BILL ANALYSIS Ó AB 285 Page 1 Date of Hearing: April 21, 2015 ASSEMBLY COMMITTEE ON JUDICIARY Mark Stone, Chair AB 285 (Gallagher) - As Amended March 26, 2015 As Proposed to be Amended SUBJECT: LEGAL DOCUMENT ASSISTANTS KEY ISSUE: IN ORDER TO REDUCE OPERATING COSTS ASSOCIATED WITH REGULAR REPLACEMENT OF THEIR PRINTED MATERIALS, SHOULD LEgal document assistants be PERMITTED TO DO THE FOLLOWING: (1) OMIT THEIR REGISTRATION EXPIRATION DATE FROM APPEARING on all PRINTED WORK-RELATED PAPERS AND DOCUMENTS, except a contract for services; and (2) keep the same county-issued registration number, even after THEIR REGISTRATION lapseS or IS NOT RENEWED? SYNOPSIS Legal document assistants (LDAs) provide legal document preparation and self-help services to the public within parameters established under consumer protection legislation established in the early 1990's. Under existing law, LDAs may not provide any self-help service for compensation unless AB 285 Page 2 registered in the county of his or her principal place of business, and any other county in which he or she serves clients. The types of services that LDAs are authorized to perform include: (1) completing legal documents in a ministerial manner, selected by a self-represented person, by typing or otherwise completing the documents at the person's specific direction; (2) making published legal documents available to a person who is representing himself or herself in a legal matter; and (3) filing and serving legal forms and documents at the specific direction of a person who is representing himself or herself in a legal matter. This bill, sponsored by the California Association of Legal Document Assistants (CALDA), seeks modest changes to laws regarding the registration of legal document assistants, particularly disclosure rules that require LDAs to display certain registration information on all of their business materials and documents. First, the bill repeals the requirement that a registered LDA must display the expiration date of his or her registration on printed solicitation, papers, documents, and other printed materials, with exception of the written contract for services that must be provided to each client. As proposed to be amended, the bill limits the disclosure exemption for the expiration date to only printed materials and clarifies that LDAs must still disclose their registration expiration date on the written contract for services, as well as on any Internet website maintained by the LDA and documents, correspondence or materials that are in electronic rather than printed form. Second, the bill would allow LDAs to keep the same registration number after periods of non-renewal. Proponents, including the National Federation of Independent Businesses (NFIB), contend that both changes are needed to reduce unnecessary cost burdens on LDAs, namely, by forcing them to regularly purchase new written materials and discard old materials whenever an expiration date or registration number changes. Additional author's amendments reduce the scope of the bill in response to Committee concerns that the removed provisions unacceptably reduced consumer AB 285 Page 3 protections in current law. This bill has no registered opposition and will be referred to the Assembly Local Government Committee upon approval by this Committee. SUMMARY: Makes modest changes to rules governing the use of registration information of legal document assistants (LDA). Specifically, this bill: 1)Provides that the expiration date of an LDA's registration need not appear in printed solicitations or advertisements, nor on printed papers or documents prepared or used by the registered LDA, including but not limited to, contracts, letterhead, business cards, correspondence, documents, forms, claims, petitions, checks, receipts, and pleadings. 2)Provides that the registered LDA's name, business address, telephone number, registration number, expiration date of the registration, and county of registration shall appear on the written contract required to be given to every client prior to providing services, as well as on any Internet website maintained by the registrant and in any solicitation, advertisement, document, or correspondence prepared or used by the registrant in electronic form. 3)Requires the county clerk, upon renewal of registration, to assign the LDA the same registration number previously issued, including in instances where renewal is sought after a lapse in registration. EXISTING LAW: 1)Prohibits any LDA, including any LDA employed by a partnership or corporation, from providing any self-help service for AB 285 Page 4 compensation, unless the LDA is registered in the county in which his or her principal place of business is located and in any other county in which he or she performs acts for which registration is required. (Business & Professions Code 6400(f). All further references are to this code unless otherwise stated.) 2)Requires a LDA or unlawful detainer assistant (UDA) to register with the county clerk in the county in which his or her principal place of business is located (deemed primary registration), and in any other county in which he or she performs acts for which registration is required (deemed secondary registration). Provides that any registration in a county, other than the county of the person's place of business, shall state the person's principal place of business and provide proof that the registrant has satisfied specified bonding requirements. (Section 6402.) 3)Requires an applicant to pay a fee of $175 to the county clerk at the time he or she files an application for initial registration, including a primary or secondary registration, or renewal of registration. (Section 6404.) 4)Requires an individual applicant to post a bond of $25,000, and any partnership or corporation applying for registration to post a bond of $25,000 for one to four assistants, $50,000 for five to nine assistants, and $100,000 for ten or more assistants. (Section 6505.) 5)Provides that a certificate of registration shall be effective for a period of two years, and requires the county clerk to deny registration or renewal of registration if the applicant has been convicted of specified crimes, has been found guilty of the unauthorized practice of law, has been held civilly liable for certain misconduct, or has had his registration AB 285 Page 5 previously revoked, as provided. (Section 6406.) 6)Requires the county clerk to maintain a register of LDAs and UDAs, assign a unique number to each LDA or UDA, and issue an identification card to each one. Provides that upon renewal of registration, the same number shall be assigned, provided there is no lapse in the period of registration. (Section 6407.) 7)Requires the registrant's name, business address, telephone number, registration number, expiration date of the registration, and county of registration to appear in any solicitation or advertisement, and on any papers or documents prepared or used by the registrant, including, but not limited to, contracts, letterhead, business cards, correspondence, documents, forms, claims, petitions, checks, receipts, money orders, and pleadings. (Section 6408.) 8)Requires every LDA or UDA who enters into a contract or agreement with a client, prior to providing any services, to provide the client with a written contract that meets certain criteria and contains specified statements and disclaimers. (Section 6410.) FISCAL EFFECT: As currently in print this bill is keyed fiscal. COMMENTS: This bill, sponsored by the California Association of Legal Document Assistants (CALDA), seeks modest changes to laws regarding the registration of legal document assistants, particularly disclosure rules that require LDAs to print certain registration information on all documents and materials they use in the ordinary course of business. First, the bill repeals the requirement that a registered LDA must display the expiration date of his or her registration on printed solicitation, papers, AB 285 Page 6 documents, and other printed materials, with exception of the written contract for services that must be provided to each client. As proposed to be amended, the bill preserves the requirement to disclose the registration expiration date with respect to appearing on the LDA's website and other papers and documents used by the LDA in electronic form, where technology allows materials to be easily updated without having to discard or reprint entire new batches of business materials. Background on Legal Document Assistants. Chapter 5.5 of Division 3 of the Business and Professions Code (commencing with Section 6400) ("Chapter 5.5") regulates both legal document assistants (LDA) and unlawful detainer assistants (UDA). Although they are defined separately in statute, the two groups are subject to the same registration and oversight structure provided under Chapter 5.5, and unless otherwise stated, will be discussed interchangeably in this analysis. Generally speaking, LDAs provide legal document preparation and self-help services to the public within parameters established under the Chapter. LDAs may not provide any self-help service for compensation unless registered in the county of his or her principal place of business, and any other county in which he or she serves clients. The term "self-help services" defines the activities that registered LDAs are specifically authorized to perform, namely: (1) completing legal documents in a ministerial manner, selected by a self-represented person, by typing or otherwise completing the documents at the person's specific direction; (2) providing general published factual information that has been written or approved by an attorney, pertaining to legal procedures, rights, or obligations to a person who is representing himself or herself in a legal matter, to assist the person in self-representation; (3) making published legal documents available to a person who is representing himself or herself in a legal matter; and (4) filing and serving legal forms and documents at the specific direction of a person who is representing himself or herself in AB 285 Page 7 a legal matter. At its core, Chapter 5.5 is a consumer protection statute, first enacted in the early 1990s in response to an epidemic of fraud perpetrated upon vulnerable consumers by non-lawyers who offered legal document preparation and other services for a fee. Because the statute was intended to deter bad actors and stop the spread of acts that were largely presumed to be part of a scheme to commit fraud, Chapter 5.5 contains a number of provisions that by today's standards may seem unnecessarily strict and burdensome, at least to LDAs who now operate in a more legitimate environment. It is important to note, however, that the Legislature previously evaluated the statute and determined that its "existing enforcement mechanisms are at least minimally sufficient to provide the necessary consumer protection." (See Professor J. Clark Kelso (McGeorge School of Law), An Assessment of the Legal Document Assistant Pilot Project (May 2002).) Consequently, efforts to update the statute should be evaluated not only with respect to their impact on registered LDAs, but also in regard to any impact on the balance of consumer protection that has been achieved in this area when the LDA pilot program statute was first enacted over 20 years ago, and later made permanent in 2002 (in what is largely its current form). Author's amendment: Publication of registration expiration date. Under existing law, LDAs are required to disclose their registration information, business address, telephone number, and registration expiration date on all business materials, such as sales brochures, forms, ink stamps, and checks. According to the author and sponsor (proponents), inclusion of the expiration date on all materials used by the LDA (checks, ink stamps, brochures, and other such collateral) is unduly burdensome and cost prohibitive to LDAs because those materials must be thrown out and repurchased at every renewal once they show the expired registration date. Proponents contend that it is reasonable to continue to mandate that other registration information be AB 285 Page 8 provided on work materials, but it is not necessary to require the registration expiration date on materials, as long as the expiration date appears on the written contract for services that is required to be provided to every client of the LDA. As currently in print, the bill would exempt the registration expiration date from appearing on any LDA work materials, except for the client contract for services, as well as from appearing on the LDA's Internet website. Because exempting the expiration date from appearing on the LDA's website is not necessary to achieve the stated purpose of relieving cost burdens associated with discarding and reprinting written materials, the author proposes to amend the bill to limit the proposed disclosure exemption for the expiration date to only printed materials. As proposed to be amended, the bill clarifies that LDAs must still disclose their registration expiration date on the written contract for services, as well as on any Internet website maintained by the LDA, as well as any documents, correspondence or materials that are in electronic, rather than printed, form. The amendment is: On page 12, line 6, strike "Internet Web site" and after "any" insert "printed" On page 12, line 13, after "Section 6410" insert "as well as on any Internet website maintained by the registrant and in any solicitation, advertisement, document, or correspondence prepared or used by the registrant in electronic form" Because much of the correspondence, advertisement, and preparation done by LDAs now occurs through use of the Internet or use of electronic documents, many (but admittedly not all) prospective consumers should still be made aware of the LDA's registration expiration date under these proposed amendments. AB 285 Page 9 Also, the bill ensures that all LDA clients who are offered a contract for services will receive disclosure of the expiration date because the date will be required to be printed on the mandatory written contract. Assignment of the same registration number. Section 6407(a) requires the county clerk, upon renewal of registration, to assign a new registration number to the LDA if the renewal is late or registration has for some reason lapsed, even if the period of non-renewal is entirely voluntary. According to proponents, requiring the issuance of a new registration number is unduly burdensome and serves only to increase costs by forcing LDAs to reorder stamps, stationary, business cards, and other promotional materials to reflect the new number. This bill would simply require the county clerk, upon renewal of registration, to assign the same registration number, including in instances where renewal is sought after a lapse in registration. Proponents contend this change would bring this provision more closely in line with professions like engineers, lawyers, contractors, real estate agents, accountants and tax preparers, who maintain their original assigned registration numbers even when renewing after a voluntary period of non-practice. They also contend that assignment of multiple registration numbers to one registered LDA may mislead the public as to how long that registrant has been practicing in the profession. Committee staff also notes that this change may help protect consumers by making it easier to track the history of individual LDAs should the need arise to investigate any case of alleged misconduct. Author's amendments reduce scope of the bill. As currently in print, the bill seeks to extend the length of the registration term for LDAs from two to four years, and to allow LDAs to provide services statewide without having to register in every county in which they provide services, as is required by current AB 285 Page 10 law. In order to address concerns expressed by the Committee that the bill simply seeks to reduce existing consumer protections provided by the current registration scheme without proposing any alternative measures to continue to protect consumers, the author has proposed to amend the bill to remove those provisions at this time. The amendments are: Strike page 3, lines 1 to 17; strike pages 4 to 10 inclusive; strike page 11, lines 1 to 16. On page 11, line 17, strike "SEC. 7" and insert "SEC. 1" On page 12, line 1, strike "SEC. 8" and insert "SEC. 2" On page 12, line 14, strike "SEC. 9" and insert "SEC. 3" Previous related legislation. AB 1573 (Burton) Ch. 1011, Stats. 1993, first established registration, bonding requirements, and further regulation for so-called "unlawful detainer assistants" in order to protect consumers from documented cases of scamming activity involving the unauthorized practice of law in the field of eviction defense. SB 1418 (Rosenthal) Ch. 1079, Stats. 1998, subsequently established registration, bonding requirements, and regulation of "legal document assistants." AB 2810 (Pacheco) Ch. 386, Stats. 2000, required legal document assistants and unlawful detainer assistants to only post a single multi-county bond of $25,000, instead of posting such a bond in every county in which the LDA or UDA does business. AB 285 Page 11 AB 1698 (Committee on Judiciary) Ch. 1018, Stats. 2002, repealed the sunset date for the Legal Document Assistant Pilot Project, and established new regulations for LDAs. REGISTERED SUPPORT / OPPOSITION: Support California Association of Legal Document Assistants (sponsor) National Federation of Independent Business Responsive Law Over 40 individual and small business LDAs Opposition None on file Analysis Prepared by:Anthony Lew / JUD. / (916) 319-2334 AB 285 Page 12