BILL NUMBER: AB 1529 CHAPTERED 09/22/05 CHAPTER 341 FILED WITH SECRETARY OF STATE SEPTEMBER 22, 2005 APPROVED BY GOVERNOR SEPTEMBER 22, 2005 PASSED THE SENATE AUGUST 25, 2005 PASSED THE ASSEMBLY MAY 16, 2005 AMENDED IN ASSEMBLY MAY 11, 2005 AMENDED IN ASSEMBLY MAY 2, 2005 INTRODUCED BY Assembly Member Jones (Coauthor: Assembly Member Harman) (Coauthors: Senators Dunn and Perata) FEBRUARY 22, 2005 An act to amend Sections 6036, 6140, 6140.5, 6140.55, 6140.6, 6140.9, 6141, and 6141.1 of the Business and Professions Code, relating to attorneys. LEGISLATIVE COUNSEL'S DIGEST AB 1529, Jones Attorneys: membership fees. Existing law, the State Bar Act, provides for the licensure and regulation of attorneys by the State Bar of California, which is governed by the board of governors. Existing law provides that a member of the board of governors must disqualify himself or herself from making, participating in the making of, or attempting to influence any decision of the board or a committee of the board if it is reasonably foreseeable that the decision will have a material financial effect, distinguishable from its effect on the public or members of the State Bar generally on specified interests of the member. This bill would instead require self-disqualification by a member with regard to any decision in which he or she has a financial interest, as defined, which it is reasonably foreseeable may be affected materially by the decision. Existing law authorizes the State Bar, until January 1, 2006, to charge an annual membership fee of up to $310 to active members of the State Bar. This bill would increase the amount that the bar may charge active members to up to $315 per year as of January 1, 2007. The bill would change the termination date relating to the State Bar's authority to charge this membership fee to January 1, 2008. Existing law authorizes the State Bar to increase the annual membership fees up to $35 for active members in any year, to be applied to the Client Security Fund. This bill would instead authorize the State Bar to increase the annual membership fees up to $40 for active members and up to $10 for inactive members in any year for this purpose. Existing law authorizes the State Bar to increase the annual membership fees for active members by up to $25 for active members for costs of the disciplinary system. This bill would also authorize the State Bar to increase the annual membership fees for inactive members by that amount. Existing law establishes the Client Security Fund for the purpose of relieving or mitigating pecuniary losses caused by the dishonest conduct of active members of the State Bar. This bill would expand the purpose of the Client Security Fund to include relieving or mitigating pecuniary losses caused by the dishonest conduct of Foreign Legal Consultants registered with the State Bar and attorneys registered with the State Bar under the Multijurisdictional Practice Program. Existing law establishes the Attorney Diversion and Assistance Program and authorizes the State Bar to charge active members an annual fee of $10 for administration of the program. This bill would also authorize the State Bar to charge inactive members an annual fee of $5 for this purpose. Existing law authorizes the State Bar to charge an annual membership fee of up to $40 for inactive members. This bill would instead authorize the State Bar to charge inactive members an annual fee of up to $65 until December 31, 2006, and an annual fee of up to $75 on and after January 1, 2007. Existing law requires a waiver of 25% of the State Bar annual membership fee if the member's income derived from the practice of law, including dispute resolution services, is less than $40,000, and a waiver of 50% of the fee when income is less than $30,000. This bill would instead require a waiver of 25% of the annual membership fee when income from all sources is less than $40,000. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 6036 of the Business and Professions Code is amended to read: 6036. (a) Any member of the board of governors must disqualify himself or herself from making, participating in the making of, or attempting to influence any decisions of the board or a committee of the board in which he or she has a financial interest, as that term is defined in Section 87103 of the Government Code, that it is reasonably foreseeable may be affected materially by the decision. (b) Any member of the board of governors must likewise disqualify himself or herself when there exists a personal nonfinancial interest which will prevent the member from applying disinterested skill and undivided loyalty to the State Bar in making or participating in the making of decisions. (c) Notwithstanding subdivisions (a) and (b), no member shall be prevented from making or participating in the making of any decision to the extent his or her participation is legally required for the action or decision to be made. The fact that a member's vote is needed to break a tie does not make his or her participation legally required for the purposes of this section. (d) A member required to disqualify himself or herself because of a conflict of interest shall (1) immediately disclose the interest, (2) withdraw from any participation in the matter, (3) refrain from attempting to influence another member, and (4) refrain from voting. It is sufficient for the purpose of this section that the member indicate only that he or she has a disqualifying financial or personal interest. (e) For purposes of this article and unless otherwise specified, "member" means any appointed or elected member of the board of governors. SEC. 2. Section 6140 of the Business and Professions Code is amended to read: 6140. (a) The board shall fix the annual membership fee for active members for 2006 at a sum not exceeding three hundred ten dollars ($310). (b) The board shall fix the annual membership fee for active members for 2007 and thereafter at a sum not exceeding three hundred fifteen dollars ($315). (c) The annual membership fee for active members is payable on or before the first day of February of each year. If the board finds it appropriate and feasible, it may provide by rule for payment of fees on an installment basis with interest, by credit card, or other means, and may charge members choosing any alternative method of payment an additional fee to defray costs incurred by that election. (d) This section shall remain in effect only until January 1, 2008, and, as of that date, is repealed, unless a later enacted statute, that is enacted before January 1, 2008, deletes or extends that date. SEC. 3. Section 6140.5 of the Business and Professions Code is amended to read: 6140.5. (a) The board shall establish and administer a Client Security Fund to relieve or mitigate pecuniary losses caused by the dishonest conduct of active members of the State Bar, Foreign Legal Consultants registered with the State Bar, and attorneys registered with the State Bar under the Multijurisdictional Practice Program, arising from or connected with the practice of law. Any payments from the fund shall be discretionary and shall be subject to regulation and conditions as the board shall prescribe. The board may delegate the administration of the fund to the State Bar Court, or to any board or committee created by the board of governors. (b) Upon making a payment to a person who has applied to the fund for payment to relieve or mitigate pecuniary losses caused by the dishonest conduct of an active member of the State Bar, the State Bar is subrogated, to the extent of that payment, to the rights of the applicant against any person or persons who, or entity that, caused the pecuniary loss. The State Bar may bring an action to enforce those rights within three years from the date of payment to the applicant. (c) Any attorney whose actions have caused the payment of funds to a claimant from the Client Security Fund shall reimburse the fund for all moneys paid out as a result of his or her conduct with interest, in addition to payment of the assessment for the procedural costs of processing the claim, as a condition of continued practice. The reimbursed amount, plus applicable interest and costs, shall be added to and become a part of the membership fee of a publicly reproved or suspended member for the next calendar year. For a member who resigns with disciplinary charges pending or a member who is suspended or disbarred, the reimbursed amount, plus applicable interest and costs, shall be paid as a condition of reinstatement of membership. (d) Any assessment against an attorney pursuant to subdivision (c) that is part of an order imposing a public reproval on a member or is part of an order imposing discipline or accepting a resignation with a disciplinary matter pending, may also be enforced as a money judgment. This subdivision does not limit the power of the Supreme Court to alter the amount owed or to authorize the State Bar Court, in the enforcement of a judgment under this subdivision, to approve an agreement for the compromise of that judgment. SEC. 4. Section 6140.55 of the Business and Professions Code is amended to read: 6140.55. The board may increase the annual membership fees fixed by it pursuant to Section 6140 by an additional amount per active member not to exceed forty dollars ($40), and the annual membership fees fixed by it pursuant to Section 6141 by an additional amount per inactive member not to exceed ten dollars ($10), in any year, the additional amount to be applied only for the purposes of the Client Security Fund and the costs of its administration, including, but not limited to, the costs of processing, determining, defending, or insuring claims against the fund. SEC. 5. Section 6140.6 of the Business and Professions Code is amended to read: 6140.6. The board may increase the annual membership fees fixed by Sections 6140 and 6141 by an additional amount not to exceed twenty-five dollars ($25) to be applied to the costs of the disciplinary system. SEC. 6. Section 6140.9 of the Business and Professions Code is amended to read: 6140.9. Moneys for the support of the program established pursuant to Article 15 (commencing with Section 6230) and related programs approved by the committee established pursuant to Section 6231 shall be paid in whole or part by a fee of ten dollars ($10) per active member per year, and by a fee of five dollars ($5) per inactive member per year. The board may seek alternative sources for funding the program. To the extent that funds from alternative sources are obtained and used for the support of the program, and provided that at least ten dollars ($10) per active member and five dollars ($5) per inactive member is available for support of the program each year, funds provided by the fee established by this section may be applied to the costs of State Bar general fund programs. SEC. 7. Section 6141 of the Business and Professions Code is amended to read: 6141. (a) Until December 31, 2006, the board shall fix the annual membership fee for inactive members at a sum not exceeding sixty-five dollars ($65). On January 1, 2007, and thereafter, the board shall fix the annual membership fee for inactive members at a sum not exceeding seventy-five dollars ($75). The annual membership fee for inactive members is payable on or before the first day of February of each year. (b) An inactive member shall not be required to pay the annual membership fee for inactive members for any calendar year following the calendar year in which the member attains the age of 70 years. SEC. 8. Section 6141.1 of the Business and Professions Code is amended to read: 6141.1. (a) The payment by any member of the annual membership fee, any portion thereof, or any penalty thereon, may be waived by the board as it may provide by rule. The board may require submission of recent federal and state income tax returns and other proof of financial condition as to those members seeking waiver of all or a portion of their fee or penalties on the ground of financial hardship. (b) The board shall adopt a rule or rules providing that an active member who can demonstrate total gross annual individual income from all sources of less than forty thousand dollars ($40,000) shall presumptively qualify for a waiver of 25 percent of the annual membership fee.