BILL ANALYSIS Ó AB 1159 Page 1 Date of Hearing: September 12, 2013 ASSEMBLY COMMITTEE ON JUDICIARY Bob Wieckowski, Chair AB 1159 (Gonzalez) - As Amended: September 11, 2013 FOR CONCURRENCE SUBJECT : IMMIGRATION ACT SERVICES KEY ISSUE : SHOULD IMPORTANT ADDITIONAL CONSUMER PROTECTIONS BE ENACTED TO PROTECT POTENTIALLY VULNERABLE IMMIGRANT CLIENTS FROM FRAUD AND ABUSE REGARDING PROSPECTIVE IMMIGRATION REFORM ACT SERVICES? FISCAL EFFECT : As currently in print this bill is keyed fiscal. synopsis According to supporters, including the State Bar and others, 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 proposed federal immigration reform. Reports indicate that immigration fraud has already begun and a few bad actors are already making guarantees they cannot fulfill, as well as already taking fees for services they cannot possibly provide until the federal government has acted. 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. By putting these safeguards in place, it is hoped that the bill will help prevent fraud and avoid more significant repercussions down the road. Specifically, this bill would require that when a contract for legal services is subject to certain existing laws, 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 AB 1159 Page 2 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 also 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. Finally, the bill would make it a violation of specified provisions of law relating to the unauthorized practice of law for any person 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. As the result of the author's strong efforts, the bill has no known opposition. SUMMARY : Imposes various restrictions and obligations on persons who would offer services with respect to potential federal immigration reform legislation that may be enacted. Specifically, this bill : 1)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 promptly refunded to the client, as specified. 2)Provides that: a) 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 b) any funds received before the effective date of this 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 AB 1159 Page 3 written notice to the client, in English and the client's native language. 3)Provides that when a contract for legal services is subject to specified laws an attorney providing immigration reform act services shall provide a written notice informing the client where he or she may report complaints. 4)Requires the notice to be attached or incorporated into any written contract for immigration reform act services, and be signed by both the attorney and client. 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. 5)Requires 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. 6)Provides 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. 7)Makes 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. 8)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. This bill would require the State Bar to announce and post on its AB 1159 Page 4 Internet Web site when an immigration reform act has been enacted. 9)Defines 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. 10)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. 11)Provides that, in a civil action brought by the State Bar, the civil penalty collected shall be paid to the State Bar and allocated as specified, and that the State Bar shall annually report any collection and expenditure of funds for the preceding calendar year to the Assembly and Senate Committees on Judiciary, as specified. 12)With respect to immigration consultants, the bill: a) increases the amount of the bond to $100,000, effective July 1, 2014; b) requires each service to be performed to be itemized with an explanation of the purpose and process of the service, and make corresponding changes; c) revises the existing exemptions for non-profit tax exempt corporations who help client complete application forms by clarifying that only a nominal fee may be charged; d) 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; e) allows an immigration consultant providing immigration reform act services for the client to withdraw funds received from that client: 1) after AB 1159 Page 5 completing one or more of the itemized services, as specified; or 2) after completing one or more of the documents listed, as specified; f) 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; g) 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; h) 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; i) 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. ; and j) expressly prohibits the literal translation of the phrase "notary public" into Spanish as "notario public" or "notario." 13)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-attorney's holding themselves out to be authorized to practice law. In addition to the remedies and penalties under the Immigration Consultants Act ( ICA), this bill provides that a person who violates this prohibition would be subject to a civil penalty of up to $1,000 per day for each violation, as specified. EXISTING LAW : 1)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. All further statutory references are to this code unless otherwise noted.) 2)Provides that in non-contingent fee matters, an attorney must have a written contract for services with their client AB 1159 Page 6 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. (Section 6148 (a), (c).) 3)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).) 4)Provides that no person shall practice law in California unless the person is an active member of the State Bar. (Section 6125.) 5)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. (Section 6126(a).) 6)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. (Section 6030.) 7)Under 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. (Section 22440 et seq.) 8)Further prohibits an immigration consultant from literally AB 1159 Page 7 translating words or titles that imply that the person is an attorney, as specified. (Section 22442.3.) 9)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. (Section 22445.) 10)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. (Section 22446.5.) Existing law further allows a person who is awarded damages to recover those damages from the required bond, as specified. (Section 22447.) COMMENTS : In support of the bill the author states: 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. AB 1159 Page 8 This Bill Imposes Restrictions and Obligations With Respect to Services In Connection With Pending Proposals For Federal Immigration Reform. As the media has widely reported, Congress has spent much of the year debating potential changes to federal immigration law. While the outcome of that debate is far from certain, various individuals have apparently sought to charge immigrants for various legal and paralegal or quasi-legal services that cannot appropriately be performed prior to enactment of the proposed legislation. Given the potential size of the immigrant pool that may be affected, a large number of people is at risk of exploitation. Undocumented immigrants may be particularly vulnerable to abuse by unscrupulous businesses and individuals because of the risks they face in asserting their rights as consumers and victims of fraud or other wrongdoing. Under the bill, "immigration reform act" is defined as an act of Congress that is enacted after the effective date of this bill before January 1, 2017. With respect to attorneys, the bill specifies that immigration reform act services are those 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 who either entered the United States without inspection or who did not depart after the expiration of a nonimmigrant visa, to attain lawful status under an immigration reform act. Although a literal reading of this language - particularly with respect to "other related initial processes" - might suggest an unduly broad scope, it is important to note that the acknowledged intent of the bill is to target attorneys who are engaged for the purpose of serving clients regarding an immigration reform law, rather than any lawyer whose services in another type of matter might tangentially or incidentally touch on a client's potential eligibility for legalization or adjustment of immigration status. Such peripheral issues might arise, for example, in the course of representation in a criminal matter, employment dispute, domestic violence case or retaliatory eviction challenge where the purpose of the representation is not immigration status. Moreover, with respect to engagement for the purpose of immigration law, this definition clearly relates to services regarding an immigration reform act and would not be implicated in the provision of lawful and appropriate preliminary or preparatory work for AB 1159 Page 9 clients, such as obtaining records and documentation, for use in applications or filings under any other immigration or other law, or for lawful and appropriate procedures or processes for determining or obtaining legal relief under other immigration or other laws. Because the bill uses terms that are not used by current immigration law, which may not be used in the proposed immigration reform act (e.g., "undocumented immigrant"), the bill requires the State Bar to issue a declaration stating whether and when the referenced act has been enacted, which will trigger the fee prohibitions and notice obligations discussed below. Restrictions on Lawyer Fees Before Any Immigration Reform Is Enacted. This bill would prohibit an attorney from demanding any funds, or from accepting advance payment of any funds, for immigration reform act services prior to the enactment of an immigration reform act. The reason for this prohibition appears to be plain: before proposed legislation has been signed into law, it is impossible to know who might be eligible and what steps would be needed to submit an application. This prohibition therefore seeks to target attorneys who are currently advertising and collecting fees for highly questionable services in connection with immigration reform that has not been enacted and may never be enacted in the future. It should be noted that the prohibition is directed at services for a fee; if no fee is charged, this section is not triggered. However it would apparently be a violation of the measure's intent to seek a fee after enactment of an immigration reform act for uncompensated services provided before enactment of the act. 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 after enactment of this section but before enactment of an immigration reform act where the services have not been rendered, this bill would require the attorney to refund those fees, presumably within 30 days of the effective date of this section, consistently with the refund period prescribed for funds received after the effective date of this section, or place them in a client trust account. Client trust accounts are governed by existing law. (Sections 6211, 6212.) If placed in a trust account, the attorney must provide a specified notice in English AB 1159 Page 10 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. Prospective Obligation To Notify Clients Of Complaint Rights If And When Immigration Reform Is Enacted. In addition to the fee prohibition noted above (which applies prior to the enactment of an immigration reform act) this bill also regulates the conduct of attorneys after the enactment of an immigration reform act. Specifically, the bill requires an attorney who provides immigration reform act services to provide a specified notice when a contract for legal services is required in writing pursuant to Section 6148, or is subject to Section 1632 of the Civil Code. Section 6148 requires a written contract for any legal services over $1000 and specifies the content of that contract. Civil Code section 1632 requires written translations of certain contracts for legal services negotiated in specified languages other than English. This section becomes operative when the State Bar posts on its Internet Web site the form and translations described below. The written notice must inform the client that he or she may report complaints to the Executive Office for Immigration Review of the United States Department of Justice, to the State Bar of California, or to the bar of the court of any state, possession, territory, or commonwealth of the United States or of the District of Columbia where the attorney is admitted to practice law. The notice shall include the toll-free telephone numbers and Internet Web sites of those entities. Although section 6148 and Civil Code section 1632 apply only to members of the State Bar, the bill makes clear that admission to the State Bar is not a necessary condition for application of this provision. The State Bar is required to provide the form of the notice, translate the form into specified languages, and post the form and translations on its Internet Web site. The notice is required to be in English and in one of the languages of the forms translated by the State Bar if the contract for immigration reform act services was negotiated in one of those languages. This provision is thus unlike the notice provision described above for clients whose funds are deposited in a client trust account in that the translation obligation for this notice applies only to contracts negotiated in a language other than English while the client trust account notice is required to be translated regardless of the language of negotiation. AB 1159 Page 11 A violation of this provision makes the contract voidable at the option of the client. This is the only express penalty for violation of the notice requirement. While it might be assumed that the State Bar may seek to initiate discipline proceedings for a violation, the bill does not expressly provide that violation of this section is cause for discipline. (Compare sections 6106.2 and 6106.3. See also Article 5 of the State Bar Act (starting at section 6075) and Article 6 (starting at section 6100) setting forth a disciplinary scheme for specified violations.) Any ground for discipline therefore would appear to rest on some unstated or implicit authority. (Cf. In the Matter of David M. Harney, 3 Cal State Bar Ct. Rptr. 266 (1995)(analyzing potential discipline for violation of section 6148.) Attorneys Subject To These Provisions. This bill would apply the above provisions regarding 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 who (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 attorneys in California are treated similarly. Reform Of Immigration Consultants Act. 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. Existing law imposes various requirements on those who act in the capacity of an immigration consultant. Consultants must AB 1159 Page 12 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. Violation 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 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. Expansion of Existing Prohibition Against Using Terms That Cause Confusion Regarding Practice of Law. Current law prohibits immigration consultants from using certain terms that when translated from English imply that the person is an attorney. This bill would expand that prohibition to all persons, and would specify that it is a violation of the prohibition against the unlicensed practice of law under section 6126. In addition to the existing civil penalty for a violation of section 6126, the bill provides a further civil penalty of up to 1,000 per day for each violation, to be assessed and collected in a civil action brought by the State Bar. Consistently with AB 888 (Dickinson) which provides that civil penalties for violation of section 6126 are to be directed to the Justice Gap Fund, which provides small but important supplemental funding for qualified legal services projects and support centers according to the established interest on lawyer's trust accounts formula, or if needed for the purposes of mitigating potential unpaid claims of injured immigrant clients, as directed by the Board of Trustees of the State Bar. AB 1159 Page 13 REGISTERED SUPPORT / OPPOSITION : Support State Bar of California (sponsor) AFSCME, AFL-CIO California Catholic Conference California Labor Federation Los Angeles County Sheriff, Leroy D. Baca San Diego Volunteer Lawyer Program, Inc. UNITE HERE Local 30 Western Center on Law and Poverty Opposition None on file Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334