BILL NUMBER: AB 940 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 13, 2009
INTRODUCED BY Committee on Judiciary (Feuer (Chair), Brownley,
Evans, Jones, Krekorian, Lieu, and Monning)
FEBRUARY 26, 2009
An act to amend Section 1021.5 of the Code of Civil
Procedure, relating to attorney's fees Sections 6212
and 6213 of the Business and Professions Code, relating to attorneys
.
LEGISLATIVE COUNSEL'S DIGEST
AB 940, as amended, Committee on Judiciary. Civil
litigation: attorney's fees: public interest.
Attorneys: IOLTA accounts.
Existing law, the State Bar Act, provides for the licensure and
regulation of the practice of law by the State Bar of California, a
public corporation. Existing law requires an attorney or law firm
receiving or disbursing trust funds to establish and maintain an
IOLTA account, as defined, in which the attorney or law firm is
required to deposit or invest all specified client deposits or funds.
Existing law also requires an attorney or law firm establishing an
IOLTA account to comply with various requirements, including, but not
limited to, that the account be established and maintained with an
eligible institution, as defined.
This bill would require an attorney or law firm establishing an
IOLTA account to report IOLTA account compliance and all other IOLTA
account information required by the State Bar in the manner specified
by the State Bar. The bill would also revise the definition of an
eligible institution.
Existing law allows a court, upon motion, to award attorney's fees
to a successful party against one or more opposing parties in any
action that has resulted in the enforcement of an important right
affecting the public interest, if certain conditions are met.
This bill would make technical, nonsubstantive changes to these
provisions.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 6212 of the Business
and Professions Code is amended to read:
6212. An attorney who, or a law firm that, establishes an IOLTA
account pursuant to subdivision (a) of Section 6211 shall comply with
all of the following provisions:
(a) The IOLTA account shall be established and maintained with an
eligible institution offering or making available an IOLTA account
that meets the requirements of this article. The IOLTA account shall
be established and maintained consistent with the attorney's or law
firm's duties of professional responsibility. An eligible financial
institution shall have no responsibility for selecting the deposit or
investment product chosen for the IOLTA account.
(b) Except as provided in subdivision (e)
(f) , the rate of interest or dividends payable on any IOLTA
account shall not be less than the interest rate or dividends
generally paid by the eligible institution to nonattorney customers
on accounts of the same type meeting the same minimum balance and
other eligibility requirements as the IOLTA account. In determining
the interest rate or dividend payable on any IOLTA account, an
eligible institution may consider, in addition to the balance in the
IOLTA account, risk or other factors customarily considered by the
eligible institution when setting the interest rate or dividends for
its non-IOLTA accounts, provided that the factors do not discriminate
between IOLTA customers and non-IOLTA customers and that these
factors do not include the fact that the account is an IOLTA account.
The eligible institution shall calculate interest and dividends in
accordance with its standard practice for non-IOLTA customers.
Nothing in this article shall preclude an eligible institution from
paying a higher interest rate or dividend on an IOLTA account or from
electing to waive any fees and service charges on an IOLTA account.
(c) Reasonable fees may be deducted from the interest or dividends
remitted on an IOLTA account only at the rates and in accordance
with the customary practices of the eligible institution for
non-IOLTA customers. No other fees or service charges may be deducted
from the interest or dividends earned on an IOLTA account. Unless
and until the State Bar enacts regulations exempting from compliance
with subdivision (a) of Section 6211 those accounts for which
maintenance fees exceed the interest or dividends paid, an eligible
institution may deduct the fees and service charges in excess of the
interest or dividends paid on an IOLTA account from the aggregate
interest and dividends remitted to the State Bar. Fees and service
charges other than reasonable fees shall be the sole responsibility
of, and may only be charged to, the attorney or law firm maintaining
the IOLTA account. Fees and charges shall not be assessed against or
deducted from the principal of any IOLTA account. It is the intent of
the Legislature that the State Bar develop policies so that eligible
institutions do not incur uncompensated administrative costs in
adapting their systems to comply with the provisions of Chapter 422
of the Statutes of 2007 or in making investment products available to
IOLTA members.
(d) The attorney or law firm shall report IOLTA account compliance
and all other IOLTA account information required by the State Bar in
the manner specified by the State Bar.
(d)
(e) The eligible institution shall be directed to do
all of the following:
(1) To remit interest or dividends on the IOLTA account, less
reasonable fees, to the State Bar, at least quarterly.
(2) To transmit to the State Bar with each remittance a statement
showing the name of the attorney or law firm for which the remittance
is sent, for each account the rate of interest applied or dividend
paid, the amount and type of fees deducted, if any, and the average
balance for each account for each month of the period for which the
report is made.
(3) To transmit to the attorney or law firm customer at the same
time a report showing the amount paid to the State Bar for that
period, the rate of interest or dividend applied, the amount of fees
and service charges deducted, if any, and the average daily account
balance for each month of the period for which the report is made.
(e)
(f) An eligible institution has no affirmative duty to
offer or make investment products available to IOLTA customers.
However, if an eligible institution offers or makes investment
products available to non-IOLTA customers, in order to remain an
IOLTA-eligible institution, it shall make those products available to
IOLTA customers or pay an interest rate on the IOLTA deposit account
that is comparable to the rate of return or the dividends generally
paid on that investment product for similar customers meeting the
same minimum balance and other requirements applicable to the
investment product. If the eligible institution elects to pay that
higher interest rate, the eligible institution may subject the IOLTA
deposit account to equivalent fees and charges assessable against the
investment product.
SEC. 2. Section 6213 of the Business
and Professions Code is amended to read:
6213. As used in this article:
(a) "Qualified legal services project" means either of the
following:
(1) A nonprofit project incorporated and operated exclusively in
California which that provides as its
primary purpose and function legal services without charge to
indigent persons and which that has
quality control procedures approved by the State Bar of California.
(2) A program operated exclusively in California by a nonprofit
law school accredited by the State Bar of California which
that meets the requirements of subparagraphs (A)
and (B).
(A) The program shall have operated for at least two years at a
cost of at least twenty thousand dollars ($20,000) per year as an
identifiable law school unit with a primary purpose and function of
providing legal services without charge to indigent persons.
(B) The program shall have quality control procedures approved by
the State Bar of California.
(b) "Qualified support center" means an incorporated nonprofit
legal services center that has as its primary purpose and function
the provision of legal training, legal technical assistance, or
advocacy support without charge and which actually provides through
an office in California a significant level of legal training, legal
technical assistance, or advocacy support without charge to qualified
legal services projects on a statewide basis in California.
(c) "Recipient" means a qualified legal services project or
support center receiving financial assistance under this article.
(d) "Indigent person" means a person whose income is (1) 125
percent or less of the current poverty threshold established by the
United States Office of Management and Budget, or (2) who is eligible
for Supplemental Security Income or free services under the Older
Americans Act or Developmentally Disabled Assistance Act. With regard
to a project that provides free services of attorneys in private
practice without compensation, "indigent person" also means a person
whose income is 75 percent or less of the maximum levels of income
for lower income households as defined in Section 50079.5 of the
Health and Safety Code. For the purpose of this subdivision, the
income of a person who is disabled shall be determined after
deducting the costs of medical and other disability-related special
expenses.
(e) "Fee generating case" means a case or matter that, if
undertaken on behalf of an indigent person by an attorney in private
practice, reasonably may be expected to result in payment of a fee
for legal services from an award to a client, from public funds, or
from the opposing party. A case shall not be considered fee
generating if adequate representation is unavailable and any of the
following circumstances exist:
(1) The recipient has determined that free referral is not
possible because of any of the following reasons:
(A) The case has been rejected by the local lawyer referral
service, or if there is no such service, by two attorneys in private
practice who have experience in the subject matter of the case.
(B) Neither the referral service nor any attorney will consider
the case without payment of a consultation fee.
(C) The case is of the type that attorneys in private practice in
the area ordinarily do not accept, or do not accept without
prepayment of a fee.
(D) Emergency circumstances compel immediate action before
referral can be made, but the client is advised that, if appropriate
and consistent with professional responsibility, referral will be
attempted at a later time.
(2) Recovery of damages is not the principal object of the case
and a request for damages is merely ancillary to an action for
equitable or other nonpecuniary relief, or inclusion of a
counterclaim requesting damages is necessary for effective defense or
because of applicable rules governing joinder of counterclaims.
(3) A court has appointed a recipient or an employee of a
recipient pursuant to a statute or a court rule or practice of equal
applicability to all attorneys in the jurisdiction.
(4) The case involves the rights of a claimant under a publicly
supported benefit program for which entitlement to benefit is based
on need.
(f) "Legal Services Corporation" means the Legal Services
Corporation established under the Legal Services Corporation Act of
1974 (P.L. 93-355; 42 U.S.C. Sec. 2996 et seq.).
(g) "Older Americans Act" means the Older Americans Act of 1965,
as amended (P.L. 89-73; 42 U.S.C. Sec. 3001 et seq.).
(h) "Developmentally Disabled Assistance Act" means the
Developmentally Disabled Assistance and Bill of Rights Act, as
amended (P.L. 94-103; 42 U.S.C. Sec. 6001 et seq.).
(i) "Supplemental security income recipient" means an individual
receiving or eligible to receive payments under Title XVI of the
federal Social Security Act, or payments under Chapter 3 (commencing
with Section 12000) of Part 3 of Division 9 of the Welfare and
Institutions Code.
(j) "IOLTA account" means an account or investment product
established and maintained pursuant to subdivision (a) of Section
6211 that is any of the following:
(1) An interest-bearing checking account.
(2) An investment sweep product that is a daily (overnight)
financial institution repurchase agreement or an open-end
money-market fund.
(3) An investment product authorized by California Supreme Court
rule or order.
A daily financial institution repurchase agreement shall be fully
collateralized by United States Government Securities or other
comparably conservative debt securities, and may be established only
with any eligible institution that is "well-capitalized" or
"adequately capitalized" as those terms are defined by applicable
federal statutes and regulations. An open-end money-market fund shall
be invested solely in United States Government Securities or
repurchase agreements fully collateralized by United States
Government Securities or other comparably conservative debt
securities, shall hold itself out as a "money-market fund" as that
term is defined by federal statutes and regulations under the
Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.), and,
at the time of the investment, shall have total assets of at least
two hundred fifty million dollars ($250,000,000).
(k) "Eligible institution" means a bank or any
either of the following:
(1) A bank, savings and loan, or other financial institution
regulated by a federal or state agency that pays interest or
dividends in the IOLTA account and carries deposit insurance from an
agency of the federal government.
(2) Any other type of financial
institution authorized by the Supreme Court.
SECTION 1. Section 1021.5 of the Code of Civil
Procedure is amended to read:
1021.5. Upon motion, a court may award attorney's fees to a
successful party against one or more opposing parties in any action
that has resulted in the enforcement of an important right affecting
the public interest if: (a) a significant benefit, whether pecuniary
or nonpecuniary, has been conferred on the general public or a large
class of persons, (b) the necessity and financial burden of private
enforcement, or of enforcement by one public entity against another
public entity, are such as to make the award appropriate, and (c)
those fees should not in the interest of justice be paid out of the
recovery, if any. With respect to actions involving public entities,
this section applies to allowances against, but not in favor of,
public entities, and no claim shall be required to be filed in such
an action, unless one or more successful parties and one or more
opposing parties are public entities, in which case no claim shall be
required to be filed therefor under Part 3 (commencing with Section
900) of Division 3.6 of Title 1 of the Government Code.
Attorney's fees awarded to a public entity pursuant to this
section shall not be increased or decreased by a multiplier based
upon extrinsic circumstances, as discussed in Serrano v. Priest, 20
Cal. 3d 25, 49.