BILL ANALYSIS Ó ----------------------------------------------------------------------- |Hearing Date:August 19, 2013 |Bill No:AB | | |1159 | ----------------------------------------------------------------------- SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT Senator Ted W. Lieu, Chair Bill No: AB 1159Author:Gonzalez As Amended:August 15, 2013 Fiscal:Yes SUBJECT: Immigration services. SUMMARY: An urgency measure which provides that it is the unlicensed practice of law for an immigration consultant, or any person who is not an attorney, to literally translate, from English into another language, in written documents or advertisements, the term "notary public," or any other term that implies that the person is an attorney; requires attorneys who provide immigration reform act services to use a written contract in English and in the client's native language which contains specified elements; prohibits an attorney or an immigration consultant from demanding or accepting the advance payment of any funds from a person for immigration reform act services before the enactment of any immigration reform act; requires immigration consultants to place client funds into a trust account; and, increases the bond required by an immigration consultant to $100,000. Existing law: 1)The State Bar Act licenses and regulates attorneys by the State Bar of California (State Bar). (Business and Professions Code (BPC) § 6000 et seq.) 2) Prohibits the practice of law in California by any person who is not an active member of the State Bar. Further provides that any person advertising or holding out as practicing, entitled to, or otherwise practicing law, who is not an active member of the State Bar, or otherwise authorized pursuant to statute or court rule to AB 1159 Page 2 practice law, is guilty of a misdemeanor punishable by up to one year imprisonment or by a fine of up to $1,000, or by both. A second or subsequent conviction requires a sentence of not less than 90 days in jail, except as provided. (BPC §§ 6125, 6126) 3)Regulates a person engaged in the business or acting in the capacity of an immigration consultant, and provides that a violation of these provisions is a crime. (BPC § 22440 et seq.) 4)Defines "immigration consultant" as a person giving non-legal assistance or advice on an immigration matter, such as completing forms, translating answers, securing forms, making referrals, or submitting forms. (BPC § 22441) 5)Requires an immigration consultant to satisfactorily pass a background check conducted by the Secretary of State, and requires the Secretary of State to disqualify an individual from acting as an immigration consultant who does not meet certain specified requirements. (BPC § 22441.1) 6)Requires immigration consultants to provide a client, in the client's native language, a written contract with certain contract language requirements and restrictions prescribed by the Department of Consumer Affairs regulations, and exempts from this requirement employees of a nonprofit, tax-exempt corporation who provide certain free or low-cost services. (BPC § 22242) 7)Requires immigration consultants to provide a client with payment receipts, as well as statements of services and payments every two months. (BPC § 22442.1) 8)Requires immigration consultants to visibly display certain information, such as evidence of compliance with the bonding requirement, a statement that the immigration consultant is not an attorney, fee information, and to provide similar written information to clients prior to providing services. (BPC § 22442.2) 9)Requires an immigration consultant to clearly identify that he/she is not an attorney. (BPC § 22442 (b) (3)) AB 1159 Page 3 10)Prohibits an immigration consultant from literally translating, with the intent to mislead, from English into another language, words or titles including, but not limited to, "notary public," "notary," "licensed," "attorney," "lawyer," or any term that might imply that the person is an attorney in any document, including an advertisement, stationery, letterhead, business card, or other comparable written material describing the immigration consultant. (BPC § 22442.3) 11)Requires all immigration consultants to file a $50,000 surety bond, related disclosure form, and other specified information with the Secretary of State, and to file and routinely update additional business information with the Secretary of State, and allows the Secretary of State to charge a fee to cover the costs of filing and maintaining the bond. (BPC § 22443.1) 12)Makes a violation of the immigration consultant requirements subject to a civil penalty not to exceed $100,000 for each violation and a misdemeanor punishable by a fine of $2,000 to $10,000 per client and/or up to one year imprisonment. Makes a second or subsequent violation for certain provisions a felony. (BPC § 22445) 13)Prohibits a notary public (who is not an attorney) from making the literal translation of the phrase "notary public" into Spanish "notario publico" or "notario" and provides for suspension or revocation of the commission of any notary public who fails to comply with that prohibition. (Government Code § 8219.5) This bill: 1)Makes it a violation of the laws prohibiting the unauthorized practice of law for any person who is not an attorney to literally translate from English into another language, in any document, including an advertisement, stationery, letterhead, business card, or other comparable written material, any words or titles, including, but not limited to, "notary public," "notary," "licensed," "attorney," or "lawyer," to imply that the person is an attorney, and expressly prohibits the literal translation of the phrase "notary public" into Spanish as "notrario publico" or "notario." 2)Adds a specified body of law to the State Bar Act relating to "Attorneys Providing Immigration Services." AB 1159 Page 4 3)Defines certain terms for purposes of the article: a) "Immigration reform act" means any pending or future act of Congress that is enacted after the effective date of this bill but before January 1, 2017, including but not limited to, the federal act known as the "Border Security, Economic Opportunity, and Immigration Modernization Act" (S. 744, 2013), which authorizes an undocumented immigrant, who either entered the United States without inspection or who did not depart after expiration of a nonimmigrant visa, to attain a lawful status under federal law. b) "Immigration reform act services" means the services necessary in the preparation of an application and other related initial processes in order for an undocumented immigrant, who either entered the United States without inspection or who did not depart after expiration of a nonimmigrant visa, to attain a lawful status under an immigration reform act. 1)Specifies that these provisions shall apply to: a) An attorney who is an active member of the State Bar who provides immigration reform act services. b) An attorney who is not a member of the State Bar, but who is authorized to practice law or authorized by federal law to represent persons before the Board of Immigration Appeals or the United States Citizenship and Immigration Services, and who is providing immigration reform act services in an office or business in California. 1)Prohibits an attorney from demanding or accepting the advance payment of any funds from a person for immigration reform act services before the enactment of an immigration reform act, and provides that any funds received after the effective date of the bill, but before the enactment of an immigration reform act, shall be refunded to the client. 2)Provides that if an attorney providing immigration reform act services accepted funds prior to the effective date of these provisions, and the services were provided, the attorney shall provide the client with a statement of accounting describing the services rendered. Any funds received before the effective date of the bill, but before the enactment of an immigration reform act, AB 1159 Page 5 shall be deposited into a client trust account. An attorney that deposits funds into a client trust account shall provide the client a written notice in English and in the client's native language, that no benefits or relief is available, and that an application may not be processed until the enactment of an immigration reform act, as specified. 3)Requires upon the enactment of an immigration reform act, an attorney providing immigration reform act services, prior to providing those services, to provide the client with a written contract which includes all of the following: a) A description explaining the services the attorney anticipates will be performed. b) The basis of compensation for each service described, including hourly rate, statutory fees, flat fees, and other applicable charges. c) A statement informing the client that complaints may be reported to the Office of Immigrant Assistance of the Department of Justice, to the State Bar, or the bar of the court of any state or jurisdiction where the attorney is admitted to practice law. The statement shall include the toll-free telephone numbers and Internet Web sites of those entities. 1)Requires the written contract to be in English and the client's native language, provided that: a) Upon the consent of the client, the contract need not be written in English, and may instead be written in the client's native language or another language the client understands. b) For unwritten languages or extremely rare or uncommon languages, the contract shall be written in English and orally translated to the client in the language the client can understand. c) Makes a contract void if it does not comply with the language provisions. 1)Requires that the written contract of an immigration consultant contain additional information, including: an itemization of each service to be performed; an explanation of the purpose and process AB 1159 Page 6 of each service; and the cost of preparing each document specified in the contract. 2)Specifies that an immigration consultant who literally translates, from English into another language, the words or titles, including, but not limited to, "notary public," "notary," "licensed," "attorney," "lawyer," or any other terms that imply that the person is an attorney, shall constitute the unlicensed practice of law, as specified. Establishes, in addition to any other remedy, a civil penalty of up to $1,000 per day for each violation of this provision, as specified. 3)Requires an immigration consultant, who provides immigration reform act services to a client, to establish and deposit into a client trust account any funds received from the client prior to performing services for that client, and imposes certain requirements relating to the expenditure of funds from the trust account. 4)Defines certain terms relating to immigration consultants who perform immigration reform act services: a) "Immigration reform act" means any pending or future act of Congress that is enacted after the effective date of the bill but before January 1, 2017, including but not limited to the federal act known as the "Border Security, Economic Opportunity, and Immigration Modernization Act" (S. 744, 2013), that authorizes an undocumented immigrant who either entered the United States without inspection or who did not depart after expiration of a nonimmigrant visa, to attain a lawful status under federal law. b) "Immigration reform act services" means the services of an immigration consultant, as described, that are provided in connection with an immigration reform act. 1)Prohibits an immigration consultant from demanding or accepting the advance payment of any funds from a person for immigration reform act services before the enactment of an immigration reform act, as defined, and requires any funds received after the effective date of the bill, but before the enactment of an immigration reform act, to be refunded to the client. Any funds received before the effective date of the bill, but before the enactment of the immigration reform act shall be deposited into a client trust account or refunded to the client. 2)Provides that if an immigration consultant providing immigration AB 1159 Page 7 reform act services accepted funds prior to the effective date of these provisions, and the services were provided, the consultant shall provide the client with a statement of accounting describing the services rendered. Any funds received before the effective date of the bill, but before the enactment of an immigration reform act shall either be refunded to the client or deposited into a client trust account. An immigration consultant deposits funds into a client trust account shall provide the client a written notice in English and in the client's native language, that no benefits or relief is available, and that no application may be processed until the enactment of an immigration reform act, as specified. Establishes, in addition to any other remedy, a civil penalty of up to $1,000 per day for each violation of this provision, as specified. 3)Increases the amount of the required bond from $50,000 to $100,000 for all immigration consultants; operative180 days after the bill becomes effective 4)Provides that the bill shall take effect immediately as an urgency measure. FISCAL EFFECT: Unknown. This bill has been keyed fiscal by Legislative Counsel. COMMENTS: 1.Purpose. This bill is sponsored by the State Bar of California (State Bar). According to the Author, this bill is a consumer protection measure that establishes minimum statutory requirements and regulations through the State Bar for attorneys and non-lawyer document preparers who offer immigration services under comprehensive immigration reform. The goal of the bill is to protect individuals seeking a path to citizenship from fraud and abuse. The Author indicates that the key components to the bill are: " Written Retainer Agreement . The bill will require these attorneys to provide a client with a written contract, in the client's language, containing an itemized list, with costs, of each service to be performed. AB 1159 Page 8 " Prohibits Early Client Solicitation . The bill will make it unlawful to demand money for services, before the passage by Congress of immigration reform legislation, and require the return of fees already collected before the federal legislation is even enacted. " Prohibition of use of term "Notario." The legislation will also clarify that advertising the term "notario," which is already prohibited except in certain limited situations, would also constitute an unlawful holding out by a non-lawyer in violation of the law prohibiting the unauthorized practice of law. " Other Non-lawyer Restrictions . Finally, the bill will add other consumer protections for immigration assistance provided by non-lawyers. 1.Need For the Bill. According to the Author and the Sponsor, this measure is proposed in anticipation of federal immigration reform legislation that is currently pending in Congress, and is intended to proactively head off problems in implementing immigration reform measures in California. The Sponsor expresses the need for the bill as follows: Immigration Fraud has already begun . We have heard about the rising tide of fraud in the immigration services arena. We have read the articles about individuals seeking help who have lost their original documents to unscrupulous attorneys, who have been held captive to unreasonable fees, and who may have been deported as a result of a lawyer's misconduct. These examples could become a tidal wave of fraud if something is not done immediately. Loan modification fraud experience was small by comparison . The experience with loan modification fraud sheds light on the magnitude of the problem. The State Bar received over 12,500 complaints of loan modification misconduct, and many of these victims ended up losing their homes as a result of that fraud. Should Congress pass immigration reform, the potential scope of fraud is exponentially higher than the scope of the loan modification scandal. Over 2.5 million Californians will probably be subject to the proposed immigration reform . Tracking past trends, roughly 20 AB 1159 Page 9 percent of these individuals (500,000) may be targets of fraud. Also applying past trends, if 10 percent of the clients targeted by lawyers under immigration reform complain to the State Bar, there will be 50,000 new complaints in the lawyer discipline system. Those clients who file complaints with the Bar due to lawyer fraud may be entitled to a full refund of their lost monies from the Client Security Fund (CSF). This fund was legislatively created in 1971, funded solely by lawyers through their annual law license renewal fee. Since its inception, it has reimbursed 100 cents on the dollar for all qualified losses suffered by clients. Assuming 50,000 qualified applications for reimbursement from the CSF at an average of $5,000 each, the impact would be $250 million in claims. Reducing fraud before it occurs is the goal of AB 1159 . This legislation is intended to protect vulnerable Californians who may be able to seek protection as a result of pending federal immigration reform proposals, but instead, are already the targets of fraudulent schemes. Through specific restrictions on both lawyers and non-lawyers providing certain immigration reform services, the bill is designed to significantly reduce fraud before it occurs, as well as to provide appropriate enforcement tools to recover against those individuals who do engage in fraudulent behavior. AB 1159 is a reasonable approach to ensure consumer protection for immigrants . Using common sense business practices as a guideline, AB 1159 will put in place some reasonable minimum requirements for the consultants and attorneys hired by immigrants. By putting in place these safeguards now, we will prevent the fraud at the front end, avoiding more significant repercussions down the road. The urgent need for this bill is demonstrated by the stories of fraud that we hear about on a daily basis. Bad actors are making guarantees that they cannot fulfill, and they are taking fees for services that they cannot possibly provide at this time. AB 1159 will take California a step closer to bringing a stop to the growing crisis of immigration services fraud by curtailing the fraud that is happening right now and providing adequate law enforcement tools to address the fraud that does occur. AB 1159 Page 10 2.Border Security, Economic Opportunity, and Immigration Modernization Act of 2013. Federal legislation, the Border Security, Economic Opportunity, and Immigration Modernization Act of 2013 (S.744) was introduced in the United States Senate in April of this year. S.744 is an immigration reform bill introduced by Senator Charles Schumer of New York and is co-sponsored by a bipartisan group of U.S. Senators who wrote and negotiated the bill. One of the key components of S. 744 is to create a path to earned citizenship to help the estimated 11 million undocumented immigrants in the United States gain legal status. It would also make changes to the existing system of legal immigration, attempting to make the system more responsive to economic needs, and make provisions for efforts to secure the border of the country. Under the bill, undocumented immigrants would initially need to apply for a newly created Registered Provisional Immigrant status; in order to do so immigrants would have to pay a fine and fees, any back taxes owed, pass a background check and not have a disqualifying criminal record. The bill further benefits children of undocumented immigrants and agricultural workers. The bill would also drastically alter the methods of visa allocation under current family-based and employment-based categories, as well as introduce a new concept of a "merit-based" visa, which awards visas based on points accrued based on educational achievements, employment history, and other contributions to society. The Author states: "[S. 744] will create a pathway to citizenship for the 2.5 million undocumented immigrants currently residing in California. This immigration reform will increase the already enormous need for qualified legal counsel to represent foreign nationals in immigration proceedings. "Though individuals in removal proceedings are granted the privilege of being represented by legal counsel, such representation must be provided at no expense to the government. The burden of securing and paying for adequate representation is the responsibility of the individual seeking immigration services. However, because foreign nationals have a much greater chance of achieving a favorable outcome in immigration proceedings if they are represented by counsel, it is in their best interest to retain the services of an immigration services professional. "Beyond the immediate problem of fraudulent behavior, the risks involved with an unqualified person performing immigration services AB 1159 Page 11 can be profoundly disruptive for the individual seeking legal immigration help. Simply filing the wrong paperwork with the U.S. Citizenship and Immigration Services (USCIS) can trigger interviews, investigations and often deportation proceedings." 3.Related legislation. AB 888 (Dickinson, 2013) requires the State Bar to disclose, in confidence, the information in its investigation of an unauthorized practice of law to the agency responsible for criminal enforcement, and allows the State Bar to request the Attorney General or other public prosecutor to bring an enforcement action for the unauthorized practice of law. The bill additionally allows the State Bar to bring a civil action for any violation of the existing prohibitions on the unauthorized practice of law, and requires the court in those actions to impose a civil penalty, to consider providing relief to any injured party, and award the State Bar reasonable attorney's fees and costs. ( Status : This bill is pending action on the Senate Floor.) 4.Prior Legislation. California first enacted its regulation of immigration consultants in 1986 allowing, under certain conditions and requirements, non-lawyers to provide immigration consulting services. The law was a response to a federal amnesty bill that led to a high volume of citizenship applications and concerns regarding the unscrupulous practices of immigration consultants. In response to continuing problems with immigration consulting fraud, the law has been amended to improve the protections for clients: AB 2520 (Napolitano, Chapter 561, Statutes of 1994) required immigration consultants to register with the Department of Consumer Affairs, increased criminal fines and created new civil fines and penalties for violations of the law. AB 3137 (Escutia, Chapter 562, Statutes of 1994) required consultants to file a surety bond and provide clients with copies of every document completed on their behalf. SB 1348 (Senate Business and Professions Committee, Chapter 790, Statutes of 1997) increased the bonding requirement from $10,000 to $25,000, and extended the law's sunset date for four years to 2002. AB 1079 (Pacheco, Chapter 336, Statutes of 1999) doubled the bonding requirement to $50,000, added new penalty provisions, and reinstated specified consultant reporting requirements. AB 1159 Page 12 AB 1858 (Romero, Chapter 674, Statutes of 2000) increased the maximum civil penalty for a violation of the immigration consultants law from $10,000 to $100,000, and required that advertisements by or on behalf of a State Bar member, published in the classified or "yellow pages" section of a telephone directory regarding legal services related to immigration or naturalization services, must include a statement that the person is an active member of the State Bar. Further, if the advertisement solicits for the employment of a law firm or corporation that employs more than one attorney, the advertisement must disclose that services related to immigration or naturalization provided by the firm or corporation must be provided by an active State Bar member, or by a person under the member's active supervision. SB 1194 (Romero, Chapter 304, Statutes of 2001) made it unlawful for any person to hold out to be an immigration consultant unless he or she has on file with the Secretary of State the required bond. Repealed the January 1, 2002 sunset date of the bond requirement for immigration consultants. AB 1999 (Correa, Chapter 705, Statutes of 2002) authorized the Attorney General, District Attorney, or city attorney to seek civil penalties of up to $100,000 in prosecuting immigration consultant cases, as well as injunctive relief, restitution or other equitable relief on behalf of the general public. It also authorized courts to order relief for benefit of the injured parties to be paid from the bond that an immigration consultant is required to post with the Secretary of State. AB 534 (Vargas, Chapter 534, Statutes of 2003) increased the client notification (written disclosure) and written contract requirements for immigration consultants, and required the immigration consultant to post in his or her office a list of services and the related fees. AB 2691 (Correa, Chapter 557, Statues of 2004) restricted the use of a bond for compliance purposes to only the immigration consultant or his or her employee, required the Secretary of State to maintain a website for public access to information on immigration consultants' bond status, and required immigration consultants to provide specified identifying information. AB 1159 Page 13 AB 630 (Chu, Chapter 605, Statutes of 2006) required fingerprinting and background checks for immigration consultants; authorized the Secretary of State to issue cease and desist orders; required the Secretary of State to post information on its Internet Web site about bond compliance, filing disclosure statements, and passing of background checks, and to post photographs of immigration consultants. The bill further increased the statute of limitations for prosecuting actions against an immigration consultant to four years. 5.Arguments in Support. San Diego Volunteer Lawyer Program, Inc . (SDVLP) believes the bill is a reasonable approach to ensure consumer protection for immigrants who are seeking relief under the impending federal immigration reform bill, and argues that by putting in place these safeguards now, the state can protect the more than 2.5 million Californians who seek immigration reform act services from the potential fraud and abuse that has already created undue hardships for clients of immigration legal services. SDVLP states that oftentimes lawyers and consultants make guarantees to clients that they cannot fulfill, demand fees for services that they cannot possibly provide at this time, and even prey upon members of a community whose language barriers or unfamiliarity with the American legal system leave them susceptible to this fraud. 6.Arguments in Opposition. The American Immigration Lawyers Association (AILA) argues that the bill places unusual burdens on a single group of attorneys which could have the effect of limiting access to legal services for the state's immigrants. AILA believes the bill should be made a two year bill in order to allow all stakeholders to further discuss and develop precise protections. AILA argues that there is no demonstrated need for the bill stating that the State Bar's own reports show that immigration fraud accounts for a miniscule percentage of draws on the Client Security Fund, and that instead of being the problem, immigration lawyers are the ones who expose fraud and pick up the pieces when things go wrong. AILA argues that there has not been an explanation why current statutes and State Bar rules are insufficient to redress any inappropriate behavior by a California attorney, and that some issues addressed by the bill are already subject to redress under current law and State Bar rules. AILA states, "It is unprecedented and unwarranted for a state legislature to interfere in the attorney/client relationship at this level, and the one-size-fits all micromanagement of that AB 1159 Page 14 agreement neither benefits clients nor protects immigrants from victimization." AILA argues that the real threat is the victimization of vulnerable immigrants by notarios and unscrupulous immigration form-preparers. The bill places onerous business and procedural requirements on immigration lawyers far in excess of what is imposed on other attorneys in California. AILA contends that if the ultimate goal is to prevent consumer fraud in immigration and to sanction bad actors, the more effective solution is to focus resources on the enforcement of existing civil and criminal provisions already designed to target the worst offenders. However, the proposed legislation will only deplete the number of well- intentioned, competent professionals from one of the most humanitarian areas of the practice of law, according to AILA. AILA further argues that as seen from the recent loan modification fiasco, that well-intentioned laws do not always have their intended effect, stating that, "When the California Legislature sought to protect an equally vulnerable class of persons facing potential foreclosure by enacting provisions to prevent attorneys from collecting fees early in the process, the new rules drove most legitimate legal professionals away from this area of practice. People had nowhere to go except to non-attorneys. Foreclosures sharply rose, people lost their homes, and lien-holders lost their money. This is essentially the same model being proposed to deal with the prospect of comprehensive immigration reform, and will likely have similar unintended results." Finally, AILA argues, there is concern that there are not enough qualified legal professionals to address the needs of the immigrant community, and that the bill will deter lawyers from offering immigration legal services. Increased capacity will be needed to serve the estimated 3-4 million immigrants in California who will need help under federal immigration reform legislation, and that this bill would make it difficult if not impossible for lawyers who would otherwise offer pro bono or low cost legal services to these communities. According to AILA,"At a time when the prospect of large-scale immigration reform has highlighted the need for competent legal help for immigrants, AB1159 would make practicing in this already complex area so much more difficult and provide further disincentives to entering the field." AB 1159 Page 15 7.Recent Amendments. According to the Author, the recent amendments have significantly narrowed the bill, and were primarily drafted to address a number of the concerns raised by AILA. NOTE : Double-referral to Judiciary Committee second. SUPPORT AND OPPOSITION: Support: State Bar of California (Sponsor) San Diego Volunteer Lawyer Program, Inc. Western Center on Law and Poverty Opposition: American Immigration Lawyers Association Consultant:G. V. Ayers