High Court Faults State Bar’s Handling of Fund

The California State Bar, in charge of a $2-million fund to pay clients cheated by lawyers, violated several due-process principles long cherished by the legal profession in administering the fund, the state Supreme Court ruled Thursday.

The court, in an opinion by Justice Malcolm M. Lucas, unanimously ordered a wholesale revision in the rules governing those proceedings so that wronged clients can, for instance, hire lawyers to represent them in the hearings.

“I have never understood why the State Bar fought this tooth and nail,” said Philip Martin, who was hired by Charles Saleeby to challenge the system. “It is ironic in the extreme that the State Bar has to be given lessons in due process by the state Supreme Court.”

Age Discrimination Suit

In 1976, Saleeby won an age discrimination suit against his employer, Pan American Airways. His arrangement with Robert A. Tarver, then his lawyer, was that Tarver would receive 40% of the settlement.

However, Tarver failed to tell Saleeby that the judge had awarded $20,600 in attorney’s fees. Tarver then gave Saleeby only $8,500 out of the $31,243 settlement against Pan Am. After Saleeby went to other lawyers questioning the division of the settlement, Tarver billed Saleeby another $24,240.

Saleeby turned to the State Bar for reimbursement from its Client Security Fund, which is used to pay clients who are cheated by lawyers. Tarver was allowed to present evidence and argue his case. Saleeby was not.

Lawyer Disbarred

Tarver was disbarred for taking an “unconscionable” fee. But the State Bar initially refused to reimburse Saleeby. He asked for reconsideration and was given only $10,246, prompting his suit.

Included among the rules governing the fund was the statement that “all payments from the fund shall be a matter of grace and not of right and shall be in the sole discretion of the State Bar of California.”

Lucas said the Legislature granted the State Bar wide discretion in administering the fund, but “that freedom is not unlimited.”

The court ordered the State Bar to make written findings explaining how it arrives at its decisions, how wronged clients present evidence at hearings, policies regarding the hiring of lawyers and appeals to a Superior Court and beyond if clients disagree with the Bar’s decisions.

‘Will Certainly Comply’

“We will certainly comply,” a State Bar spokeswoman said.

Lucas also agreed that Martin, who pressed the case against the State Bar on Saleeby’s behalf, should receive attorneys fees from the State Bar. Lucas said, “These benefits, both pecuniary and non-pecuniary, will affect all future (fund) applicants, a significant number of persons interested in a significant sum of money.”

Saleeby died Monday, three days before his 9-year-old case was finally won.