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  








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          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  








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            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  








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            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  








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            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  








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          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  








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               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.