BILL ANALYSIS Ó SENATE JUDICIARY COMMITTEE Senator Noreen Evans, Chair 2013-2014 Regular Session AB 1159 (Gonzalez) As Amended September 6, 2013 Hearing Date: September 10, 2013 Fiscal: Yes Urgency: Yes BCP PURSUANT TO SENATE RULE 29.10 SUBJECT Immigration Services DESCRIPTION This bill would require that, when a contract for legal services is required to be in writing, as specified, an attorney providing immigration reform act services must provide a written notice informing the client that he or she may report complaints to specified entities. The bill would also prohibit an attorney or an immigration consultant from demanding or accepting the advance payment of any funds for immigration reform act services before the enactment of an immigration reform act, as defined, and would require any funds received after the effective date of this bill, but before the enactment of an immigration reform act, to be refunded to the client. The bill would require any funds that were received before the effective date of the bill for services not yet rendered to be either refunded to the client or deposited in a client trust account, as specified. This bill would increase the amount of bond required to be filed by an immigration consultant from $50,000 to $100,000, and require consultants to itemize their contracts, establish a client trust account, and to deposit any funds received from the client prior to performing immigration reform act services. The bill would make it a violation of specified provisions of law relating to the unauthorized practice of law for any person (more) AB 1159 (Gonzalez) Page 2 of ? who is not an attorney to literally translate from English into another language the phrases "notary public," "notary," "licensed," "attorney," "lawyer," or any other terms that imply that the person is an attorney. BACKGROUND The Immigration Consultants Act (ICA) was enacted in 1986 to regulate activities of immigration consultants who perform a variety of services for persons who seek adjustment of their immigrant status at minimal cost. The explosion of immigration applications, a result of the 1986 federal and amnesty law revisions, necessitated the regulation of these persons. The ICA and its subsequent amendments now require immigration consultants to, among other things: (1) provide clients with written contracts; (2) file a bond with the Secretary of State; and (3) post a notice of compliance with the bonding requirement and a statement that the immigration consultant is not an attorney (if pertinent) or that the attorney is authorized under some other federal rule or is an attorney from another state. Due to concerns that pending federal immigration reform could result in a similar increase in immigration applications, this bill seeks to enact various restrictions on persons who would offer services pursuant to that reform. Regarding the impact of the pending proposal for reform, the Border Security, Economic Opportunity, and Immigration Modernization Act of 2013 (S. 744), the United States' Senate Judiciary Committee Report noted: One of the key components of the Border Security, Economic Opportunity and Immigration Modernization Act (S. 744) is the path to earned citizenship for the estimated 11 million undocumented immigrants living and working in the shadows of American society. This legislation will give this population a tough but fair opportunity to come forward and earn their citizenship by meeting several requirements, including paying fees and fines, passing national security and criminal background checks, paying their taxes, and learning English. During the Committee's consideration of S. 744, and its extensive study and consideration of comprehensive immigration reform in previous Congresses, the Committee has heard from law enforcement officials, community leaders, AB 1159 (Gonzalez) Page 3 of ? faith groups, civil rights groups, and individual members of the public about the urgent need to address the millions of undocumented immigrants living in the United States. Undocumented immigrants have a tenuous place in our communities. They live in constant fear of deportation. If they are victims of crime, they often do not report those crimes to State and local law enforcement. They work for low wages, unable to defend themselves from employer harassment and exploitation. Many have been in the country for 10 years or more, have made valuable contributions to their communities, and have immediate relatives who are American citizens. The prospect of deporting these individuals would not only be prohibitively expensive, but would also have untold damaging effects on our economy, which relies on the work, taxes, and purchasing power of undocumented immigrants even as our legal system fails to fully recognize or protect them. It would separate families and run counter to our ideals as a Nation. Instead, S. 744 outlines a tough but fair path that will bring individuals out of the shadows and into the lawful immigration system, by allowing eligible applicants to adjust to the legal status of Registered Provisional Immigrant (RPI). (http://www.gpo.gov/fdsys/pkg/CRPT-113srpt40/pdf/CRPT-113srpt 40.pdf.) S. 744 was passed by the Senate on June 27, 2013, and is currently in the House of Representatives. To proactively address the fraud that likely will occur as a result of the passage of S. 744, this bill would impose various restrictions on immigration consultants and attorneys who offer services pursuant to any pending or future immigration reform act, including a prohibition on accepting advance fees before the immigration reform is enacted. This bill was originally approved by this Committee on August 26, 2013, and, as a result of concerns expressed by committee members, the author agreed to strike out provisions of the bill that would have required attorneys to provide a translated written contract. The author subsequently removed those provisions from this bill, and, on September 6, 2013, amended the bill to, among other things, require an attorney providing immigration reform act services to provide a written notice informing the client as to where he or she may report complaints. AB 1159 is now before this Committee pursuant to Senate Rule 29.10 for approval of those amendments. AB 1159 (Gonzalez) Page 4 of ? CHANGES TO EXISTING LAW 1. Existing law requires all attorneys who practice law in California to be members of the State Bar of California (State Bar) and establishes the State Bar for the purpose of regulating the legal profession. (Bus. & Prof. Code Sec. 6000 et seq.) Existing law provides that in non-contingent fee matters, an attorney must have a written contract for services with their client whenever the client's total expense, including fees, will foreseeably exceed $1,000, as specified. The written contract must contain: (1) any basis compensation; (2) the general nature of the legal services to be provided; and (3) the respective responsibilities of the attorney and the client as to the performance of the contract. Failure to comply with the written contract requirement renders the agreement voidable at the option of the client, and the attorney shall, upon the agreement being voided, be entitled to collect a reasonable fee. (Bus. & Prof. Code Sec. 6148 (a), (c).) Existing law requires a person who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean to deliver to the other party to the contract a translation of the contract or agreement in the language in which the contract or agreement was negotiated, as specified. That requirement applies to various contracts and agreements, including, those for the purpose of obtaining legal services. (Civ. Code Sec. 1632 (b).) This bill would provide 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 promptly refunded to the client, as specified. This bill would further provide 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 promptly provide the client with a statement of accounting describing services rendered; and any funds received before the effective date of this AB 1159 (Gonzalez) Page 5 of ? bill for which immigration reform act services were not rendered prior to the effective date, shall be either 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 specified written notice to the client, in English and the client's native language. This bill would provide that when a contract for legal services is required to be in writing, as specified, an attorney providing immigration reform act services shall provide a written notice informing the client where he or she may report complaints. This bill would require that notice to be attached or incorporated into any written contract for immigration reform act services, and, require the notice to be signed by both the attorney and client if it is attached to a written contract. This bill would require the notice to be in English and in one of the languages translated by the State Bar, if the contract for immigration reform act services was negotiated in one of those languages. This bill would require the State Bar to provide the form of the notice, post the form and translations of the form on its Internet Web site, and to translate the form into Spanish, Chinese, Tagalog, Vietnamese, Korean, Armenian, Persian, Japanese, Russian, Hindi, Arabic, French, Punjabi, Portuguese, Mon-Khmer, Hmong, Thai, and Gujarati. This bill would specify that an attorney who meets specified criteria shall be responsible for adding and translating the name of, toll-free number of, and information on the Internet Web site for, the bar or court in which he or she is admitted to practice law. This bill would provide that failure to comply with the notice and translation requirement renders the contract voidable at the option of the client, and the attorney shall, upon the contract being voided, be entitled to collect a reasonable fee. This bill would make the above notice and translation provision operative when the State Bar posts on its Internet Web site the required form and translations, and, require the State Bar to post the form and translations as soon as practicable but no later than 45 days after the effective date of the bill. AB 1159 (Gonzalez) Page 6 of ? This bill would define "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. This bill would require the State Bar to announce and post on its Internet Web site when an immigration reform act has been enacted. This bill would define immigration reform act services as 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, as specified, to attain lawful status under the immigration reform act. 2. Existing law provides that no person shall practice law in California unless the person is an active member of the State Bar. (Bus. & Prof. Code Sec. 6125.) Existing law provides that any person advertising or holding himself or herself out as practicing or entitled to practice law or otherwise practicing law who is not an active member of the State Bar, or otherwise authorized pursuant to statute or court rule to practice law in this state at the time of doing so, is guilty of a misdemeanor. (Bus. & Prof. Code Sec. 6126(a).) Existing law authorizes the State Bar to enjoin any violations or threatened violations of the unauthorized practice of law in a civil action brought in the superior court by the State Bar. (Bus. & Prof. Code Sec. 6030.) This bill would provide 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. This bill would provide that, in a civil action brought by the State Bar, the civil penalty collected shall be paid to the AB 1159 (Gonzalez) Page 7 of ? State Bar and allocated to provide free legal services related to immigration reform act services to clients of limited means or to a fund for the purposes of mitigating unpaid claims of injured immigrant clients. This bill would require the Board of Trustees of the State Bar to annually report any collection and expenditure of funds for the preceding calendar year to the Assembly and Senate Committees on Judiciary, as specified. 3. Existing law , the Immigration Consultants Act (ICA), regulates the activities of immigration consultants by requiring them to pass a background check conducted by the Secretary of State (SOS), file a $50,000 bond with the SOS, to comply with specified notice requirements, and to provide clients with written contracts in their native language, as specified. (Bus. & Prof. Code Sec. 22440 et seq.) Existing law further prohibits an immigration consultant from literally translating words or titles that imply that the person is an attorney, as specified. (Bus. & Prof. Code Sec. 22442.3.) Existing law provides that a violation of the ICA subjects a person to a civil penalty not to exceed $100,000 for each violation, is a misdemeanor punishable by a fine of not less than $2,000 or more than $10,000, and that the second or subsequent violation is a felony. (Bus. & Prof. Code Sec. 22445.) Existing law allows a person claiming to be aggrieved to bring a civil action for injunctive relief, or damages, or both, and requires a court finding a violation to award the plaintiff actual damages plus treble damages, as specified, and reasonable attorney's fees and costs. (Bus. & Prof. Code Sec. 22446.5.) Existing law further allows a person who is awarded damages to recover those damages from the required bond, as specified. (Bus. & Prof. Code Sec. 22447.) This bill would additionally: increase the amount of the bond to $100,000, effective July 1, 2014; require each service to be performed to be itemized with an explanation of the purpose and process of the service, and make corresponding changes; revise the existing exemptions for non-profit tax AB 1159 (Gonzalez) Page 8 of ? exempt corporations who help client complete application forms by clarifying that only a nominal fee may be charged; require 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; allow 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 the itemized services, as specified; or (2) after completing one or more of the documents listed, as specified; prohibit 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; provide that funds received after the effective date of this bill but before enactment of an immigration reform act must be refunded to the client; provide 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; state 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. ; and expressly prohibit the literal translation of the phrase "notary public" into Spanish as "notario public" or "notario." This bill would state 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-attorney's 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 prohibition would be subject to a civil penalty of up to $1,000 per day for each violation, as specified. COMMENT AB 1159 (Gonzalez) Page 9 of ? 1. Stated need for the bill According to the author: AB 1159 is an important consumer protection measure that will immediately assist in helping to protect the vulnerable community that will be seeking assistance under comprehensive immigration reform. Immigration fraud has already begun. A few bad actors are already making guarantees they cannot fulfill, and are already taking fees for services they cannot possibly provide until the federal government has acted. If immigration reform passes, it is estimated that 11 million nationwide will be impacted. Of that 11 million, approximately 2.55 million live in California. No one knows how many of the 2.55 million will be victimized by fraud, but we do know the risk of fraud is very high since the fraud is already occurring. . . AB 1159 is designed to significantly help reduce fraud and 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. By putting in place these safeguards now, the bill will help prevent the fraud at the front end, avoiding more significant repercussions down the road. 2. September 6, 2013 Amendments In response to concerns raised about the prior version of the bill, the September 6, 2013 amendments inserted language that requires an attorney providing immigration reform act services to provide a written notice to the client as to where he or she may report complaints. The State Bar would be required to provide the form of the notice and post the form and translations on its Internet Web site. The September 6, 2013 amendments further require the notice to be in English and one of the specified languages, as necessary, provided by the State Bar (if the contract was negotiated in one of those languages). As a result, attorneys who are active members of the State Bar would be able to comply with the requirements of the bill by using one of the forms posted by the State Bar. For attorneys AB 1159 (Gonzalez) Page 10 of ? who are not active members of the State Bar, but authorized under federal law to practice law, this bill would require the attorney to be responsible for adding and translating information for the bar of the court in which he or she is admitted to practice law. It should be noted that the above notice and translation requirements would only apply when a contract for legal services is required to be in writing (See Business & Profession Code Sec. 6148), or, is required to be translated into the language it was negotiated (Civil Code Section 1632). Thus, the required notice would be attached (or incorporated) into a contract that is already required to be in writing pursuant to existing law. Staff notes that, in addition to the notice and translation provision discussed above, the September 6, 2013 amendments also would: (1) required the State Bar to direct civil penalties recovered in civil actions relating to "notarios" to free legal services relating to the immigration reform act or for purposes of mitigating the unpaid claims of injured immigrant clients; (2) required the State Bar to announce and post on its Internet Web site when an immigration reform act has been enacted; (3) clarified timelines and requirements related to the prohibition on advance fees for immigration reform act services; and (4) made other clarifying changes. 3. Attorney provisions previously approved by this Committee In addition to the provision described in Comment 2, this bill would restrict the ability of attorneys to receive advance fees for immigration reform act services before the reform is enacted, and define the attorneys covered by the bill's provisions. a. Advance fee prohibition This bill would prohibit an attorney from demanding or receiving advance payment of any funds from a person for immigration reform act services before the enactment of an immigration reform act. That prohibition seeks to target attorneys who are reportedly advertising and collecting fees for services in connection with immigration reform that may or may not be enacted in the future. Although, as noted in the Background above, the Border Security, Economic Opportunity, and Immigration Modernization Act of 2013 (S. 744) is currently in the House of Representatives, it is unclear AB 1159 (Gonzalez) Page 11 of ? whether it will actually be passed, or, if passed, if it will resemble the current form of the Act. As a result, this bill seeks to prohibit the collection of fees that attorneys may be currently collecting for reform that may never be enacted. The American Immigration Lawyers Association (AILA), in opposition, asserts: "AILA understands the need to restrict the ability of attorneys to collect fees for a service that is not permitted or warranted under existing law. There are many ethics rules attorneys must follow on this subject. However, [Section] 6242 of AB 1159 would also prohibit an attorney from completing critical research and background work. AILA believes that these services are legitimate and permitted under current law. AB 1159 should not impede an attorney's ability to service a client." It should be noted that, in response to AILA's concerns, the author previously accepted an amendment in this Committee to clarify that immigration reform act services are those offered in connection with pending or future immigration reform. Staff notes that the recent amendments have not fully addressed the concerns raised by AILA. This bill would further provide that if fees were collected before this bill is enacted, and the services were rendered, the attorney must provide the client with a statement of accounting for those services. For fees that were collected before enactment and the services have not been rendered, this bill would require the attorney to refund those fees or place them in a client trust account. If placed in a trust account, the attorney must provide a specified notice in English and the client's native language. Any advance fees received after the effective date of the bill, but before the enactment of an immigration reform act, must be returned to the client. b. Application of attorney provisions This bill would apply the above provisions regarding advance fees and written notices to attorneys who are active members of the State Bar, as well as to attorneys who are not active members but (1) provide immigration reform act services in an office or business in California and (2) are 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. From a policy standpoint, that provision would appear to apply the above restrictions with some uniformity so that clients who visit AB 1159 (Gonzalez) Page 12 of ? attorneys in California are treated similarly. AILA, in opposition, contends that "[u]nder Immigration practice, many out-of-state attorneys work with [U.S. Citizenship and Immigration Services (USCIS)] offices like the California Service Center (CSC) to represent individuals in California. The state should not be involved in seeking to restrict the ability of an attorney, authorized by federal law, to practice law in California. Such regulations are likely preempted by federal law. AILA would ask that the provisions relating to federal immigration attorneys be removed." The State Bar, in response, contends that: "California under its police powers has jurisdiction over non-California lawyers who are doing business in the State and representing immigrant clients residing in the State. Those lawyers have to comply with all other existing laws when doing business in the state. The ban on no advance payments and written contracts in AB 1159 regulates the transaction with clients, not what the lawyer may or may not do before BIA or USCIS." 4. Restrictions on immigration consultants approved by this Committee As noted in the Background, existing law imposes numerous requirements on those who would act in the capacity of an immigration consultant. Consultants must pass a background check, provide clients with a written contract in English and the client's native language, conspicuously display a statutory notice with specified information (including that the consultant is not an attorney), and file a $50,000 surety bond with the Secretary of State. Existing law also prohibits consultants from making false or misleading statements, making guarantees or promises unless it is in writing and there a basis in fact for the promise or guarantee, and making any statement that the consultant can obtain special favors. Violations of those provisions is a misdemeanor, subject a person to a civil penalty not to exceed $100,000, and can be a felony if there are repeat violations. This bill would further strengthen those provisions by: (1) requiring the written contract to itemize each service to be performed; (2) requiring consultants who provide immigration reform act services to deposit any funds received into a client trust account and only withdraw funds upon completing an itemized service or a document listed; (3) prohibiting AB 1159 (Gonzalez) Page 13 of ? consultants from demanding or accepting advance payment of any funds from a person for immigration reform act services before the reform is enacted; (4) imposing a civil penalty of up to $1,000 per day for violations of the advance fee prohibition; and (5) increasing the amount of the required surety bond from $50,000 to $100,000. 5. Translation provision approved by this Committee Under existing law, immigration consultants are prohibited from literally translating, with the intent to mislead, any words or titles, including notary public, notary, licensed, attorney, or lawyer, that imply that the person is an attorney. (Bus. & Prof. Code Sec. 22442.3.) That prohibition was added by AB 2520 (Napolitano, Chapter 561, Statutes of 1994) in response to instances of consumer fraud by non-attorney immigration service providers. This Committee's analysis noted that the prohibition was supported by the findings of a State Bar Task Force as follows: Testimony at the two public hearings revealed that the highest incidence of consumer fraud appears to be engaged in by non-attorney immigration service providers, although complaints were also heard regarding activities engaged in by both out-of-state and California-licensed attorney immigration service providers. Many non-attorney service providers employ storefront advertisements which hold themselves out as a "notario," "licenciado," or "abogado;" terms which can connote legal training or licensure to members of the Latin-American immigrant community. Advertisements are often misleading and deceptive, raising false consumer hopes in an attempt to attract business. Non-attorney service providers appear to frequently change business locations to: 1) avoid unhappy clients; 2) avoid law enforcement investigation and prosecution; and 3) attract fresh customers. This bill would strengthen that existing translation prohibition (and a related prohibition regarding the surety bond) by providing that a violation is also a violation of the State Bar Act's prohibition on non-attorney's advertising or holding themselves out as practicing or entitled to practice law, expressly prohibit translation of the phrase "notary public" into Spanish as "notario public" or "notario," and, add a civil penalty of up to $1,000 per day for each violation. This bill would also add similar language to the State Bar Act that would AB 1159 (Gonzalez) Page 14 of ? prohibit any person who is not an attorney from literally translating any words that imply the person is an attorney, and, specifically prohibit the translation of the phrase "notary public" into Spanish as "notario public" or "notario." Consistent with the proposed change to the ICA, this bill would add a $1,000 civil penalty to the prohibition on translation that would be added to the State Bar Act. Support (prior version of the bill) : American Federation of State, County, and Municipal Employees (AFSCME), AFL-CIO; California Catholic Conference; California Labor Federation; San Diego Volunteer Lawyer Program, Inc.; Sheriff Leroy D. Baca; UFW; UNITE HERE Local 30; Western Center on Law & Poverty Opposition (prior version of the bill) : AIDS Legal Referral Panel; American Immigration Lawyers Association; Asian American Bar Association of the Greater Bay Area; Asian Law Alliance; Asian Pacific Islander Legal Outreach; Central American Resource Center; Justice for Our Neighbors - Bay Area Immigration Taskforce; National Center for Lesbian Rights; National Lawyers Guild Bay Area Chapter; Northern California Chapter of the American Immigration Lawyers Association; Northern California Chapter of the Iranian American Bar Association; Omid Advocates; Pangea Legal Services; San Diego Chapter of the American Immigration Lawyers Association; San Diego Chapter of the Iranian American Bar Association; Southern California Chapter of the American Immigration Lawyers Association; one individual HISTORY Source : State Bar of California Related Pending Legislation : AB 888 (Dickinson) would allow the State Bar to bring a civil action for any violation of the existing prohibitions on the unauthorized practice of law, and require the court in those actions to impose a civil penalty, consider providing relief to any injured party, and award the State Bar reasonable attorney's fees and costs. This bill is currently on the Senate Floor. Prior Legislation : AB 630 (Chu, Chapter 605, Statutes of 2006) increased the regulation of immigration consultants by: (1) requiring fingerprinting and background checks; (2) authorizing the AB 1159 (Gonzalez) Page 15 of ? Secretary of State to issue cease and desist orders; and (3) requiring the Secretary of State to post information on its Internet Web site about bond compliance, filing of disclosure statements, the passing of background checks, and photographs of immigration consultants. Prior Vote : Senate Committee on Appropriations (Ayes 7, Noes 0) Senate Committee on Judiciary (Ayes 7, Noes 0) Senate Committee on Business, Professions and Economic Development (Ayes 9, Noes 0) **************