Improving Our Profession
Advancing the Rule of Law
One of the California Lawyers Association’s greatest opportunities lies in its ability to advocate for causes that advance our mission: promoting excellence, diversity and inclusion in the legal profession and fairness in the administration of justice and the rule of law. CLA has consistently advocated on behalf of the legal profession. We have been at the center of the action on a number of items of interest to our members and to the legal profession in general, including the following:
Public Licensee Information and Required Reporting
Proposed Rule Changes Addressing Public Licensee Information and Required Reporting
December 13, 2019
Office of General Counsel
180 Howard Street
San Francisco, CA 94105
Dear Ms. Grandt:
The California Lawyers Association (CLA) submits these comments in response to the State Bar’s request for public comment on the proposed rule changes addressing public licensee information and required reporting.
We note that the State Bar specifically seeks public comment on its recommendation that “practice area information be made searchable in the interest of providing useful information to the public, but that the publication of practice area be accompanied by appropriate caveats, which state that the information has been provided by the licensee, but has not otherwise been verified by the State Bar, and that the State Bar cannot attest to any attorney’s performance in any particular area.” Our comments are focused on this issue.
CLA has several concerns about the proposed rule changes that would provide for the searchability of an attorney’s area of practice. The State Bar, at the Legislature’s request, has already developed a regulatory mechanism to help the public find attorneys. As the regulator of certified lawyer referral services (LRS), the State Bar sets and administers the regulatory framework specifically to help Californians find attorneys. As stated on its website, State Bar certified LRS programs afford the following benefits:
- Attorneys are insured.
- The certified lawyer referral service may be able to refer you to a qualified lawyer with experience in the legal issues you are facing.
- The certified lawyer referral service may be able to provide referrals outside of regular business hours.
- The certified lawyer referral service can give you information about other service programs.
- The certified lawyer referral service may be able to provide an attorney at a reduced rate. Specially, the certification rules require lawyer referral services to serve the community it operates in and improve the quality and affordability of legal services by creating programs to serve people of limited means.
- The lawyer referral service may be able to provide bilingual lawyers.
As part of its regulatory function, the State Bar also certifies attorneys as specialists in certain areas of practice under the Legal Specialization program. This information is searchable on the State Bar website. The current proposal would result in a situation where there are two different classes of searchable attorney practice areas, one that is regulated and verified and one that is not. This may result in additional confusion to the public, and could undermine the regulatory function of the Legal Specialization program.
From a regulatory perspective, we do not believe having area of practice posted or searchable on the State Bar website will assist members of the public in finding attorneys who are well suited to help them, especially since the information will not and cannot be verified without significant State Bar expense. The term “area of practice” is open-ended. We anticipate that many attorneys reporting this information will identify all areas in which they have practiced, without regard to the depth, breadth, or level of experience and expertise in the particular areas. While caveats and disclaimers could certainly be provided, this would create an environment where some information about licensees is accurate and correct, while other information may not be. The public should be able to rely on the accuracy of information posted on the State Bar website. Unverified listing of practice areas could actually result in a chilling effect by frustrating or causing harm to those members of the public who either come across or specifically go to the State Bar website as a means to find an attorney. Finally, we question the true impact of caveats and disclaimers on members of the public who see that the State Bar, as the regulator, has identified an attorney’s area of practice. We are concerned that caveats and disclaimers may be viewed as “boilerplate” language aimed at limiting liability, as opposed to a true warning that would impact in any meaningful way a member of the public’s reliance on the information that was found.
For these reasons, CLA does not support the inclusion of area of practice in the proposed rules or as information that would be searchable on the State Bar website.
We do see reasons to collect but not make public or searchable practice area information, all of which align with CLA’s Access to Justice and Diversity, Equity and Inclusion Initiatives. Reasons include addressing the scope and topics covered by the California Bar examination, and whether communities are adequately served by attorneys with certain practice area expertise. However, this information could easily be captured in ways that do not potentially mislead the public. For example, the information could be included as part of the State Bar’s annual demographic survey which has achieved a significant response rate. We encourage the State Bar to explore these other avenues.
Finally, as a separate and technical matter, CLA thinks the term “practice sector” as a mandatory report item is potentially confusing, and may be viewed as asking for area of practice. Our understanding is that the term is intended to refer to type of practice (e.g., government, private practice, not for profit, in-house counsel, etc.). We recommend that this be clarified, perhaps by using a different term.
We appreciate the opportunity to submit these comments.
Emilio Varanini, President
California Lawyers Association
California Consumer Privacy Act (CCPA)
Proposed California Consumer Privacy Act Regulations
December 6, 2019
Privacy Regulations Coordinator
California Office of the Attorney General
300 South Spring Street, First Floor
Los Angeles, CA 90013
Dear Attorney General Becerra:
The California Lawyers Association (“CLA”) Privacy Working Group (“PWG”) respectfully submits these comments on the proposed California Consumer Privacy Act (“CCPA”) regulations. The PWG is a multidisciplinary group with members drawn from various sections of the California Lawyers Association, including: Antitrust, UCL and Privacy; Business Law; and Intellectual Property Law. Our members have broad-ranging expertise in areas that include consumer privacy, cybersecurity, and data protection, and extensive experience with related regulatory, transactional, and litigation matters.
The Attorney General released these proposed regulations for public comment on October 10, 2019. The regulations are intended to operationalize the CCPA and provide clarity and specificity to assist in the implementation of the law. The CCPA requires the Attorney General to adopt initial regulations on or before July 1, 2020.
The PWG applauds the Office of the Attorney General for engaging in a broad and inclusive rulemaking process, including public forums. This public comment period is important because the stakes are high. According to estimates in the Standardized Regulatory Impact Assessment for the CCPA regulations, published by the Berkeley Economic Advising and Research, LLC, the CCPA will protect over $12 billion worth of personal information that is used for advertising in California each year. If finalized, businesses are estimated to spend between $467 million to $16,454 million in costs to comply with the draft regulation during the period 2020-2030. The CCPA grants new rights to consumers and imposes new obligations on businesses.
As highlighted in the CCPA Fact Sheet, published together with the proposed regulations, the CCPA and the European Union’s General Data Protection Regulation (“GDPR”) are separate legal frameworks with different scopes, definitions, and requirements. A business that is subject to GDPR and also processes personal information of California consumers will need to reconcile the differences between the two regimes. In addition, a business will need to examine what additional obligations apply under the CCPA that are outside of how personal information is collected, processed, sold or disclosed pursuant to the federal Gramm-Leach-Bliley Act, the California Financial Information Privacy Act, the Driver’s Privacy Protection Act of 1994, the Confidentiality of Medical Information Act, the Health Insurance Portability and Accountability Act of 1996 and the Federal Policy for the Protection of Human Subjects.
We submit the following comments on the proposed regulations.
All views expressed in these comments are our own as individual members of the PWG and do not represent the views of any entity whatsoever with which we have been, are now, or will be affiliated.
The PWG notes that the proposed regulations will not be final before the January 1, 2020 effective date of the CCPA. Once the regulations are final, it will likely take most businesses several months to fully implement processes consistent with the final regulations. Accordingly, we urge the Office of the Attorney General to take into consideration the practical impact these regulations will have on businesses as well as the desire to protect consumer rights.
Our comments below are organized by section. We underlined for ease of reading new or amended language and we struck out language we propose to have deleted (i.e., underline or
Article 2. Notices to Consumers
§ 999.305. Notice at Collection of Personal Information
The PWG is concerned that “accessible” in the first sentence is unclear, ambiguous, and undefined. This could result in regulatory enforcement issues as well as prolonged litigation regarding interpretation and applicability, similar to other litigation we have already seen concerning website accessibility. In order to address this concern, the PWG suggests that the phrase “accessible to consumers with disabilities” be tied to the requirements of other specific provisions of law and recommends revising § 999.305(a)(2)(d) to read as follows:
Be accessible to consumers with disabilities to the extent required by the Americans with Disabilities Act, the Unruh Civil Rights Act, the California Disabled Persons Act, or any applicable regulations.
At a minimum, provide information on how a consumer with a disability may access the notice in an alternative format.
We recommend that this same amendment be made to § 999.306(a)(2)(d) § 999.307(a)(2)(d), and § 999.308(a)(2)(d).
Section § 999.305(a)(3) appears to create an opt-in and consent requirement. The PWG is concerned that a new opt-in requirement not already part of CCPA will potentially lead to “click fatigue” in which consumers ignore notices because of their ubiquity. We think a better approach may be to limit the use of personal information to the purposes that were included in the notice at the time of collection or uses that are within the reasonable expectation of the consumer. We understand that the existing text of the CCPA already allows for exceptions that permit use of personal information for other purposes, as enumerated in Civil Code § 1798.145(a), including: (1) to comply with federal, state or local laws; (2) to comply with a civil, criminal, or regulatory inquiry, investigation, subpoena, or summons by federal, state, or local authorities; (3) to cooperate with law enforcement agencies concerning conduct or activity that the business, service provider, or third party reasonably and in good faith believes may violate federal, state or local laws; (4) to exercise or defend legal claims; and (5) to collect, use, retain, sell, or disclose consumer information that is deidentified or in the aggregate consumer information. As such, uses required by law or in furtherance of legal processes, such as serving subpoenas, providing required warranty or recall notices, providing notice of pending class actions, etc. would be permitted even if the notice at collection did not adequately cover these use cases. We recommend revising § 999.305(a)(3) to read as follows:
A business shall not use a consumer’s personal information for any purpose other than those disclosed in the notice at collection, required by law, or reasonably aligned with the expectations of the consumer based on the consumer’s relationship with the business, or within a lawful manner that is compatible with the context in which the consumer provided the information.
If the business intends to use a consumer’s personal information for a purpose that was not previously disclosed to the consumer in the notice at collection, the business shall use and obtain explicit consent from the consumer to use it for this new purpose.
(1) A list of the categories of personal information about consumers to be collected. Each category of personal information shall be written in a manner that provides consumers a meaningful understanding of the information being collected.
(2) For each category of personal information, the business or commercial purpose(s) for which it will be used.
(3) If the business sells personal information, the link titled “Do Not Sell My Personal Information” or “Do Not Sell My Info” required by section 999.315(a), or in the case of offline notices, the web address for the webpage to which it links.
Similar to the change noted above, we recommend revising § 999.305(a)(2)(e) as follows, to allow for other means to link to privacy policies than web addresses, such as QR codes or shortened URLs such as bit.ly:
§ 999.306. Notice of Right to Opt-Out of Sale of Personal Information
Article 3. Business Practices for Handling Consumer Requests
§ 999.312. Methods for Submitting Requests to Know and Requests to Delete
The proposed regulations in § 999.312(a) set forth the requirements for businesses to provide two or more designated methods through which consumers may submit requests to know. We ask the Office of the Attorney General to consider the legislative changes under AB 1564 (Stats. 2019, ch. 759), which clarify this toll-free number requirement and would require a business which “operates exclusively online and has a direct relationship with a consumer” to only provide an email address for submitting access requests.
We recommend revising § 999.312(a) to read as follows, adding this clarification to make the draft regulations consistent with the CCPA:
A business shall provide two or more designated methods for submitting requests to know including, at a minimum, a toll-free telephone number, and, if the business operates a website, an interactive webform accessible through the business’s website or mobile application. A business that operates exclusively online and has a direct relationship with a consumer from whom it collects personal information shall only be required to provide an email address for submitting requests for information required to be disclosed pursuant to Sections 1798.110 and 1798.115. Other acceptable methods for submitting these requests include, but are not limited to, a designated email address, a form submitted in person, and a form submitted through the mail.
We also recommend revising the proposed example (1) in § 999.312(c)(1) to clarify that if a business is primarily an online retailer but also has certain products or services that are provided to consumers at brick-and-mortar retail stores, the consumer may submit requests through the email address that is provided on the business’s retail website.
In Example 2, the PWG proposes revising the requirement so that the businesses can consider the methods by which they interact with consumers but the number of designated methods the retail businesses must provide is no more than the two that are required for other industries to avoid any confusion on the minimum requirement.
As such, our recommended revision to § 999.312(c) reads as follows:
A business shall consider the methods by which it interacts with consumers when determining which methods to provide for submitting requests to know and requests to delete. At least one method offered shall reflect the manner in which the business primarily interacts with the consumer, even if it requires a business to offer three methods for submitting requests to know. Illustrative examples follow:
(1) Example 1: If the business is primarily an online retailer, businesses can provide an email address on their retail website through which consumers can submit requests to know or requests to delete.
at least one method by which the consumer may submit requests should be through the business’s retail website.
(2) Example 2: If the business operates a website but primarily interacts with customers in person at a retail location, the business may
shalloffer three methods to submit requests to knowconsumers the following designated methods for submitting requests to know or requests to delete: a toll-free telephone number, an interactive webform accessible through the business’s website, and ora form that can be submitted in person at the retail location.
We understand that the intent of § 999.312(d) may be to allow for instances where a consumer may have submitted the deletion request by mistake, especially in an electronic setting where accidents may occur at the click of a button. However, we do not believe this is a significant issue as deletion requests under the CCPA already require a process for verifying the identity of the consumer. As such, we recommend revising § 999.312(d) to indicate that the businesses can apply discretion in asking the consumers if they indeed meant to submit such deletion request but it is not a requirement. Our suggested language for § 999.312(d) reads as follows:
A business may
shalluse a two-step for online requests to delete where the consumer must first, clearly submit the request to delete and then second, separately confirm that they want their personal information deleted.
The PWG suggests removing proposed §999.312(f) because it is overly burdensome and unworkable as drafted. If a business has 10,000 employees, we cannot expect all 10,000 employees to be trained to handle privacy-related inquiries. Especially given that the draft regulations require a response from the business within certain number of days after receiving such requests, we ask that the regulations do not add this new requirement and keep the requirement intact as it is written in the CCPA, which is for the businesses to respond to requests that are submitted through the designated methods. In the alternative, we would propose at a minimum that the requirement is amended to read as follows:
If a consumer submits a request in a manner that is not one of the designated methods of submission, or is deficient in some manner unrelated to the verification process, the business shall, to the extent feasible, either:
(1) Treat the request as if it had been submitted in accordance with the business’s designated manner, or
(2) Provide the consumer with specific directions on how to submit the request or remedy any deficiencies with the request, if applicable.
§ 999.313. Responding to Requests to Know and Requests to Delete
Section 999.313(c)(7) allows a business that maintains a password-protected account with the consumer to comply with a request to know by utilizing a secure self-service portal for consumers to access, view, and receive a portable copy of their personal information. The PWG proposes the below changes to make clear that the business which uses such a portal may direct the consumer to the portal for submission and processing of a consumer request.
The PWG suggests revising § 999.313(c)(7) to read as follows:
If a business maintains a password-protected account with the consumer, it may comply with a request to know by
usingdirecting the consumer to a secure self-service portal for consumers to access, view, and receive a portable copy of their personal information if the portal fully discloses the personal information that the consumer is entitled to under the CCPA and these regulations, uses reasonable data security controls, and complies with the verification requirements set forth in Article 4.
Section 999.313(d)(1) requires businesses to treat a failed deletion request as an opt-out request. The CCPA treats the right to opt-out and the right to delete as two separate rights. We do not recommend conflating the two and instead recommend clarifying that if the business is unable to verify the identity of the requestor for the deletion request, the requestor must be informed how she may rectify the issue and allow an opportunity to complete verification. The PWG recommends revising § 999.313(d)(1) to read as follows:
For requests to delete, if a business cannot verify the identity of the requestor pursuant to the regulations set forth in Article 4, the business may deny the request to delete. The business shall inform the requestor that their identity cannot be verified, and shall instead treat the request as a request to opt-out of sale
the information needed for verification, and allow the requestor to provide additional information to complete verification.
We understand the intent behind the proposed regulations in § 999.313(d)(3) may be to provide the businesses the flexibility to not have to search through and delete personal information from archived or backup systems if the information is not in use currently. We recommend revising the language in § 999.313(d)(3) to clarify that the requests to delete do not apply to information on archived or backup systems but if the information were accessed or used by the business, the deletion request would apply to that information. Our recommended version reads as follows:
If a business stores any personal information on archived or backup systems, it may delay compliance with the consumer’s request to delete, with respect to data stored on the archived or backup system, until the archived or backup system is next accessed or used.The consumers’ request to delete shall not apply to any personal information on archived or backup systems, as long as that information is not accessed or used by the business.
§ 999.315. Requests to Opt-Out
The CCPA already contains a provision which restricts the resale of personal information (see Civil Code § 1798.115(d)). We suggest removing § 999.315(f), as any third parties to whom the personal information is sold would already be restricted from reselling the personal information unless the consumer has received explicit notice and is provided an opportunity to exercise the right to opt-out. The proposed requirement to look back 90 days in § 999.315(f) is unnecessary and unduly burdensome.
§ 999.317. Training: Record-Keeping
In § 999.317(b), there is no clear indication of when the 24 month clock starts (i.e., from the date the business receives the request, responds to the request, etc.). The PWG recommends the Attorney General clarify when the 24 months record-keeping requirement begins. Recommended version of § 999.317(b) reads as follows:
A business shall maintain records of consumer requests made pursuant to the CCPA and how the business responded to said requests for at least 24 months from the date the consumer submitted any such request.
The PWG proposes a minor change to § 999.317(f) in order to provide clarity as to what record-keeping purpose it pertains. We recommend revising § 999.317(f) to read as follows:
Aside from this the record-keeping purpose referred to in subsection (e), a business is not required to retain personal information solely for the purpose of fulfilling a consumer request made under the CCPA.
Article 4. Verification of Requests
§ 999.325. Verification for Non-Accountholders
The PWG recommends adding language to § 999.325(c) to allow for electronic signatures, as follows:
A business’s compliance with a request to know specific pieces of personal information requires that the business verify the identity of the consumer making the request to a reasonably high degree of certainty, which is a higher bar for verification. A reasonably high degree of certainty may include matching at least three pieces of personal information provided by the consumer with personal information maintained by the business that it has determined to be reliable for the purpose of verifying the consumer together with a signed declaration under penalty of perjury that the requestor is the consumer whose personal information is the subject of the request. A signed declaration may be physically signed or electronically signed. Businesses shall maintain all signed declarations as part of their record-keeping obligations.
Article 5. Special Rules Regarding Minors
§ 999.330. Minors Under 13 Years of Age
The PWG recommends adding language to § 999.330.(a)(2)(a) to allow for additional electronic methods for businesses to verify user identities. Recommended changes to § 999.330(a)(2)(a) reads as follows:
Providing a consent form to be signed physically or electronically by the parent or guardian under penalty of perjury and returned to the business by postal mail, electronic mail, electronic form, facsimile, or electronic scan;
We thank you for your consideration of these comments.
Members of the Privacy Working Group that prepared these comments are identified below. Affiliations are provided for identification purposes only.
Stanton Burke, Member of the California Lawyers Association
Christopher James Donewald, Member of the California Lawyers Association
Aigerim Dyussenova, Member of the California Young Lawyers Association
Jennifer S. Elkayam, Member of the Antitrust, Unfair Competition, and Privacy Law Section of the California Lawyers Association
Jared Gordon, Past co-chair of the Internet and Privacy Law Committee of the Business Law Section of the California Lawyers Association
Christian Hammerl, Past co-chair of the Internet and Privacy Law Committee of the Business Law Section of the California Lawyers Association
Thomas A. Hassing, Chair of the Internet and Privacy Law Committee of the Business Law Section of the California Lawyers Association
Irene Jan, Member of the Intellectual Property Law Section of the California Lawyers Association
Minji Kim, Member of the Antitrust, UCL and Privacy Section of the California Lawyers Association
Joshua de Larios-Heiman, Executive Committee Member of the Antitrust, UCL and Privacy Section of the California Lawyers Association
Marina A. Lewis, Member of the California Lawyers Association
Gayatri Raghunandan, Member of the California Lawyers Association
Mary Stone Ross, Executive Committee Member of the Antitrust, UCL and Privacy Section of the California Lawyers Association
Perry L. Segal, Board Representative, Law Practice Management and Technology Section of the California Lawyers Association
Jeewon Kim Serrato, Executive Committee Member of the Antitrust, UCL and Privacy Section of California Lawyers Association
Kieran de Terra, Executive Committee Member of the Intellectual Property Law Section of the California Lawyers Association
Emily S. Yu, Secretary of the Intellectual Property Law Section of the California Lawyers Association and Chair of the Technology, Internet and Privacy Interest Group
Code of Judicial Ethics
CLA supported proposed amendments to the Code of Judicial Ethics, to allow a judge to comment publicly about a pending case that formed the basis of criticism of a judge during an election or recall campaign, provided the comment would not reasonably be expected to affect the outcome or impair the fairness of the proceeding. CLA has worked closely with other interested stakeholders to address the increasing attacks on judges and judicial independence. These efforts have involved defense by third parties. The proposed amendments would provide judges with the option of defending themselves.
Proposed Amendments to Canon 3B(9) and Commentary of the Code of Judicial Ethics
November 27, 2019
Hon. Richard D. Fybel, Chair
Supreme Court Advisory Committee on the Code of Judicial Ethics
350 McAllister Street
San Francisco, CA 94102
Dear Justice Fybel:
The California Lawyers Association (CLA) is pleased to support the proposed amendments to canon 3B(9) of the Code of Judicial Ethics and its commentary, to allow a judge to comment publicly about a pending case that formed the basis of criticism of a judge during an election or recall campaign, provided the comment would not reasonably be expected to affect the outcome or impair the fairness of the proceeding.
CLA has been directly involved with the issues raised by the proposed amendments. We have worked closely with the Judicial Fairness Coalition and other interested stakeholders to address the increasing attacks on judges and judicial independence, and have considered the most effective ways of dealing with these attacks, given the current inability of judges to respond in their own defense. Among other things, CLA has established a process so that CLA can effectively:
- Address errors in reporting and inaccurate or unjust criticism of judges, courts, the bar and/or the administration of justice;
- Be reasonably available to the news media as a resource for obtaining information concerning judicial activities, court process, or other technical or legal information about the administration of justice;
- Encourage broad dissemination of information to the public about noteworthy achievements and improvements within the legal system; and
- Promote a better understanding within the community of the legal system and the role of lawyers and judges.
CLA’s efforts, and the current efforts of other interested stakeholders, involve defense by third parties. We endorse the proposed amendment to the canon’s commentary, which provides that a judge should consider whether it may be preferable for a third party, rather than the judge, to respond or issue statements in connection with allegations concerning a decision. At the same time, we believe it is crucial that judges be provided with the option of defending themselves.
We agree with the Supreme Court Advisory Committee that “without the proposed exception and with the increasing popularity of recall elections, judges may be reluctant to issue controversial decisions because they will be unable to defend themselves if attacked while the matter is pending.” Ultimately, the public and the judicial system in general will benefit when a judge is permitted to address attacks directly, and provide comments about the procedural, factual, or legal basis of a decision about which a judge has been criticized. Finally, we believe the restrictions contained in the proposed amendment strike the proper balance.
We appreciate the opportunity to submit these comments.
Emilio Varanini, President
California Lawyers Association
State Bar Task Force on Access Through Innovation of Legal Services (ATILS)
CLA submitted extensive comments expressing concerns about the State Bar proposal that would, among other things, allow nonlawyers to provide legal advice and services under certain circumstances; permit nonlawyers to own or have a financial interest in a law practice; and permit lawyers to share fees with nonlawyers under certain circumstances. This proposal is still under consideration and CLA continues to be actively engaged in the process.
Options for Regulatory Reforms to Promote Access to Justice
September 23, 2019
Office of Professional Competence, Planning and Development
State Bar of California
180 Howard Street
San Francisco, CA 94105
Dear Ms. Marlaud:
On behalf of the California Lawyers Association (CLA) and in response to the State Bar of California’s request for public comment, we respectfully submit this letter on the options for regulatory reform being considered by the Task Force on Access Through Innovation of Legal Services (ATILS). The Task Force has set out tentative recommendations and concepts that could significantly change the provision of legal advice and services. We greatly appreciate all the work the Task Force has done. CLA is acutely aware of the justice gap and has a keen focus on improving access to justice. Our comments below are aimed at ensuring that an appropriate balance is struck between the dual goals of public protection and increased access to justice as consideration of the tentative recommendations moves forward.
Potential changes regarding the unauthorized practice of law (UPL)
1.0 – The Task Force does not recommend defining the practice of law
One of the ATILS tentative recommendations is not to define the practice of law. Whereas we acknowledge that defining the practice of law with precision can be difficult, and that it is often fact-based, we suggest considering whether there should be a codification of factors to consider when evaluating whether a particular activity may be considered the practice of law. A natural starting point for this would be Rules of Professional Conduct, rule 5.3.1, which provides circumstances under which a disbarred, suspended, resigned, or involuntary inactive lawyer may and may not provide services. Offering guidelines, rather than a hard definition, may strike the proper balance between the issues that ATILS identified and a decision on whether to provide a definition. Providing some guidance to potential providers would allow them to better predict whether their services would constitute the practice of law, while still maintaining agility to address a myriad of potential scenarios. If nonlawyers will be permitted to provide specified legal advice and services, as discussed below, it will be important to set out the specific tasks they are permitted to perform.
2.0 – Nonlawyers will be authorized to provide specified legal advice and services as an exemption to UPL with appropriate regulation
The Task Force charter provides, in part: “Each Task Force recommendation should include an explanatory rationale that reflects a balance of the dual goals of public protection and increased access to justice.” We believe this tentative recommendation presents the greatest challenge in terms of striking the appropriate balance as between these dual goals. The key question here, as we see it, is how best to strike this balance as this tentative recommendation potentially moves from a broad concept to implementation of day-to-day, real world activities.
We believe this tentative recommendation is worthy of further exploration in greater depth as a potential means of increasing access to justice. At the same time, we urge caution prior to implementing any changes, as there are numerous details relating to this tentative recommendation that will require careful consideration.
We are concerned that if the appropriate balance is not struck, permitting nonlawyers (or nonlawyer entities) to provide legal advice or services may result in greater harm than good for consumers. Our concerns are not merely theoretical. Many of our members have seen problems created for consumers in various areas, including immigration (immigration consultants and notaries), bankruptcy (petition preparers), loan modifications (foreclosure and loan modification consultants), general civil and family law matters (paralegals and legal document assistants), and probate (trust mills and document preparation services). This often results in devastating injuries to consumers, sometimes caused by scam artists, but often the result of poor legal advice provided by individuals who were simply not qualified to provide that advice. Sometimes the problems that have been created cannot be fixed. When they can, significant resources may be required to remedy the harm caused by the nonlawyer who provided the initial legal advice. In many instances this results in additional costs to clients who are obligated to pay a second time, ultimately resulting in services that are far more costly. Often it is those who can least afford to pay for the services of a lawyer who are the most susceptible to the potential harm caused by nonlawyers giving legal advice.
We appreciate that the Task Force has prepared this and other tentative recommendations as options under consideration. As noted in the Task Force materials, some of the proposals would require that a subsequent implementation body evaluate and plan implementation strategies and details. It is particularly difficult to fully evaluate the implications of this tentative recommendation in the absence of specific details. As an example, the ATILS material notes that the Task Force “carefully considered public protection in developing the proposed concept options by [l]imiting the new UPL exceptions to only those providers who meet eligibility qualifications and become regulated.” The precise confines of these limitations are key. If this tentative recommendation does move forward, numerous variables would have a significant impact on any actual implementation, including 1) required education and training; 2) required qualifications; 3) licensing and regulatory oversight; 4) discipline; 5) continuing education requirements; 6) approved practice areas; and 7) permissible scope of activity. We highlight some of the more significant issues and questions below.
Training is key. To the extent nonlawyers may be permitted to provide legal advice or services, they must be adequately trained in the substantive tasks or services they will perform so they can provide the services competently. We believe that any training should also include an ethics component. Many of the lawyers’ ethical duties may not be obvious but serve important client protection purposes. It is possible current training programs for paralegals or legal secretaries could be modified to serve this purpose, but other models could be explored.
Training, education, qualifications, and licensing raise a host of interrelated issues and questions, including:
- What would be the actual educational requirements, and what level of degree would be needed?
- Would there be a set curriculum? If so, what entity would establish the curriculum and what would the curriculum be?
- Would a license be required?
- If a license is required, what entity would create and administer any examination that is required to obtain the license?
- What regulatory agency would set the licensing and other standards for the nonlawyers, as the State Bar does for lawyers?
- Will there be an experience requirement that must be met prior to licensing?
- Would continuing education be required in order to maintain a license?
- What level of lawyer supervision or oversight, if any, would be required if a nonlawyer is authorized to provide specified legal advice and services?
Ongoing regulatory oversight is also key. Thus, if any changes are made that would permit nonlawyers to provide legal advice and services, we emphasize the necessity of regulating the practice of law by nonlawyers. California’s Rules of Professional Conduct were implemented “to protect the public, the courts, and the legal profession; protect the integrity of the legal system; and promote the administration of justice and confidence in the legal profession.” (Rules Prof. Conduct, rule 1.0; see also Bus. & Prof., § 6001.1 [providing “protection of the public” is “the highest priority” of the State Bar Act].) The regulation of lawyers and nonlawyers must be coordinated to ensure there are no gaps in these protections. As examples, a lawyer’s duty of loyalty and duty of confidentiality are cornerstones of a lawyer’s duties and, for the protection of the public, should also be cornerstones of any legal services provided by nonlawyers.
One of the main responsibilities of a regulator is to discipline those who violate their duties. We believe it is important that there be consistency in disciplinary enforcement and decisions, both so that those providing legal advice (whether lawyer or nonlawyer) understand the expectations and also so the public maintains its trust in the legal services industry. If nonlawyers are subject to the same standards as lawyers, we think this coordination will be difficult if there is a regulatory agency separate from the State Bar of California that governs nonlawyers who are practicing law. If, on the other hand, different standards apply to the nonlawyers, regulation by a separate regulatory agency may be appropriate.
The permissible areas of practice and scope of activities also raise questions. In light of our concerns raised above, we urge the Task Force to explore whether there are limited areas of law where nonlawyers could be authorized to provide legal advice and services, to address a demonstrated need, and whether the benefits of having nonlawyers practice in these limited areas would outweigh the possible harm to consumers.
As part of our analysis of this issue, we have reviewed the experience in other states that have considered or adopted “limited license” models. We considered the work in Washington and Utah (which have adopted rules permitting limited practice of law by nonlawyers) as well as Colorado, Illinois, Montana, Oregon, and Virginia (which considered but have so far declined to adopt such rules). We also note the State Bar’s prior work looking into the issue of legal technicians and limited licenses, including in 1988, 1990, 1993 and 2013. A consistent theme emerges from all of this work, and the fundamental balancing question remains the same. As noted in the June 17, 2013 Agenda Item from State Bar Staff to Members of the Limited License Working Group:
The significant potential of harm to the public by both unscrupulous and well-intentioned but untrained providers of legal services cannot be ignored. Potential harm can include outright fraud; inadequate and imprecise advice; missed issues, defenses and remedies, exemptions.
Regulation offering licensure, disciplinary standards and consequences, codes of conduct, education, training, and financial responsibility can provide greater access to legal services while at the same time limiting potential harm to the public. [Report of the State Bar of California Commission on Legal Technicians (July 1990)].
2.0 – 2.6 – Permitting entities to practice law
Regarding permitting entities to practice law, we are concerned that it will be difficult for regulatory oversight to keep up with technological developments, and we would suggest consideration of a significant level of lawyer involvement, whether as an owner or in some other capacity, to ensure the technology is maintaining compliance with ethical duties as the technology evolves and is otherwise in a position to substantively engage in the practice of law without harming consumers. The concerns expressed above (potential changes regarding UPL) and below (potential changes to the Rules of Professional Conduct) also apply here.
Potential changes to the Rules of Professional Conduct
To account for some of the potential changes to how legal services are provided, the ATILS tentative recommendations include potential changes to the Rules of Professional Conduct. While we acknowledge that some changes to the rules will be necessary to accommodate and support any recommendations that may ultimately be adopted, we have concerns as discussed below.
3.0 – Adoption of a new Comment  to rule 1.1
The proposed language for new Comment  mandates that lawyers keep abreast of benefits and risks associated with relevant technology. We believe that the proposed comment does not accurately reflect the rule. That is, it is possible for a lawyer to provide competent services even though the lawyer is not fully aware of all benefits and risks of particular technologies. The rule expressly sets the threshold at the learning and skill “reasonably necessary for the performance of” legal services.
3.1 – Adoption of a proposed amended rule 5.4 [Alternative 1] and 3.2 – Adoption of a proposed amended rule 5.4 [Alternative 2]
Before proposing that nonlawyers should be able to participate in fee-sharing, or otherwise share in the profits or ownership of entities that deliver legal services, we believe much greater consideration should be given to whether these approaches are likely to foster better access to justice or other advances in law firms without resulting in harm that does not exist today.
We are concerned that it will be difficult for any regulator to enforce either proposed version of rule 5.4 against savvy lawyers or nonlawyers, who may not leave a paper trail and may set up operations in which lawyers do not independently control the provision of legal services. We are not suggesting that lawyers will violate their own ethical obligations as a result of the influence of nonlawyer business partners. Rather, we believe the central question that needs to be addressed is how this would be effectively regulated.
Our concerns are based in part on what we have already seen under existing law. In one notorious case, Terry Bollea (professionally known as Hulk Hogan), sued Gawker Media for invasion of privacy after it published a sex tape, and a Florida jury awarded Hogan $140 million. What the jury—and the public—did not know at the time was that Silicon Valley billionaire Peter Thiel was secretly bankrolling the lawsuit. As reported in the New York Times, a series of previous articles about Mr. Thiel and his friends “drove Mr. Thiel to mount a clandestine war against Gawker. He funded a team of lawyers to find and help ‘victims’ of the company’s coverage mount cases against Gawker.” (Peter Thiel, Tech Billionaire, Reveals Secret War With Gawker https://www.nytimes.com/2016/05/26/business/dealbook/peter-thiel-tech-billionaire-reveals-secret-war-with-gawker.html).
Mr. Thiel was simply funding this litigation. To that extent, this was not the typical litigation funding situation, where an outside entity funds litigation in exchange for an interest in the proceeds of any ultimate recovery. Litigation funding by outsiders raises potential ethical issues. Of significance here is the possible move to situations where an “outsider” would become an “insider.” Any such change raises new concerns and requires a much different evaluation as to what the potential outcomes might be.
If nonlawyers (individuals or entities) can profit directly from the legal business in which they are partners, there would necessarily be an incentive for them to “help” their investment. This is potentially problematic if the nonlawyers are not bound by the same ethical standards as the lawyers. And even if the intent is for the nonlawyer business partners to be bound by these same standards, they would not be licensed by or subject to the regulatory or disciplinary jurisdiction of the State Bar. Thus, the State Bar would have no remedy available for a nonlawyer’s violation of the standards.
Issues are likely to arise in the context of the advertising and solicitation rules and other areas. Would the lawyers who get cases simply choose to turn a blind eye as to how the cases are coming to the firm or fail to ask their nonlawyer business partners critical questions about how the clients were obtained? Would the nonlawyer investors potentially ask the lawyers to sue a competitor of theirs for a competitive advantage without disclosing key facts to the lawyers that would not be discovered in the course of the lawyers’ ordinary due diligence? If large public companies start investing in law firms, would shareholder interests drive the agenda? Would inevitable tensions be created between the fiduciary duties that lawyers would owe to their nonlawyer partners and the fiduciary duties that lawyers owe to their clients?
As to the first more limited approach to modifying rule 5.4, we are concerned with subsection (b), which permits nonlawyers to be owners of firms if: “(1) the firm’s sole purpose is providing legal services to clients; (2) the nonlawyers provide services that assist the lawyer or law firm in providing legal services to clients; (3) the nonlawyers have no power to direct or control the professional judgment of a lawyer; (4) the nonlawyers state in writing that they have read and understand the Rules of Professional Conduct, the State Bar Act and other laws regulating lawyer conduct and agree in writing to undertake to conform their conduct to the Rules, the State Bar Act and other laws regulating lawyer conduct; (5) the lawyer partners in the law firm are responsible for these nonlawyers to the same extent as if the nonlawyers were lawyers under rule 5.1; and (6) compliance with the foregoing conditions is set forth in writing.”
Although (b)(1) and (b)(2) of this rule limit the services to be provided by law firms with nonlawyer partners, we wonder whether nonlawyers will provide services that we often think of as being outside the scope of the practice of law, such as investment advice, because it arguably assists a lawyer in its advice to a client. The outside boundaries of the rule are not at all clear. It is possible this issue could be resolved by a comment to explain what it means to “assist the lawyer or law firm in providing legal services to clients.”
As to subsection (b)(3), there is no restriction on the percentage of ownership the nonlawyers can have in the firm. A lawyer’s independent professional judgment could be influenced by the control of the law firm being in the hands of nonlawyers. Although we agree the ABA’s approach in (b)(5) of its Ethics 20/20 version is cumbersome, if this tentative recommendation is pursued we suggest considering a cap on nonlawyers’ ownership percentage of, and financial share, in the firm. As to subsection (b)(4), we believe any rules on nonlawyers must subject the nonlawyers to discipline. Therefore, any change to Rule 5.4 that would impose obligations on nonlawyers must be done in conjunction with a regulatory framework being applied to nonlawyers. Although subsection (b)(5) imposes a supervisory duty on lawyers, the public would be better protected if a nonlawyer’s conduct is directly regulated. Also, the oversight required of lawyers under subsection (b)(5) might be difficult where the nonlawyer is engaged in services that are highly specialized and not within the purview of the lawyer’s expertise, such as may be the case in a highly technological service, or where the nonlawyer holds the power or financial leverage in the relationship with the lawyer.
The second approach to modifying rule 5.4 would permit fee-sharing with nonlawyers, with restrictions that are similar to the restrictions on fee-sharing among lawyers under Rules of Professional Conduct 1.5.1 and 1.8.6. We understand this alternative is meant to create a major shift and would allow fee-sharing and partnerships between nonlawyers and lawyers so long as the consumer approves of the fee-sharing arrangement. We have the same concerns we raised above with the first alternative, but also are concerned that consumers might be misled, pressured, or may not adequately understand the ramifications of the fee-sharing arrangements they approve, which could be intricate and complex. We also are concerned that the managers of nonlawyer-owned entities that provide legal services will not be aware of or understand the importance of lawyers’ obligations, and will not have client protection in mind when operating the entity. We do not see how to resolve the major issues raised by this rule draft, and would not suggest moving forward with this version.
3.4 – Adoption of revised California Rules of Professional Conduct 7.1–7.5
We note that the proposed changes to rules 7.1 through 7.5 will need to be coordinated with any changes to rule 5.4. Although we have concerns about fee-sharing with nonlawyers, as noted above, we appreciate the effort to address what kind of fee-sharing is permitted with for-profit lawyer referral sources, and whether this could result in an imbalance in certain areas where only lawyers who were able to pay significant premiums were able to get clients from referral services. We think further study should examine whether for-profit referral services actually increase access to justice, and if so, whether and how to allow fee-sharing with these service providers. The current proposals to rule 7.1 through 7.5 provide much needed guidance on newer marketing methods, but do not change the status quo of fee-sharing with advertisers.
Other approaches to increasing access to justice
While possibly not within the purview of the Task Force, we encourage consideration of other alternative means to try to increase access to legal services. Many of these approaches have been pursued for years, but efforts in the following and other areas could potentially be enhanced: creating incentives for lawyers to provide bono services; expanding opportunities to provide pro bono services; expanding the use of limited-scope representation; and expanding the judiciary. These options would not necessarily replace all of the tentative recommendations, but they would avoid the potential harm to consumers we have addressed above.
Separately, we would encourage consideration of whether social purpose corporations or benefit corporations (Corp. Code, §§ 2500-3503, 14600-14631) could serve as alternatives for promoting access to justice. These structures have a purpose of serving the public in the manner defined by such corporation’s charter. These corporate forms have only been permitted in California for the past eight years and so we are not aware that they have become common, or have increased access to justice. However, these forms might serve the dual purpose of allowing innovation through the ability of the owners to make a profit while requiring the entity to have an access to justice purpose.
We appreciate the opportunity to submit these comments. We remain available to assist and provide ongoing input as the ATILS Task Force moves forward with this process.
Heather Linn Rosing, President
California Lawyers Association
State Bar Licensing Fee Increase
CLA successfully resisted the amount of the licensing fee increase the State Bar sought, ultimately resulting in a much smaller increase. Our comments expressed numerous concerns with the proposed fee increase, urging a cautious approach with a sharp focus on the State Bar’s current use of revenue derived from licensing fees and future use of revenue that may be derived as a result of any increase to the licensing fee.
SB 176 (Jackson), as amended May 22, 2019
July 3, 2019
Hon. Hannah-Beth Jackson, Chair
Senate Judiciary Committee
State Capitol, Room 5080
Sacramento, CA 95814
Hon. Mark Stone, Chair
Assembly Judiciary Committee
State Capitol, Room 3146
Sacramento, CA 94249
Dear Senator Jackson and Assembly Member Stone:
As the Senate Judiciary Committee and Assembly Judiciary Committee are well aware, the California Lawyers Association (CLA) was created as a result of Senate Bill 36, the annual State Bar fee bill of 2017. Now, a year and a half after its establishment, CLA greatly appreciates the opportunity to offer its perspective on this year’s fee bill, in particular the proposed State Bar licensing fee increase.
CLA has close to 100,000 members. This includes about 45,000 members of the California Young Lawyers Association (CYLA) who do not need to join CLA separately but are members automatically as lawyers in California practicing eight or fewer years. Our members represent the vast diversity of California’s legal community and the various areas of law practiced throughout the state. We continue to expand the scope of our activities, consistent with our mission of promoting excellence, diversity and inclusion in the legal profession and fairness in the administration of justice and the rule of law.
We recognize that the State Bar licensing fee has not increased in over 20 years and that economic realities may justify an increase of some amount. At the same time, we urge a cautious approach, with a sharp focus on the State Bar’s current use of revenue derived from licensing fees and future use of revenue that may be derived as a result of any increase to the licensing fee.
By its nature, a fee increase will necessarily have an impact on those required to pay the fee. The immediate and direct impact will be on the attorneys, who will be required to make a greater annual payment in order to maintain their licenses. That impact may fall disproportionately on certain attorneys, such as members of CYLA and solo and small firm practitioners.
Beyond the direct impact, there may be indirect impacts on those who are least able to afford necessary legal services. For example, any increase in the amount attorneys are required to pay may be accompanied by a decrease in the amount that attorneys voluntarily pay toward certain programs, including those that increase access to justice. Thus, optional donations to help close the justice gap and to fund legal services—both appearing on the annual State Bar fee statement at the same time attorneys pay their mandatory licensing fee—may decrease.
Certain local non-profit bar associations share our concern about the impact of a fee increase on access to justice, and believe it is likely that some members may drop their membership in these associations if the licensing fee is increased. This could result in decreased participation in important educational programming and a decrease in funding for valuable services these bar associations provide to members of the public, including pro bono and modest means programs, lawyer referral services, indigent criminal defense panels, and foundations that donate to local legal aid programs. With decreased funding, these and other services may need to be cut back. Finally, there would likely be an adverse impact on funding for our ongoing programs aimed at ensuring the highest level of attorney ethics and competence in specific practice areas, thereby protecting the public, and partner-based initiatives we are developing in the areas of access to justice, pro bono, diversity, equity and inclusion, and civics engagement.
The State Bar plays a crucial role in protecting the public. CLA—like the State Bar—is interested in an adequately funded and well-functioning attorney discipline system. The question presented here is the actual amount of funding the State Bar needs to run its discipline system and otherwise function efficiently and effectively.
We have carefully analyzed the two recent reports on the State Bar, the April 30, 2019 report of the California State Auditor and the June 26, 2019 report of the Legislative Analyst’s Office (LAO). It is our belief that any increase in the licensing fee for 2020 should not exceed the “low” option contained in the LAO report. Although we recognize, as the LAO report notes, that the “low” option demonstrates a “bare‑bones” assessment, the LAO report also notes, on Page 23, that this would cover “the most immediate and necessary costs.” We are, however, sensitive to the impact of this option on the State Bar workforce and are open to engaging in a discussion about addressing these issues.
Assuming the Legislature authorizes the collection of an increased licensing fee for 2020, we believe the increased fee should be subject to further evaluation in connection with a 2021 State Bar fee bill. Thus, if there is to be an increase in the licensing fee for 2020, there should also be some associated performance standards, measurements, or benchmarks included in this bill, along with a required accountability report from the State Bar addressing planned and actual spending. This report could be used to assist in evaluating the impact of any fee increase authorized for 2020 and potentially provide justification for an adjustment to the amount of the licensing fee in 2021.
We recognize that the State Bar is already subject to numerous reporting and audit requirements, and have no interest in unnecessarily diverting resources away from the State Bar’s mission, toward additional record-keeping and reporting requirements. We would, however, like to see measures in place to ensure that funds the State Bar receives as a result of any fee increase are spent in a way that most effectively furthers its mission. Our goals are, therefore, aligned with these comments on page 24 of the LAO Report:
Consider Performance and Outcome Measures for Any New Resources Provided. The Legislature currently receives reports on certain State Bar activities. For example, the State Bar is required to provide an annual discipline report that provides key outcome measures for disciplinary workload. The Legislature could consider modifying these established requirements as well as implementing new outcome and performance measures that reflect the Legislature’s intended expectations for any funding provided. This will help the Legislature monitor how the funding is used and any effect the new funding has upon State Bar operations (such as the effect any new OCTC positions has upon disciplinary disposition times). This would also help the Legislature evaluate whether legislative expectations were actually met, determine whether future policy changes are needed, and make decisions on appropriate funding and service levels in the future.
We are open to conferring with the Legislature and other key stakeholders about the exact language of any accountability provisions.
Finally, we are interested in exploring ways to potentially lower State Bar licensing fees in the future, consistent with this assessment on page 2 of the State Auditor’s Report:
To potentially mitigate proposed fee increases, we reviewed State Bar’s operations for opportunities to increase its revenue, which may allow it to decrease the fees that attorneys must pay. We hired a certified real estate appraiser to evaluate State Bar’s real estate holdings in San Francisco and Los Angeles. Our appraiser found that State Bar has not maximized lease revenue from its San Francisco building. State Bar has entered into leases that are below market value, and it has not leased all available space in the building. We also considered efficiencies—such as the agency wide performance measures and goals that State Bar has recently developed—that could improve its performance and eventually translate to reduced costs and corresponding reductions in licensing fees.
We appreciate your consideration of our comments. If you have any questions, please feel free to contact me at (619) 239-8131 or HRosing@Klinedinstlaw.com.
Heather Linn Rosing, President
California Lawyers Association
AB 5 (the Dynamex legislation)
This legislation dealt with the tests for determining whether a worker will be classified as an independent contractor or employee. CLA successfully advocated in favor of adding a “lawyer exemption” to provide an opportunity for lawyers to continue working as independent contractors.
CLA successfully advocated in support of the enactment of legislation that increased funding for programs established under California’s Sargent Shriver Civil Counsel Act. The Shriver Act established funding for pilot programs, providing representation of counsel for low-income persons who require legal services in specified civil matters, including tenants facing eviction, parents involved in child custody disputes, and families in urgent need of guardianships or conservatorships. The increase in funding was vital in order to continue offering legal representation to litigants who are most vulnerable.
AB 330 (Gabriel) – Support
June 5, 2019
Hon. Jesse Gabriel
Member of the Assembly
State Capitol, Room 4139
Sacramento, CA 94249
Dear Assembly Member Gabriel:
The California Lawyers Association (CLA) is pleased to support Assembly Bill 330, which would increase funding for programs established under the Sargent Shriver Civil Counsel Act (Shriver Act).
Established in 2018, CLA is a nonprofit, voluntary organization. Our extensive membership represents the vast diversity of California’s legal community and the various areas of law practiced throughout the state. CLA’s mission is promoting excellence, diversity and inclusion in the legal profession and fairness in the administration of justice and the rule of law.
Under Gideon v. Wainwright (1963) 372 U.S. 335, defendants in criminal proceedings have a right to counsel. The Shriver Act was one of the first efforts in the United States to implement the right to counsel in civil cases—sometimes referred to as “Civil Gideon”—for parties who cannot afford counsel in civil matters involving critical issues affecting basic human needs.
The Shriver Act established funding for pilot programs, providing representation of counsel for low-income persons who require legal services in specified civil matters, including tenants facing eviction, parents involved in child custody disputes, and families in urgent need of guardianships or conservatorships. In 2017, the Judicial Council submitted an evaluation of the Shriver Act to the Legislature detailing the efficacy of the pilot programs and how they have helped to increase settlements, improve outcomes for litigants, and reduce court costs.
The pilot programs are currently funded by a $10 set-aside from the fees paid for certain court services. AB 330 would build on the success of the pilot programs by increasing Shriver funding, to be paid for with a $15 increase in the fees paid for those court services. This increase in funding is vital in order to continue offering legal representation to litigants and increase the availability of Civil Gideon in California for those who are most vulnerable.
For these reasons, CLA supports AB 330.
We appreciate your consideration of our comments. If you have any questions, please feel free to contact me at (619) 239-8131 or HRosing@Klinedinstlaw.com.
Heather Linn Rosing, President
California Lawyers Association
Mandatory Pro Bono Service
In 2018, legislation was introduced that would have required lawyers to annually complete a minimum of 25 hours of pro bono service or contribute $500 to support legal services. Although CLA strongly supports both pro bono legal services and increased funding to support the provision of legal services to indigent persons, CLA expressed several concerns with the legislation as introduced, as well as its views on alternative ways in which the overarching goals of the legislation could be met. Ultimately, the legislation did not advance.
Assembly Bill 3204 (Gray)
April 23, 2018
Hon. Adam Gray
Member of the Assembly
P.O. Box 942849
Sacramento, CA 94249
Dear Assembly Member Gray:
The California Lawyers Association (“CLA”) submits these comments regarding Assembly Bill 3204, which would require active California attorneys to annually complete a minimum of 25 hours of pro bono legal service or contribute $500 per year to support legal services to indigent persons.
CLA strongly supports both pro bono legal services and increased funding to support the provision of legal services to indigent persons. However, CLA has concerns with this bill in its current form and believes there are alternative ways in which the overarching goals of this legislation could be met. CLA is available as an ongoing resource and would be pleased to work with the Legislature and other interested stakeholders to develop and advocate in favor of these alternatives.
CLA launched on January 1, 2018 as a nonprofit, voluntary organization, and the new home of what were the Sections of the State Bar of California and the California Young Lawyers Association. The mission of CLA is promoting excellence, diversity and inclusion in the legal profession and fairness in the administration of justice and the rule of law. CLA represents the vast diversity of California’s legal community and the various areas of law practiced throughout the state.
CLA recognizes that there is an unmet need for legal services for people who are indigent or of modest means, and that legal aid is woefully underfunded. AB 3204 proposes to address this situation through mandatory pro bono service or a mandatory financial contribution. Although this bill is well-intentioned, we have concerns as discussed below. We follow that with a discussion of several alternative approaches that would achieve the goals of this bill and address those concerns.
This bill may not be the most effective means of achieving the desired results.
For many years, much has been written about the concept of mandatory pro bono legal services.  In reviewing this bill, CLA’s Board of Representatives carefully considered the arguments made on all sides of this issue and consulted with members of the CLA Sections, many of whom are deeply involved with pro bono activities, in one form or another.
We appreciate that Business and Professions Code section 6073 currently provides that every lawyer is expected to make a contribution, which may consist of pro bono services, financial support to organizations providing free legal services to persons of limited means, or other voluntary public service activities. Similarly, ABA Model Rule 6.1 adopted in several states, sometimes with modifications, contains an aspirational goal regarding pro bono legal services.
The shift from expectations and aspirational goals to a mandatory requirement, as contained in this bill, is significant. In preparing these comments, we heard from strong proponents of pro bono legal services (including pro bono partners in large law firms, who speak from many years of expereince), who believe that imposing a pro bono requirements on lawyers who are not independently interested in doing such work can create many problems and cause more harm than good to those people who are vulnerable and need legal assistance the most. We are not suggesting that lawyers will shirk their ethical obligations and intentionally do a “bad job.” However, there is a legitimate concern that lawyers who are “forced” to do pro bono work may not do their best work, to the detriment of their clients, and may even come to resent the obligation.
There may also be unintended and adverse consequences arising from the proposed pro bono service requirement. We have heard examples of well-intentioned lawyers providing pro bono services that ultimately resulted in the expenditure of additional resources to fix a problem that was created by a lawyer’s unfamiliarity with the are of law related to those services.  Mandatory pro bono service (particularly without adequate training and oversight) will only exacerbate this problem. We received feedback from specialized practitioners (in the area of intellectual property law, for example) who believe it would be very difficult to locate clients in their practice area who qualify as potential pro bono clients under this bill. Clients who are indigent or of modest means deserve the same level of representation as other clients. This bill will potentially force attorneys to provide service in specialized areas with great needs (for example, landlord-tenant, family law, immigration) without the requisite knowledge or experience.
On balance, we believe a voluntary pro bono system—with expanded opportunities, training, oversight, encouragement, and rewards—is the most effective way to advance the administration of justice and serve those who cannot afford but are in need of legal services.
This bill also raises the following specific concerns:
- Many lawyers are not allowed to provide pro bono legal services
Public lawyers and in-house counsel are often prohibited from providing legal services to any party beyond the scope of their employment. Other lawyers may have that same prohibition imposed by their employer. For these attorneys, the only option under AB 3204 would be payment of a mandatory contribution of $500 per year to the State Bar, which would distribute the money for the provision of legal services to indigent persons. This effectively amounts to a $500 tax or fine on this entire class of lawyers. Although the bill could be amended to entirely exempt lawyers who are prohibited from providing pro bono legal services, that would appear to be an unfair and inequitable result with respect to those lawyers who are otherwise equally situated, except for that prohibition.
- Pro bono legal services may not be covered by malpractice insurance
Public lawyers and in-house counsel (assuming they are permitted to provide pro bono legal services to third parties) are unlikely to have any malpractice insurance at all. For those lawyers who do not have malpractice insurance, the insurance policies often contain an exclusion for pro bono legal services. Clients who are indigent or of modest means should not be steered toward uninsured lawyers, and lawyers should not be required to perform legal services for which they are not insured.
- The alternative payment of $500 annually raises several issues
As an alternative to the pro bono legal service required under this bill, a lawyer can make a contribution of $500 per year for legal services to indigent persons. Although Business and Professions Code section 6073 contains a similar option in connection with a lawyer’s expected contribution, the analysis differs when it becomes mandatory to make either a service or a financial contribution. For lawyers who could easily afford the payment, this may simply become a “buy-out” of the service requirement. We question how many lawyers among those with the greatest experience will actually undertake 25 hours of service when many could make $500 in about one hour—or even less—of billable time. We also note that under Business and Professions Code section 6073, when a lawyer is deciding to provide financial support instead of legal services, the “lawyer should, at minimum, approximate the value of the hours of pro bono legal service that he or she would otherwise have provided.” Although we are not advocating in favor of a requirement for a greater financial contribution, there does seem to be a mismatch between 25 hours of service and $500, at least for some lawyers. At the same time, $500 is a lot of money for many lawyers, who may not be unnable to meet the 25-hour service requirement for any number of reasons, and would have no choice but to pay the $500.
- The scope of permissible pro bono service is too limited
Under this bill, “pro bono legal service” is defined as “work without compensation from the client who receives the legal service that is designed to benefit the public interest or persons who are indigent or of modest means” for one of the specified purposes. We recognize this is modeled on existing definitions, for example Business and Professions Code second 6072(d). But Section 6072 deals with contracts with the state for legal services in excess of $50,000, and certification by the contracting law firm that the firm agrees to make “a good faith effort” to provide a minimum number of hours of “pro bono legal services” or an equivalent amount of financial contributions. In contrast, we are dealing with a mandatory service requirement in this case, and AB 3204 does not encompass much of very worth pro bono work (services performed free of charge or at reduced fees) already performed voluntarily by many lawyers.
There are countless examples of legal services currently performed on a pro bono basis that are unlikely to meet the new statutory definition. As two examples only, we received input from lawyers who serve voluntarily as minor’s counsel in child custody cases, and lawyers who volunteer under the IRS-AARP tax aide program to help senior citizens or low income people have their tax returns prepared, a program with a definition of “low income” that is higher than the definition of “modest means” in this bill. Unless a client is “indigent or of modest means” these and similar direct legal services provided to individual clients do not appear to be covered by the proposed statutory definition.
The definition in this bill is also too narrow because it is limited to legal services performed for a client. Unlike the proposed legislation, Business and Professions Code section 6073 recognizes that “[l]awyers also make invaluable contributions through their other voluntary public service activities that increase access to justice or improve the law and the legal system.” (Bus. & Prof. Code, § 6073, italics added.) Similary, ABA Model Rule 6.1, with its 50-hour aspirational pro bono service goal, recognizes that these services may be provided through “participation in activities for improving the law, the legal system or the legal profession.” (ABA Model Rule 6.1, ¶ (b)(3).) Comment  to Model Rule 6.1 states:
Paragraph (b)(3) recognizes the value of lawyers engaging in activities that improve the law, the legal system or the legal profession. Serving on bar association committees, serving o boards of pro bono or legal services programs, taking part in Law Day activities, acting as a continuing legal education instructor, a mediator or an arbitrator and engaging in legislative lobbying to improve the law, the legal system or the profession are a few examples of the many activities that fall within this paragraph.
In considering this bill, we were provided with numerous examples of valuable public service currently performed voluntarily that would not be covered by this bill. Examples include sitting as a Temporary Judge in superior court so that all courtrooms can be open; mediating cases to help lighten court dockets; drafting consumer pamphlets for pro se litigants; participating for many years as speakers on the radio program Your Legal Rights; and ongoing work with the Educating Seniors Project, sponsored by CLA’s Trusts and Estates Section.
Because this bill is limited in scope to the defined legal services, it is likely to siphon away much of the good work that is currently done by lawyers on a pro bono basis, creating a new gap.
- The exemptions based on gross income raise several issues
Proposed subdivision (c)(3) provides an exemption for a lawyer who “earned less than fifty thousand dollars ($50,000) in gross income in the previous year from work as a lawyer in California.” This exemption appears to be premised on the idea that the pro bono requirements would place an unfair burden on those lawyers who earn less than a certain amount. Although income does have a direct correlation with the ability to make a financial contribution, that is not necessarily the case with respect to the ability to make a service contribution, with the associated time commitment. In addition, using gross income does not account for debt, and using income from work as a lawyer may not account for income from other sources.
Proposed subdivision (d) provides an exemption “during the first five years after the member is admitted to the State Bar or until the member eans at least one hundred thousand dollars ($100,000) in gross income in a single year for work as a lawyer in California, whichever occurs first.” New lawyers often have significant student loan debt. At the same time, other lawyers, particularly solo and small firm practitioners, upon whom this bill would have a disproportionate impact, may also be struggling to earn a living and run a business, and may not have the resource or ability to comply with the service or payment requirements under this bill. We also find this exemption somewhat ironic because, in our experience, newer lawyers are often the most enthusiastic about volunteer pro bono service, as it provides new opportunities to be recognized, develop professional skills, explore different areas of practice, and facilitate wider access to justice by utilizing a new law license to give back to the community.
Using gross income from practice of law raises the same issues with respect to the $100,00 exemption that are discussed above, by not accounting for debt or other sources of income. It is also not clear why the exemption under subdivision (c)(3) is set at $50,000 and this exemption is set at $100,000.
Although we are not advocating in favor of eliminating all the exemptions in the bill, we believe that additional thought should be given to any such exemptions, before setting them based solely on gross income from work as a lawyer.
- The bill is likely to result in an undue burden on legal aid organizations
We are concerned that this bill will place an undue burden on legal aid organizations. Those organizations are likely to see an influx of requests to provide pro bono legal services, without the means to absorb the new volunteers, adequately assess and oversee the lawyers asking to provide the legal services, and ensure that legal aid clients continue to receive the high quality legal services that they deserve.
- The bill contains some drafting ambiguities and omits at least one important provision
Proposed subdivision (k) provides that an attorney shall not satisfy any part of the pro bono legal service required “by participating in any partisan political activities.” This phrase is vague and ambiguous. It is not clear whether it would only prohibit participation in a political campaign on behalf of or in opposition to a candidate for public office, or something broader than that. If a broader prohibition is envisioned, the exact boundaries are likely to be subject to ongoing debate. Ultimately, we believe the bill should simply define “pro bono legal service” with no need to state any particular type of activity that would not qualify.
The bill also fails to specify an enforcement mechanism or any consequences that may result from a lawyer’s failure to comply with the new statutory requirements. In contrast, Senator Wieckowski Senate Bill 316 (currently pending legislation that would impose a new pro bono reporting requirement) provides: “Failures of a member of the State Bar to comply with any of the provisions of this section is not grounds for disciplinary or administrative recourse.” Assuming this bill moves forward, would this or something similar be the case with the new pro bono requirements? Lawyers should be put on notice of potential consequences arising out of a failure to comply with any of the newly imposed statutory requirements.
CLA believes there are alternative approaches that would achieve the overarching goals of this bill, without raising the concerns discussed above
Access to justice is one of the CLA’s top priorities. Although we have been in existence for less than five months, we are already in the process of developing projects that would greatly assist in delivering pro bono services to those with the greatest need.
As the statewide association of California lawyers, we believe we are ideally situated to create a statewide clearinghouse for pro bono opportunities. We intend to identify geographical areas with the greatest need of volunteers, develop an infrastructure for volunteers to access pro bono opportunities, and assist with supervision of these programs. We recognize that we cannot administer a statewide program to coordinate pro bono legal services on our own, and plan to establish partnerships with local legal service programs to facilitate these efforts. Our goal is to partner with the Legislature and other interested stakeholders to develop and implement the most effective pro bono program possible.
We are also exploring ways to tie our statutory mandate to provide low- and no-cost mandatory continuing legal education (“MCLE”) directly to pro bono service opportunities, using other existing models. There are programs (in the juvenile court system, as one example only) that offer free MCLE training for lawyers who are willing to accept at least one pro bono matter referred by the program. This could be expanded so that a supervising or mentoring lawyer is available to provide consultation and support to the pro bono attorney throughout the life of the case. We are currently exploring ways to implement this idea.
Beyond the creation of opportunities, we believe it is important to encourage lawyers to contribute time or money legal services to the needy, and plan to do so. Among other possibilities, CLA is considering various ways in which it could publicly recognize lawyers, based on their pro bono service.
Finally, CLA strongly supports icnreased funding for legal aid programs and will be engaged in efforts, in collaboration with other interested parties, aimed at making that happen.
We appreciate your consideration of our comments. If you have any questions, please feel free to contact me at (619)239-8131 or HRosing@Klinedinstlaw.com.
Heather Linn Rosing, President
California Lawyers Association
1. See, e.g., Ronald A. Rotunda, “Forcing Lawyers to Perform Pro Bono Services” (2016) https://verdict.justia.com/2016/07/18/forcing-lawyers-perform-pro-bono-services; Joseph A. Sullivan, “A Response to: ‘Forcing Lawyers to Perform Pro Bono Services'” (2016) https://verdict.justia.com/2016/08/26response-forcing-lawyers-perform-pro-bono-services; Cramton, Roger C., “Mandatory Pro Bono” (1991). Cornell Law Faculty Publications. Paper 1027 https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredirect1&article=2233&context=facpub (surveying the arguments for and against mandatory pro bono)
2. As one example only, assistance with preliminary documents in domestic violence proceedings, by those who are not familiar with certain requirements, in some instances has ended up costing more time and money than necessary, given a lack of understanding about the impact of preliminary issues on subsequent proceedings in the same matter.
Sales Tax on Legal and Other Professional Services
We are deeply engaged in the policy debate to resist a movement to tax legal and other professional services in California. Imposition of such a tax would increase the cost of legal services, decrease access to justice, put California law firms at a competitive disadvantage as compared to out-of-state law firms, and disfavor California offices of national law firms because clients might opt to use offices in other states that do not impose such a tax. In 2018, CLA opposed SB 993, which would have imposed such a tax. That legislation did not advance. In 2019, SB 522 was introduced. While the details of this bill are still being developed, CLA continues to work in opposition to this or any other legislation that would impose a sales tax on legal services.
Senate Bill 933 (Hertzberg) – Oppose
April 13, 2018
Hon. Robert Hertzberg
Member of the Senate
State Capitol, Room 4038
Sacramento, CA 95814
Dear Senator Hertzberg:
The California Lawyers Association (“CLA”) respectfully opposes Senate Bill 993, which would expand the Sales and Use Tax Law to impose a new tax on the purchase of services by businesses in California.
By way of background, CLA launched on January 1, 2018 as a nonprofit, voluntary organization, and the new home of what were the Sections of the State Bar of California and the California Young Lawyers Association. The mission of CLA is promoting excellence, diversity and inclusion in the legal profession and fairness in the administration of justice and the rule of law. CLA represents the vast diversity of California’s legal community and the various areas of law practiced throughout the state.
CLA is opposed to SB 993 because it would have an adverse impact on California consumers, access to justice, and affordable legal services.
Sales and use taxes are “consumption taxes” that target consumers who choose to make certain purchases. The purchase of legal services is rarely a choice. The proposed new tax, which would apply to legal services, among other services, would increase costs and diminished access to justice for businesses that are confronted with a wide array of circumstances requiring the services of a lawyer. These legal services can range from advice concerning essential functions of running the business, including remaining in compliance with California’s numerous laws that apply to businesses, to representation when difficult and unforeseen business situations arise.
SB 993 would have a disproportionate impact on, and discriminate against, small and medium sized business. We recognize the bill contains a $100,000 gross receipts threshold, for businesses that qualify. However, there are numerous sole proprietorships and small or medium sized businesses that exceed the $100,00 gross receipts threshold. These businesses often operate under very tight margins. Under SB 993, they would be required to absorb the added tax on any legal services they purchase, or pass that cost on their own consumers, which may not be feasible in a highly competitive market. Although the same would be true for large businesses, they would more likely be able to avoid paying a tax on these same services simply by hiring in-house attorneys for legal services, instead of using outside service providers.
SB 993 would also result in a regressive tax, insofar as the tax would require small business to pay a larger portion of their income than large businesses.
Finally, under SB 993 California businesses would be at a competitive disadvantage, as they would be subject to a tax that would not apply to out-of-state competitors who are not subject to a sales and use tax for services. This added tax burden would therefore be detrimental to California businesses.
We appreciate your consideration of our concerns. If you have any questions, please feel free to contact me at (619) 239-8131 or HRosing@Klinedinstlaw.com.
Heather Linn Rosing, President
California Lawyers Association
International Commercial Arbitration
CLA successfully advocated in support of the enactment of legislation that authorized out-of-state attorneys and attorneys from foreign jurisdictions to represent parties in international commercial arbitrations in California.
Senate Bill 766 (Monning) – Support
February 28, 2018
Hon. Bill Monning
Member of the Senate
State Capitol, Room 313
Sacramento, CA 95814
Dear Senator Monning:
The California Lawyers Association (“CLA) is pleased to support SB 766, which would authorize out-of-state attorneys and attorneys from foreign jurisdictions to represent parties in international commercial arbitrations and related proceedings in California.
By way of background, CLA launched on January 1, 2018 as a nonprofit, voluntary organization, and the new home of what were the Sections of the State Bar of California and the California Young Lawyers Association. The mission of CLA is promoting excellence, diversity and inclusion in the legal profession and fairness in the administration of justice and the rule of law. CLA represents the vast diversity of California’s legal community and the various areas of law practiced throughout the state. As part of its consideration of this bill, the CLA Board of Representatives consulted with the subject matter experts on CLA’s International Law Section, who practice in the area of international commercial arbitration. The International Law Section’s Executive Committee voted unanimously to support this bill in its entirety, including its public protections provisions. We have also reviewed the Report and Recommendations of the California Supreme Court International Commercial Arbitration Working Group, which studied this issue and made the recommendation upon which this bill is based. We believe SB 766 transcends any particular practice area and strikes at the core of CLA’s mission by (1) governing who is permitted to practice law in California; and (2) ensuring that appropriate safeguards are in place to oversee the practice of law in California and protect clients.
California is currently missing out on a valuable opportunity. Nineteen United States jurisdictions and fifty-three of fifty-five surveyed foreign countries currently permit lawyers from foreign jurisdictions to provide legal services to parties in international arbitrations in their jurisdictions. Some states, like New York and Florida, actively work to attract international commercial arbitration business. In California, in contrast, out-of-state attorneys and attorneys from foreign jurisdictions are not authorized to provide legal services in these arbitrations. This deters foreign parties from selecting California as a venue for arbitrating international commercial disputes, resulting in an adverse impact on California’s legal business, the related economy, and California parties.
California is ideally situated to become a center of international commercial arbitration, with its robust concentration of businesses engaged in international commerce. By opening California as a venue for international arbitrations, SB 766 would increase business for California attorneys. Although some California attorneys currently represent clients in international commercial arbitrations, the attorneys are most often required to go to other states or countries to pursue these arbitrations. SB 766 would bring these arbitrations to California, providing new opportunities for California attorneys to act as lead counsel or as local counsel, often retained in the jurisdiction in which an international arbitration is held to assist the foreign or out-of-state attorneys and parties.
The economic benefits of SB 766 would not be limited to attorneys. In addition to increasing business for those who directly support the legal proceedings (including paralegals, other professional staff, experts, court reporters, and translators) the bill would benefit the local economy (including hotels, restaurants, tourist attractions, and retail businesses).
SB 766 will also benefit California parties. The fact that California deters foreign parties from selecting California as a venue for international commercial arbitrations results in a disadvantage to California parties who would prefer the convenience and benefits of having the arbitration in California. Given the barrier to choosing California as a venue for an international arbitration, California parties are often forced to go to the considerable expense of arbitrating their disputes in a foreign jurisdiction. In addition, if the parties have selected California law as the governing law, California residents are currently less protected because the dispute and the application of California law will likely be decided by non-California arbitrators in a foreign jurisdiction. Under SB 766, if the arbitration were held in California, the California party would have a greater likelihood of a California arbitrator being appointed, would have access to the California courts with respect to judicial review of any arbitration award, and would have the convenience of a local forum for its witnesses and attorneys.
SB 766 is based on the American Bar Association Recommendation for a Model Rule of Temporary Practice by Foreign Lawyers and includes important public protection provisions, all of which the CLA Board supports. Disputes subject to international commercial arbitration are generally business disputes between sophisticated parties who are able to select properly qualified attorneys to represent their interests. This bill provides, as specified, that it does not apply to individual consumer, health insurance, healthcare, or employment disputes. The bill would require that the out-of-state or foreign attorney be subject to effective regulation and discipline by a duly constituted professional body or public authority of the attorney’s out-of-state or foreign jurisdiction and be in good standing in every jurisdiction in which he or she is admitted or otherwise authorized to practice law. The bill would further (1) require that an attorney rendering legal services pursuant to its provisions be subject to the jurisdiction of the courts and disciplinary authority of California with respect to the California Rules of Professional Conduct and the laws governing the conduct of attorneys to the same extent as a member of the State Bar of California; (2) specifically authorize the State Bar to report complaints and evidence of disciplinary violations to the appropriate disciplinary authority of any jurisdiction in which the attorney is admitted or otherwise authorized to practice law (but also recognize that there is nothing in existing law that would prevent such reports); and (3) require the State Bar to submit an annual report to the Supreme Court that specifies the number and nature of any complaints that it has received against attorneys who provide legal services pursuant to the bill’s provisions, and any actions it has taken in response to those complaints. We believe these are all necessary and proper protections that would be in place to oversee the provision of legal services in California.
California should seize this opportunity and join the other jurisdictions that authorize foreign and out-of-state attorneys to represent parties in international commercial arbitrations. Enactment of SB 766 will remove barriers that prevent foreign parties from selecting California as a venue for international commercial arbitrations, thereby increasing California’s legal business and strengthening the related economy, while also protecting California parties who are currently compelled to arbitrate outside California in a different state or country.
If you have any questions, please feel free to contact me at (619) 239-8131 or HRosing@Klinedinstlaw.com.
Heather Linn Rosing, President
California Lawyers Association