayman both grief-stricken and in a quandary about what to do with her solo law practice.

“I felt like my house was on fire and the fire department was disbanded by the order of the governor,” said Gayman. He finally resolved the situation with the help of a court and his late wife’s malpractice insurance carrier.

The bar does not make complaints against lawyers public, but consumers can look at the bar’s Internet site to learn whether an attorney has been charged or disciplined.

Johnson predicted that clients also may press for publication of all complaints against lawyers, even if the reports have not been investigated.

“If we are not going to have a discipline system, consumers are going to look for ways for enacting punishment against lawyers,” Johnson said.

The bar has a fund to reimburse clients whose lawyers stole from them or improperly refused to refund fees. But clients cannot be reimbursed until the lawyers have been investigated and formally disciplined. With most cases on hold, clients will have a long wait.

“The horror stories are piling up,” said Johnson.