California Legislature—2015–16 Regular Session

Assembly Bill No. 1523

Introduced by Committee on Judiciary (Assembly Members Mark Stone (Chair), Alejo, Chau, Chiu, Cristina Garcia, Holden, and O'Donnell)

March 10, 2015

An act to amend Section 6213 of the Business and Professions Code, relating to attorneys.

LEGISLATIVE COUNSEL’S DIGEST

AB 1523, as introduced, Committee on Judiciary. Attorneys.

Existing law, the State Bar Act, provides for the licensure and regulation of attorneys by the State Bar of California, a public corporation. Existing law requires an attorney or law firm receiving or disbursing trust funds to establish and maintain an IOLTA account, as defined, in which the attorney or law firm is required to deposit or invest all specified client deposits or funds. Existing law requires an attorney or law firm establishing an IOLTA account to report IOLTA account compliance and all other IOLTA account information required by the State Bar in the manner specified by the State Bar.

This bill would make a technical correction to a definition related to IOLTA accounts.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 6213 of the Business and Professions
Code is amended to read:

6213.  

As used in this article:

(a) “Qualified legal services project” means either of the
following:

(1) A nonprofit project incorporated and operated exclusively
in California that provides as its primary purpose and function
legal services without charge to indigent persons and that has
quality control procedures approved by the State Bar of California.

(2) A program operated exclusively in California by a nonprofit
law school accredited by the State Bar of California that meets the
requirements of subparagraphs (A) and (B).

(A) The program shall have operated for at least two years at a
cost of at least twenty thousand dollars ($20,000) per year as an
identifiable law school unit with a primary purpose and function
of providing legal services without charge to indigent persons.

(B) The program shall have quality control procedures approved
by the State Bar of California.

(b) “Qualified support center” means an incorporated nonprofit
legal services center that has as its primary purpose and function
the provision of legal training, legal technical assistance, or
advocacy support without charge and which actually provides
through an office in California a significant level of legal training,
legal technical assistance, or advocacy support without charge to
qualified legal services projects on a statewide basis in California.

(c) “Recipient” means a qualified legal services project or
support center receiving financial assistance under this article.

(d) “Indigent person” means a person whose income is (1) 125
percent or less of the current poverty threshold established by the
United States Office of Management and Budget, or (2) who is
eligible for Supplemental Security Income or free services under
the Older Americans Act or Developmentally Disabled Assistance
Act. With regard to a project that provides free services of attorneys
in private practice without compensation, “indigent person” also
means a person whose income is 75 percent or less of the maximum
levels of income for lower income households as defined in Section
50079.5 of the Health and Safety Code. For the purpose of this
subdivision, the income of a person who is disabled shall be
determined after deducting the costs of medical and other
disability-related special expenses.

(e) “Fee generating case” means a case or matter that, if
undertaken on behalf of an indigent person by an attorney in private
practice, reasonably may be expected to result in payment of a fee
for legal services from an award to a client, from public funds, or
from the opposing party. A case shall not be considered fee
generating if adequate representation is unavailable and any of the
following circumstances exist:

(1) The recipient has determined that free referral is not possible
because of any of the following reasons:

(A) The case has been rejected by the local lawyer referral
service, or if there is no such service, by two attorneys in private
practice who have experience in the subject matter of the case.

(B) Neither the referral service nor any attorney will consider
the case without payment of a consultation fee.

(C) The case is of the type that attorneys in private practice in
the area ordinarily do not accept, or do not accept without
prepayment of a fee.

(D) Emergency circumstances compel immediate action before
referral can be made, but the client is advised that, if appropriate
and consistent with professional responsibility, referral will be
attempted at a later time.

(2) Recovery of damages is not the principal object of the case
and a request for damages is merely ancillary to an action for
equitable or other nonpecuniary relief, or inclusion of a
counterclaim requesting damages is necessary for effective defense
or because of applicable rules governing joinder of counterclaims.

(3) A court has appointed a recipient or an employee of a
recipient pursuant to a statute or a court rule or practice of equal
applicability to all attorneys in the jurisdiction.

(4) The case involves the rights of a claimant under a publicly
supported benefit program for which entitlement to benefit is based
on need.

(f) “Legal Services Corporation” means the Legal Services
Corporation established under the Legal Services Corporation Act
of 1974 (P.L. 93-355; 42 U.S.C. Sec. 2996 et seq.).

(g) “Older Americans Act” means the Older Americans Act of
1965, as amended (P.L. 89-73; 42 U.S.C. Sec. 3001 et seq.).

(h) “Developmentally Disabled Assistance Act” means the
Developmentally Disabled Assistance and Bill of Rights Act, as
amended (P.L. 94-103; 42 U.S.C. Sec. 6001 et seq.).

(i) “Supplemental security income recipient” means an
individual receiving or eligible to receive payments under Title
XVI of the federal Social Security Act, or payments under Chapter
3 (commencing with Section 12000) of Part 3 of Division 9 of the
Welfare and Institutions Code.

(j) “IOLTA account” means an account or investment product
established and maintained pursuant to subdivision (a) of Section
6211 that is any of the following:

(1) An interest-bearing checking account.

(2) An investment sweep product that is a daily (overnight)
financial institution repurchase agreement or an open-end money
market fund.

(3) An investment product authorized by California Supreme
Court rule or order.

A daily financial institution repurchase agreement shall be fully
collateralized by United States Government Securities or other
comparably conservative debt securities, and may be established
only with any eligible institution that is “well-capitalized” or
“adequately capitalized” as those terms are defined by applicable
federal statutes and regulations. An open-end money market fund
shall be invested solely in United States Government Securities
or repurchase agreements fully collateralized by United States
Government Securities or other comparably conservative debt
securities, shall hold itself out as a “money market fund” as that
term is defined by federal statutes and regulations under the
Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.),
and, at the time of the investment, shall have total assets of at least
two hundred fifty million dollars ($250,000,000).

(k) “Eligible institution” means either of the following:

(1) A bank, savings and loan, or other financial institution
regulated by a federal or state agency that pays interest or dividends
begin delete in end delete begin insert on end insert the IOLTA account and carries deposit insurance from an
agency of the federal government.

(2) Any other type of financial institution authorized by the
California Supreme Court.