BILL ANALYSIS Ó SENATE JUDICIARY COMMITTEE Senator Hannah-Beth Jackson, Chair 2015-2016 Regular Session AB 285 (Gallagher) Version: July 2, 2015 Hearing Date: July 14, 2015 Fiscal: Yes Urgency: No TMW SUBJECT Professions and vocations: registration DESCRIPTION This bill, until January 1, 2021, would repeal all secondary county registration requirements for unlawful detainer assistants (UDAs) and legal document assistants (LDAs), establish a 15-hour continuing legal education requirement for UDA and LDA registration and renewal, provide additional oral and written client disclosures, and provide that the venue for any disputes involving a UDA or LDA would be in the county of the client's primary residence. This bill would also authorize a county clerk to assign the same registration number to a UDA, LDA, process server, and professional copier renewing his or her registration as long as the registration has not lapsed for three or more years. BACKGROUND Under California law, certain types of legal services can be performed by legal document assistants (LDAs) or unlawful detainer assistants (UDAs). Legal document and unlawful detainer assistants provide, for compensation, self-help assistance to members of the public who are representing themselves in legal matters. LDAs and UDAs are prohibited from providing legal advice or opinion, but they are permitted to prepare legal documents; provide attorney-authored general information and published legal documents; and file and serve documents at the direction of the client. AB 285 (Gallagher) Page 2 of ? LDAs and UDAs are subject to comprehensive registration, bonding, and business practice requirements to ensure that clients are protected from unscrupulous legal document preparers. LDAs and UDAs are required to register in the county of their primary place of business (primary registration) and in each additional county in which they provide services (secondary registration). County clerks are responsible for reviewing the applications of and registering LDAs and UDAs. Among their duties, clerks are responsible for ensuring that registrants receive identification cards and comply with the prerequisites for registration. Clerks are also responsible for maintaining a register, assigning a number, and issuing identification cards to process servers (individuals who serve legal documents) and professional photocopiers (services that receive or copy personal medical information, personal identifying information, or business records, including legal documents). This bill would repeal the secondary county registration requirements of LDAs and UDAs and require additional education and client disclosures. This bill would also authorize county clerks to assign the same registration number to LDAs, UDAs, process servers, and professional photocopiers if the registration has not lapsed for three or more years. CHANGES TO EXISTING LAW Existing law prescribes registration, business practices, client disclosures, and education requirements for legal document assistants (LDAs) and unlawful detainer assistants (UDAs). (Bus. & Prof. Code Sec. 6400 et seq.) Existing law defines a legal document assistant (LDA) as a person, corporation, partnership, association, or other entity that employs or contracts with any person, unless otherwise exempt, who provides or assists in providing, for compensation, any self-help service to another person who is self-represented in a legal matter. (Bus. & Prof. Code Sec. 6400(c).) Existing law prohibits LDAs from providing any kind of advice, explanation, opinion, or recommendation to a client about possible legal rights, remedies, defenses, options, selection of forms, or strategies. Existing law defines an unlawful detainer assistant (UDA) to mean an individual who, for compensation, renders assistance or advice in the prosecution or defense of an unlawful detainer AB 285 (Gallagher) Page 3 of ? claim or action. (Bus. & Prof. Code Sec. 6400 (a).) Existing law requires UDAs and LDAs to be registered with the county clerk in the county in which their principal place of business is located and in any other county in which they perform acts for which registration is required. (Bus. & Prof. Code Sec. 6402.) Existing law requires an LDA or UDA applicant to provide specified information, including his or her name, age, address, telephone number, felony and misdemeanor convictions, and liability in civil actions. (Bus. & Prof. Code Sec. 6403(a), (c).) Existing law requires the county clerk to retain the registration application for three years following the expiration date of the application. (Bus. & Prof. Code Sec. 6403(e).) Existing law requires LDA or UDA applicants to pay a $175 fee 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. (Bus. & Prof. Code Sec. 6404.) Existing law requires the LDA or UDA registration applicant to include with the registration application a $25,000 bond (for individuals) or, if the applicant is a partnership or corporation, a bond for $25,000 for one to four LDAs or UDAs, $50,000 for five to nine assistants, or $100,000 for 10 or more assistants. (Bus. & Prof. Code Sec. 6405(a).) Existing law requires the bond to be made in favor of the State of California for the benefit of any person who is damaged as a result of a violation of the LDA or UDA statutes or by the fraud, dishonesty, or incompetency of an individual, partnership, or corporation registered as an LDA. (Bus. & Prof. Code Sec. 6405(h).) Existing law makes a certificate of registration effective for two years, until the date the bond expires, or until the total number of LDAs and UDAs employed by a partnership or corporation exceeds the number allowed for the amount of the bond in effect, whichever occurs first. (Bus. & Prof. Code Sec. 6406(a).) Existing law, if the county clerk finds that an applicant has failed to demonstrate having met the requisite requirements to obtain registration, requires the county clerk to return the application and fee to the applicant with a notice to the applicant indicating the reason for the denial and the method of AB 285 (Gallagher) Page 4 of ? appeal. (Bus. & Prof. Code Sec. 6406(c).) Existing law requires the county clerk to maintain a register of LDAs, and a register of UDAs, assign a unique number to each LDA, or UDA, and issue an identification card to each one. (Bus. & Prof. Code Sec. 6407(a).) Upon renewal of registration, the same number is assigned, provided there is no lapse in the period of registration. (Id.) Existing law prescribes the size of and information contained on the identification card. (Bus. & Prof. Code Sec. 6407(b).) Existing law requires a registered LDA or UDA to include his or her name, business address, telephone number, registration number, and county of registration 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. The registrant'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 provided to a client pursuant to Section 6410, as well as on any Internet Web site maintained by the registrant, and in any solicitation, advertisement, document, or correspondence prepared or used by the registrant in electronic form. (Bus. & Prof. Code Sec. 6408.) Existing law requires every LDA or UDA who enters into a contract or agreement with a client to provide services, prior to providing any services, to provide the client with a written contract, the contents of which shall be prescribed by regulations adopted by the Department of Consumer Affairs, and requires the written contract to include all of the following provisions: the services to be performed; the costs of the services to be performed; a statement, on the face of the contract in 12-point boldface type, that the legal document assistant or unlawful detainer assistant is not an attorney and may not perform the legal services that an attorney performs; a statement in 12-point boldface type that the county clerk has not evaluated or approved the registrant's knowledge or experience, or the quality of the registrant's services; a statement in 12-point boldface type that the consumer may obtain information regarding free or low-cost representation AB 285 (Gallagher) Page 5 of ? through a local bar association or legal aid foundation and that the consumer may contact local law enforcement, a district attorney, or a legal aid foundation if the consumer believes that he or she has been a victim of fraud, the unauthorized practice of law, or any other injury; and a statement in 12-point boldface type that a legal document assistant or unlawful detainer assistant is not permitted to engage in the practice of law, including providing any kind of advice, explanation, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options, selection of forms, or strategies. (Bus. & Prof. Code Sec. 6410(a), (b).) Existing law requires the contract to be written both in English and in any other language comprehended by the client and principally used in any oral sales presentation or negotiation leading to execution of the contract, and the legal document assistant or the unlawful detainer assistant is responsible for translating the contract into the language principally used in any oral sales presentation or negotiation leading to the execution of the contract. (Bus. & Prof. Code Sec. 6410(c).) Existing law specifies that the failure of an LDA or UDA to provide the required contract information makes the contract or agreement for services voidable at the option of the client; upon the voiding of the contract, the LDA or UDA is required to immediately return in full any fees paid by the client. (Bus. & Prof. Code Sec. 6410(d).) Existing law , in addition to any other right to rescind, provides the client the right to rescind the contract within 24 hours of the signing of the contract, and the client may cancel the contract by giving the LDA or the UDA any written statement to the effect that the contract is canceled. If the client gives notice of cancellation by mail addressed to the LDA or UDA, with first-class postage prepaid, cancellation is effective upon the date indicated on the postmark, and, upon the voiding or rescinding of the contract or agreement for services, the LDA or UDA is required to immediately return to the client any fees paid by the client, except fees for services that were actually, necessarily, and reasonably performed on the client's behalf by the legal document assistant or unlawful detainer assistant with the client's knowing and express written consent. (Bus. & Prof. Code Sec. 6410(e).) AB 285 (Gallagher) Page 6 of ? Existing law makes it unlawful for any legal document assistant or unlawful detainer assistant, in the first in-person or telephonic solicitation of a prospective client of legal document or unlawful detainer assistant services, to enter into a contract or agreement for services or accept any compensation unless the legal document assistant or the unlawful detainer assistant states orally, clearly, affirmatively and expressly all of the following, before making any other statement, except statements required by law in telephonic or home solicitations, and a greeting, or asking the prospective client any questions: the identity of the person making the solicitation; the trade name of the person represented by the person making the solicitation, if any; the kind of services being offered for sale; and the statement: "I am not an attorney" and, if the person offering legal document assistant or unlawful detainer assistant services is a partnership or a corporation, or uses a fictitious business name, "[name] is not a law firm. I/we cannot represent you in court, advise you about your legal rights or the law, or select legal forms for you." (Bus. & Prof. Code Sec. 6410.5(a).) Existing law , if the first contact between an LDA or UDA and a prospective client is initiated by the prospective client, makes it unlawful for the LDA or UDA to enter into a contract or agreement for services or accept any compensation unless the LDA or UDA states orally, clearly, affirmatively and expressly, during that first contact, and before offering any contract or agreement for services to the prospective client, the following: "I am not an attorney [and, if the person offering legal document assistant or unlawful detainer assistant services is a partnership or a corporation, or uses a fictitious business name, "[name] is not a law firm."] [I/We] cannot (1) represent you in court, (2) advise you about your legal rights or the law, or (3) select legal forms for you." (Bus. & Prof. Code Sec. 6410.5(b).) Existing law allows, after making this statement, and before offering the prospective client a contract or agreement for services, an LDA or UDA who has made the statement to ask the prospective client to read the "Notice to Consumer," as provided by statute, and after allowing the prospective client time to read the notice, to ask the prospective client to sign and date the notice. (Id.) Existing law prescribes registration and registration renewal requirements for process servers. (Bus. & Prof. Code Sec. AB 285 (Gallagher) Page 7 of ? 22355.) Existing law defines a process server as any natural person that makes, for compensation, more than 10 services of process in California during a calendar year, and any corporation that derives compensation from service of process within California. (Bus. & Prof. Code Sec. 22350.) Existing law prescribes registration and registration renewal requirements for professional photocopiers. (Bus. & Prof. Code Sec. 22457.) Existing law defines a professional photocopier to mean any person who, for compensation, obtains or reproduces documents pertaining to personal medical information, personal identifying information, or business records. (Bus. & Prof. Code Sec. 22450.) Existing law requires process servers and professional photocopiers to register with the county clerk of the county in which they reside or have a principal place of business. (Bus. & Prof. Code Secs. 22350 et seq., 22450 et seq.) Existing law requires the county clerk to retain a certificate of registration of a process server for a period of three years following the expiration date of the certificate or retain an application for registration of a professional photocopier for three years following the expiration date of the application. (Bus. & Prof. Code Secs. 22351(c), 22452(c).) This bill would repeal the requirement for an LDA or UDA to also register in any other county in which he or she performs acts for which registration is required (secondary registration), make conforming changes in several code sections, and, require the LDA or UDA to register in any county in which he or she maintains a branch office. This bill , to be eligible to renew registration, would require the registrant to complete 15 hours of continuing legal education courses, as specified, during the two-year period preceding renewal. This bill would repeal the requirement that the application for registration indicate whether the registration was primary or secondary, and, instead, require an application for renewal of AB 285 (Gallagher) Page 8 of ? registration to include a statement by the applicant that he or she has completed the 15-hour legal education courses prescribed under this bill. This bill would require a registered LDA or UDA to provide his or her name, business address, telephone number, registration, and county of registration in on any printed papers or documents prepared or used by the registrant, but no longer require the expiration date of the registration to be provided in any solicitation or advertisement, or on any printed papers or documents. This bill would require the above information to also appear on the written contract that must be provided to a client, as well as on any Internet Web site maintained by the registrant, and in any solicitation, advertisement, document, or correspondence prepared or used by the registrant in electronic form. This bill would require the venue for an action arising out of a dispute between an LDA or UDA and his or her client to be the county in which the client has his or her primary residence, and require a written contract entered into on or after January 1, 2016, between an LDA or UDA and a client to contain a statement that the venue for an action arising out of a dispute between an LDA or UDA and his or her client shall be the county in which the client has his or her primary residence. This bill would make it unlawful for any LDA or UDA, in the first contact with a prospective client, to enter into a contract or agreement for services or accept any compensation unless the LDA or UDA orally states to the prospective client specified information, including the county in which the LDA or UDA is registered and his or her registration number and expiration date of the registration. This bill , after the LDA or UDA makes the required oral consumer notification statements, would make it unlawful for an LDA or UDA to enter into a contract or agreement for services or accept any compensation unless the LDA or UDA also provides the client with a written notice to consumer, and requires the LDA or UDA to ask the prospective client to sign and date the notice. This bill , if the first contact between the LDA or UDA and the client is not in person, would require the written notice to consumer to be provided to the prospective client at the first in person meeting or mailed to the prospective client before AB 285 (Gallagher) Page 9 of ? entering into a contract or agreement for services or accepting any compensation. This bill would require the LDA's or UDA's notice to consumer and written contract entered into between an LDA or UDA and a client to include the contact information of the County Clerk's office where the LDA or UDA is registered, including the address, phone number, and Internet Web site, if available. This bill would make the LDA or UDA responsible for translating the notice to consumer into the language principally used in any oral sales presentation or negotiation. This bill would add to the statutory Notice to Consumer that the LDA or UDA is registered in the specified county, registration number, and expiration date and a statement that the prospective client can confirm the LDA's or UDA's registration by contacting the office of the county clerk where the LDA or UDA is registered at the appropriate county clerk's phone number, address, or Internet Web site to be provided by the LDA or UDA. This bill would make the above provisions regarding LDAs and UDAs effective only until January 1, 2021, unless a later enacted statute is enacted before that date to delete or extend that sunset. This bill would authorize the county clerk to assign the same registration number upon renewal of LDA, UDA, process service, and professional photocopier registration, provided the applicant is renewing registration in the same county in which he or she was previously registered and there is no lapse of three or more years in the period of registration. COMMENT 1. Stated need for the bill The author writes: AB 285 brings common-sense changes to the registration requirements of Legal Document Assistants to modernize the profession and bring it in line with similar businesses and professions. Legal Document Assistants are key providers of crucial legal services to underserved populations. It is important to make these changes to clear up unnecessary and AB 285 (Gallagher) Page 10 of ? onerous requirements, while leaving crucial consumer protections in place. 2. Revising LDA and UDA disclosures to consumers Existing law requires LDAs and UDAs to provide his or her registration number and registration expiration date on 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. This bill would remove the expiration date provision from any printed papers or documents, but, if the LDA or UDA maintains an Internet Web site, would require the expiration date to be included on that Internet Web site and any document in electronic form. This bill would also require the expiration date to be provided in the Notice to Consumer provided to a prospective client, be provided orally or in writing when soliciting a client, and any written contract with the client. The National Federation of Independent Business (NFIB), in support, states that "[t]he [LDA] profession was created by the Legislature to provide critical legal document support for those who cannot afford the high legal fees of other professionals. Unfortunately the LDA registration process has proven to be overbearing and challenging for these small business owners, and is a huge disincentive for people to enter into this important line of work. Unlike other similar professions like notaries or paralegals, the law requires LDAs to include the expiration date of their registration on all legal documents, while requiring them to re-register every two years whereupon they receive a new registration number. This means that they must re-purchase new documents, stamps, etc., every time their registration is renewed. The inclusion of an expiration date on the legal documents serves no legitimate purpose in consumer protection. Current law imposes a burden on one profession that similar professions do not bear." The California Association of Legal Document Assistants (CALDA), sponsor, states that "requiring that all work related materials have to include the registration expiration date is an undue burden on LDAs. This requirement is unnecessarily duplicative for every document, but should continue to be included in the required Contract for Self Help Services we use in our daily AB 285 (Gallagher) Page 11 of ? work." CALDA further asserts that this bill "will make registration and the LDA practice more cost and time effective, which will in turn aid low-income clients who cannot afford the rising cost of attorney's fees and frequently need LDA services." The author points to a study by the Responsive Law Center, which found that "Californians are increasingly unable to afford legal help. The average Californian must work 20 hours to pay for just one hour of an attorney's time" (based on a pre-tax income of $29,630 and attorney billing rate of $250/hour). The author argues that LDAs play an important role in providing access to justice through assisting self-represented parties with document preparation and other tasks, but, unfortunately, regulatory burdens discourage many LDAs from expanding and becoming more accessible. The bill seeks to provide an appropriate balance between the cost of doing business as an LDA or UDA and client protection by removing the two-year reprinting requirement currently undertaken by an LDA or UDA after each registration renewal, and establishing new written contract, consumer notice, Internet Web site, and electronic form disclosure requirements, which would include the expiration date of the registration. Further, to address concerns raised by the Western Center on Law and Poverty, this bill was recently amended to clarify the oral statement, written notice to consumer, and contract provisions, and to add a sunset of the LDA and UDA provisions specified under this bill in order to provide additional consumer protections. 3. Providing venue for client actions against LDAs and UDAs in lieu of multi-county registration Existing law requires an LDA or UDA to register in the county of his or her principal place of business, which is considered the primary registration. If the LDA or UDA also provides services to clients in other counties, the LDA or UDA is also required to register in those counties, which is considered the secondary registration(s). Notably, the current registration requirement was written before the advent of the Internet, which is used by many professionals and businesses to solicit services and provide information to prospective clients. The author argues that by current law, anyone with an Internet Web site should presumably register in all counties, or refuse business in counties in which they are AB 285 (Gallagher) Page 12 of ? not registered. Yet, the author points out, similar professions, including process servers and notaries, are not subject to such a requirement. Further, CALDA argues that the primary and secondary registration requirements are an unnecessary burden on LDAs who wish to do business at the state level, but are restricted due to the time consuming process of registering in every single county. This bill seeks to update existing law to provide for the solicitation of services of UDAs and LDAs by allowing an LDA or UDA to register only in the county in which her principal place of business is located, and in which he or she maintains a branch office. In order to ensure that clients are able to effectively pursue claims against an LDA or UDA, if needed, this bill would establish that the venue for any dispute between a client and an LDA or UDA must be in the county where the client primarily resides. In this way, this bill seeks to balance the interconnectivity of professionals and clients, while maintaining appropriate client protection and convenience through judicial review in the county in which the client resides, rather than the county in which the LDA or UDA principally performs his or her business. This bill maintains the requirement to disclose the county of registration and registration number, and would also require the LDA or UDA to provide written notice of the venue requirement in the written contract with the client to ensure the client is aware of his or her rights. 4. Registration number continuity Rather than reassigning a new registration number to an LDA or UDA at each registration renewal, this bill would authorize the county clerk to assign the same registration number to the LDA or UDA, provided the registration has not lapsed for three or more years. The author argues that this number reassignment requirement is problematic for several reasons: "First, requiring a new registration number serves only to increase costs to LDAs by forcing providers to reorder stamps, stationary, business cards, and other promotional materials. Additionally, multiple registration numbers make it more difficult to track the history of nefarious individuals and is deceptive to the public as to how long the registrant has been practicing." The author contends that allowing LDAs and UDAs to keep their original AB 285 (Gallagher) Page 13 of ? registration numbers after periods of non-renewal, provided there is not a lapse of three or more years, would bring this requirement more closely in line with similar professions (lawyers, contractors, engineers, medical professionals, private investigators, CPAs, and tax preparers) who maintain their original registration numbers, even after voluntary periods of non-practice. Further, county clerks do not want to maintain applications for an undefined amount of time to comply with this provision, so this bill would limit the lapse provision to three years, which is consistent with the current county clerk record retention requirement. To maintain consistency, this bill also allows county clerks to assign the same registration number to process servers and professional photocopiers if there is no lapse in registration for three or more years. 5. Increased education requirements In order for an LDA or UDA to renew his or her registration, this bill would require an LDA or UDA to complete 15 hours of continuing legal education (CLE) courses during the two-year period preceding renewal. This bill would also require the LDA or UDA to provide a statement in the renewal application that he or she has completed the required courses. In support of this provision, the author argues that legal documents are constantly being updated, and with the vast growing of self-represented litigants needing assistance in representing themselves, it is essential for the LDA or UDA to constantly update his or her skills and knowledge base in the areas in which he or she provides assistance to clients. The author asserts that one way this can be done is through CLE. The author contends that mandatory CLE will protect the consumer by ensuring the quality of the legal professional's work. Furthermore, a well-trained LDA and UDA workforce will be well-equipped to deliver access to justice for Californians who cannot afford the cost of traditional legal services. Notably, CLE requirements established under this bill are nearly double the required 8 hours necessary for paralegals. Support : A Legal Bridge; A People's Choice; Affordable Wills & Trusts; ASAP Legal, Inc.; California Document Preparers; Judicial Self-Help Center; Quality Document Preparation Center; AB 285 (Gallagher) Page 14 of ? National Federation of Independent Business; Responsive Law Center; Siskiyou Legal Document Services; 33 Individuals Opposition : None Known HISTORY Source : California Association of Legal Document Assistants Related Pending Legislation : None Known Prior Legislation : AB 620 (Perez, Chapter 458, Statutes of 2009) provided county clerks with flexibility to issue identification cards that take advantage of new security features, and clarified rules pertaining to identification cards for corporations and partnerships of legal document assistants, unlawful detainer assistants, process servers, and professional photocopiers. It also required that applications for professional photocopiers be signed under penalty of perjury, as is already required for related professions. AB 935 (Committee on Business & Professions, Chapter 402, Statutes of 2007), among other things, established a three-year retention period for applications and certificates of registration of process servers, professional copiers, unlawful detainer assistants, and legal document assistants filed with the county clerk. AB 1698 (Committee on Judiciary, Chapter 1018, Statutes of 2002) repealed the legal document assistant pilot program regulations and replaced it with a permanent and more comprehensive set of regulations. SB 1418 (Rosenthal, Chapter 1079, Statutes of 1998) established a four-year pilot project regulating the business and registration of legal document assistants, with a sunset date of January 1, 2003. Prior Vote : Assembly Floor (Ayes 76, Noes 0) Assembly Appropriations Committee (Ayes 15, Noes 0) Assembly Local Government Committee (Ayes 9, Noes 0) AB 285 (Gallagher) Page 15 of ? Assembly Judiciary Committee (Ayes 10, Noes 0) **************