BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 1159 (Gonzalez) - Immigration services. Amended: August 22, 2013 Policy Vote: BP&ED 9-0, JUD 7-0 Urgency: Yes Mandate: Yes Hearing Date: August 30, 2013 Consultant: Jolie Onodera This bill does not meet the criteria for referral to the Suspense File. Bill Summary: AB 1159, an urgency measure, would establish minimum statutory requirements and regulations through the State Bar and Secretary of State (SOS) for attorneys and immigration consultants who offer immigration reform act services, as defined. Fiscal Impact: Minor costs in Fiscal Year (FY) 2013-14 of less than $20,000 (Special Fund*) to the SOS for form and website changes, noticing, and postage. Additional costs in FY 2014-15 of approximately $35,000 (Special Fund*) to accommodate the increased workload associated with bond processing and cease and desist notices/orders in response to the surety bond increase for immigration consultants. Minor, absorbable one-time costs to the Department of Consumer Affairs (DCA) to revise regulations related to written contract requirements for immigration consultants. One-time costs to the State Bar to create a template contract form and necessary language translations. All costs to be offset by existing fee revenue. Non-reimbursable local costs for enforcement offset to a degree by fine revenue for violations of various prohibitions specified in the bill. Potential minor revenue increases (General Fund) for civil penalty collections to the extent additional civil actions are brought by the Attorney General. *Business Fees Fund Background: Federal legislation, the Border Security, Economic Opportunity, and Immigration Modernization Act of 2013 (S.744) was introduced in April of this year and passed out of the AB 1159 (Gonzalez) Page 1 United States (U.S.) Senate on June 27, 2013. S.744 is currently awaiting consideration in the House of Representatives. One of the key components of S.744 creates a pathway to citizenship to assist the estimated 11 million undocumented immigrants in the U.S. obtain legal status. S.744 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. Immigration reform is expected to increase the need for qualified legal counsel to represent individuals in immigration proceedings. This bill is intended to protect consumers and proactively address potential fraudulent and abusive activities associated with implementation of pending and/or future immigration reform. This bill contains an urgency clause, stating, "In order to implement measures as quickly as possible and as necessary to prevent fraud on immigrants by attorneys and other persons by making promises of benefits and relief under pending and proposed federal immigration reform acts before their enactment, it is necessary that this act take effect immediately." Proposed Law: This bill: Provides that it is unlawful for an attorney to demand or accept advance payment of any funds from a person for immigration reform act services before the enactment of an immigration reform act. Any funds received after the effective date of this bill, but before the enactment of an immigration reform act must be refunded to the client. Provides that if an attorney providing immigration reform act services accepted funds prior to the effective date of this bill, and the services provided in connection with payment of those funds were rendered, the attorney shall provide the client with a statement of accounting describing services rendered. Provides that any funds received before the effective date of this bill, and before the enactment of an immigration reform act, for which immigration reform act services have not yet been rendered, shall either be refunded to the client or shall be deposited in a client trust account. If the attorney elects to deposit funds in a client trust account, he or she shall provide a written notice to the client, in English and the client's native language, that there are no benefits or relief that are available and that no application may be processed AB 1159 (Gonzalez) Page 2 until enactment of an immigration reform act and the related necessary federal regulations and forms. Requires an attorney providing immigration reform act services to, prior to providing those services, provide the client with a written contract that is to include specified information, at a minimum. Requires the provisions of the written contract to be stated both in English and the client's native language, with specified exceptions. States that a written contract is void if it does not comply with the above requirements. Requires the State Bar to work with the necessary professional association for lawyers practicing immigration law to prepare and provide forms for contracts, which the State Bar shall translate into the languages specified in Civil Code Section 1632. Does not apply the above written contract and translation requirements to attorneys who provide immigration reform act services in accordance with any of the following: 1) qualified legal services project or support center; 2) a nonprofit, tax-exempt corporation that helps clients complete application forms in immigration matters free of charge or for a nominal fee; or 3) for free, at no cost to the client, as pro bono legal services. Provides that the above exempted attorneys must, instead, provide a written notice to the client containing a description of the services, basis for compensation, and where he or she may report complaints. This bill would state that the notice is not a contract. Applies the above provisions to 1) an attorney who is an active member of the State Bar who provides immigration reform act services; and 2) an attorney who is not an active member but: (1) is authorized by federal law to practice law and to represent persons before the Board of Immigration Appeals of the United States Citizenship and Immigration Services; and (2) is providing immigration reform act services in an office or business in California. Defines "immigration reform act" as any pending or future act of Congress that is enacted after the effective date of this section but before January 1, 2017, including but not limited to the "Border Security, Economic Opportunity, and Immigration Modernization Act" (S. 744, 2013), as specified. Defines "immigration reform act services" as services necessary in the preparation of an application and other AB 1159 (Gonzalez) Page 3 related initial processes in order for an undocumented immigrant, as specified, to attain lawful status under the immigration reform act. Provides that it is a violation of the existing prohibition on non-attorneys advertising or holding themselves out as entitled to practice law for any person who is not an attorney to literally translate from English into another language, in any document, any words or titles, including "notary public," "notary," "licensed," "attorney," or "lawyer" that imply the person is an attorney, as specified. This bill would provide that a person who violates the translation prohibition is liable for a civil penalty not to exceed $1,000, as specified. Requires an immigration consultant who provides immigration reform act services to establish and deposit into a client trust account any funds received from a client prior to performing those services. Allows an immigration consultant providing immigration reform act services for the client to withdraw funds received from that client: 1) after completing one or more of itemized services, as specified; or 2) after completing one or more of specified documents. Prohibits an immigration consultant from demanding or accepting advance payment of any funds from a person for immigration reform act services before the enactment of an immigration reform act. Provides that funds received after the effective date of this bill but before enactment of an immigration reform act must be refunded to the client. Provides that for funds received before the effective date of the bill: 1) the consultant must provide the client with an accounting for services that were rendered; and 2) any funds received for which services have not yet been rendered must be refunded or deposited into a client trust account, as specified. States that a person who violates the above restrictions on advance fees shall be subject to a civil penalty not to exceed $1,000, as specified, and require a court to grant a prevailing plaintiff reasonable attorney's fees and costs. States that a violation of the existing prohibition on translating terms that imply the person is an attorney is a violation of the State Bar Act's prohibition on non-attorneys holding themselves out to be authorized to practice law. In addition to the remedies and penalties under the ICA law, this bill would provide that a person who violates the translation AB 1159 (Gonzalez) Page 4 prohibition would be subject to a civil penalty of up to $1,000 per day for each violation, as specified. Effective July 1, 2014, increases the amount of the required bond from $50,000 to $100,000 for all immigration consultants. Provides that the bill shall take effect immediately as an urgency measure. Related Legislation: AB 888 (Dickinson) 2013 would require 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 would allow the State Bar to request the AG or other public prosecutor to bring an enforcement action. This bill allows the State Bar to bring a civil action for any violation of the existing prohibitions on the unauthorized practice of law, as specified. This bill is currently pending action on the Senate Floor. Prior Legislation: SB 1194 (Romero) Chapter 304/2001 made it unlawful for any person to hold out to be an immigration consultant unless he or she has on file with the SOS the required bond. This bill repealed the January 1, 2002, sunset date of the bond requirement for immigration consultants. AB 1999 (Correa) Chapter 705/2002 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 SOS. AB 630 (Chu) Chapter 605/2006 required fingerprinting and background checks for immigration consultants; authorized the SOS to issue cease and desist orders; required the SOS to post information on its website about bond compliance, filing disclosure statements, and passing of background checks, and to post photographs of immigration consultants. Staff Comments: The SOS administers the State's immigration consultant registration program. Under existing law, prior to AB 1159 (Gonzalez) Page 5 engaging in the business or acting in the capacity of an immigration consultant, a person must obtain a $50,000 bond from a corporate surety and file a copy of the bond with the SOS along with the Immigration Consultant Disclosure form. In addition, a person engaging in the business or acting in the capacity of an immigration consultant must satisfactorily pass a background check conducted by the SOS. Increasing the bond amount from $50,000 to $100,000 will require the SOS Business Programs Division to revise forms and web pages and obtain required approval from the Attorney General (AG). Also required by law is the submittal of the new surety bond form to the Office of Administrative Law in the form of a regulation package for review and approval. After form approval and availability for use, the SOS will send informational notices to immigration consultants to provide adequate time for the immigration consultants to obtain a new bond, and on the effective date of the bond requirement, initiate a notice of cease and desist followed 30 days later by a cease and desist order. New surety bonds will be evaluated and immigration consultants unable to afford the higher bond requirement will be taken through the cease and desist notice and order process. Based on a caseload of approximately 750 immigration consultants, the SOS has indicated the additional workload is not estimated to require new resources and could be accomplished using staff overtime. Due to the delayed effective date of July 1, 2014, for the higher bond amount, this workload is not estimated to add to the existing backlog of business filings that has been addressed through recent legislation. AB 113 (Committee on Budget) Chapter 3/2013, the Budget Act of 2012, appropriated an additional $1.6 million to use for costs associating with reducing the processing time of business filings. The SOS has indicated minor costs in FY 2013-14 of less than $20,000 for form and website changes, noticing, and postage. Additional one-time costs of $35,000 in FY 2014-15 are estimated to accommodate the increased workload associated with bond processing and issuing cease and desist notices/orders. Recommended Amendments: As submitted by the Senate Committee on Judiciary: Clarify that "immigration reform act services" are those AB 1159 (Gonzalez) Page 6 services offered in connection with an immigration reform act that are necessary in the preparation of an application and other related initial processes in order for an undocumented immigrant to attain a lawful status under an immigration reform act. Delete the proposed Section 6243 of the Business and Professions Code that would have required attorneys who are providing immigration reform act services to provide clients with a written contract, as specified.