BILL ANALYSIS                                                                                                                                                                                                    



                             SENATE JUDICIARY COMMITTEE
                         Senator Hannah-Beth Jackson, Chair
                             2015-2016  Regular  Session


          AB 2878 (Committee on Judiciary)
          Version: June 2, 2016
          Hearing Date: June 28, 2016
          Fiscal: No
          Urgency: No
          ME   


                                        SUBJECT
                                           
                      Attorneys:  State Bar:  board of trustees

                                      DESCRIPTION  

          This bill would authorize the State Bar of California (State  
          Bar) to collect annual membership dues for 2017 and would, among  
          other things:
           codify a protocol for handling unlawful practice of law  
            complaints;
           provide that access to records of State Bar Court are subject  
            to the rules and laws applicable to the judiciary instead of  
            the California Public Records Act or Bagley-Keene Open Meeting  
            Act;
           require various additional audits of the State Bar by the  
            State Auditor;
           require the Board of Trustees (Board) to transition from a 19  
            member Board to a 13 member board and comprised of a majority  
            of public members;
           provide that no motion of the Board can be approved unless a  
            majority of the public members approve the motion;
           create a Commission of nine appointed members to evaluate  
            issues of State Bar governance and report findings, as  
            specified;
           require the Chief Justice to appoint a temporary State Bar  
            enforcement program monitor to evaluate the disciplinary  
            system, make recommendations, and report findings, as  
            specified;
           prohibit the State Bar from creating foundations or  
            nonprofits, as specified; and
           require the State Bar to conduct an analysis of the Client  
            Security Fund, as specified.

                                      BACKGROUND  









          AB 2878 (Committee on Judiciary)
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          The State Bar of California is a public corporation.  Attorneys  
          who wish to practice law in California generally must be  
          admitted and licensed in this state and must be a member of the  
          State Bar.  (Cal. Const., art. VI, Sec. 9.)  The State Auditor  
          and media have reported extensively in the last year regarding  
          the State Bar's lack of transparency and problems with the  
          discipline system, including the mishandling of over 300  
          complaints alleging the unauthorized practice of law.  The power  
          to regulate the practice of law, including the power to admit  
          and to discipline attorneys, is among the inherent powers of the  
          Supreme Court.  The State Bar functions as the administrative  
          arm of the Supreme Court for the purpose of assisting in  
          attorney admissions and discipline, with the Court retaining its  
          inherent judicial authority to disbar or suspend attorneys.

          The State Bar of California is the largest state bar in the  
          country.  As of March 2016, the State Bar had 186,152 active  
          members and 56,929 inactive members, which represents a slight  
          annual increase in both active members and inactive members.   
          Total State Bar membership is listed at 257,788, which includes  
          2,162 judge members and 12,544 members who are "Not Eligible to  
          Practice Law."  The State Bar's programs are financed mostly by  
          annual membership dues paid by attorneys as well as other fees  
          paid by applicants seeking to practice law.  The Legislature has  
          required the Board to establish and administer a Client Security  
          Fund (CSF) to relieve or mitigate pecuniary losses caused by  
          dishonest conduct of active attorneys.  Among the criticisms of  
          the State Bar in a recent State Auditor report was that the  
          State Bar failed to be transparent with the Legislature and that  
          it now takes 18 to 36 months for a victim to be paid from the  
          CSF.  If the Bar dues bill fails to pass or be signed by the  
          Governor, the Supreme Court will be able to exercise its  
          inherent constitutional power over regulation of the legal  
          profession and may order a special regulator assessment to fund  
          the State Bar's discipline-related functions.  

          This bill would authorize the State Bar to collect the annual  
          membership dues for 2017 and make various substantive changes to  
          the State Bar Act designed to increase transparency, protect  
          victims of unscrupulous non-attorneys, remove politics from the  
          Board, reform the discipline system, and make various other  
          changes in response to the findings in the State Auditor's audit  
          of the State Bar and various media reports.  










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                                CHANGES TO EXISTING LAW
           
           1.Existing law  establishes that protection of the public shall  
            be the highest priority for the State Bar of California and  
            the Board of Trustees in exercising their licensing,  
            regulatory, and disciplinary functions.  Whenever the  
            protection of the public is inconsistent with other interests  
            sought to be promoted, the protection of the public shall be  
            paramount. (Bus. & Prof. Code Sec. 6001.1.)

             Existing law  requires all attorneys who practice law in  
            California to be members of the State Bar and establishes the  
            State Bar for the purpose of regulating the legal profession.   
            Pursuant to the State Bar Act, the annual mandatory membership  
            fee set by the State Bar's Board of Trustees to pay for  
            discipline and other functions must be ratified by the  
            Legislature.  (Bus. & Prof. Code Sec. 6000 et seq.)

             Existing law  authorizes the State Bar to collect $315 in  
            annual membership fees from active members for a total annual  
            dues bill of $390 for the year 2015.  (Bus. & Prof. Code Sec.  
            6140.)  The other $75 is pursuant to statutory authorization  
            to assess annually the following fees:  $40 for the Client  
            Security Fund (Bus. & Prof. Code Sec. 6140.55); $25 for  
            disciplinary activities (Bus. & Prof. Code Sec. 6140.6); and  
            $10 to fund the Lawyer Assistance Program (Bus. & Prof. Code  
            Sec. 6140.9). 

             Existing law  authorizes the State Bar to collect $75 in annual  
            membership fees from inactive members for a total annual dues  
            bill of $115 for the year 2015.  (Bus. & Prof. Code Sec.  
            6141.)  The other $40 is pursuant to statutory authorization  
            to assess annually the following fees:  $10 for the Client  
            Security Fund (Bus. & Prof. Code Sec. 6140.55); $25 for  
            disciplinary activities (Bus. & Prof. Code Sec. 6140.6); $5 to  
            fund the Lawyer Assistance Program (Bus. & Prof. Code Sec.  
            6140.9.)

             Existing law  authorizes the State Bar to increase the annual  
            membership fees by an additional $40, to be allocated only for  
            purposes of providing voluntary support for nonprofit  
            organizations that provide free legal services to persons of  
            limited means.  Members have the option of deducting the $40  
            from the annual membership fee if they elect not to have the  









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            amount allocated for the purposes of legal services.  (Bus. &  
            Prof. Code Secs. 6033, 6140.03.) 

             This bill  , until January 1, 2018, would require the board to  
            charge an annual membership fee for 2017 of $390 for active  
            members.

           2.Existing law  subjects the State Bar to the California Public  
            Records Act (CPRA) and provides that all public records and  
            writings of the State Bar are subject to the CPRA with  
            exceptions, as specified.  Identifying information submitted  
            by applicants to the State Bar for admission to practice law  
            and State Bar admissions records, as specified, are  
            confidential and may not be disclosed pursuant to any law,  
            including the CPRA. (Bus. & Prof. Code Secs. 6001(g), 6026.11,  
            6060.25, 6086.1(b), 6168, 6200(h), 6232(d), 6234.)

             Existing law  subjects the State Bar to the Bagley-Keene Open  
            Meeting Act, except that the Act shall not apply to the  
            Judicial Nominees Evaluation Commission or the Committee of  
            Bar Examiners.  (Bus. & Prof. Code Secs. 6001(g), 6026.5,  
            6026.7; Gov. Code Sec. 11121.)

             This bill  would provide that access to records of the State  
            Bar Court is subject to the rules and laws applicable to the  
            judiciary instead of the CPRA and would exempt the State Bar  
            Court from the Bagley-Keene Open Meeting Act.

           3.Existing law  provides that the Board shall engage the services  
            of an independent national or regional public accounting firm  
            with at least five years of experience in governmental  
            auditing for an audit of its financial statement for each  
            fiscal year.  The financial statement must be promptly  
            certified and a copy of the audit and financial statement must  
            be submitted, as specified, to the Chief Justice of the  
            Supreme Court, and to the Assembly and Senate Committees on  
            Judiciary. Existing law requires that the audit examine both:
                 the receipts and expenditures of the State Bar and the  
               State Bar sections to ensure that the receipts of the  
               sections are being applied, and their expenditures are  
               being made, in compliance with specified law, and that the  
               receipts of the sections are applied only to the work of  
               the sections; and
                 the receipts and expenditures of the State Bar to ensure  









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               that the funds collected on behalf of the Conference of  
               Delegates of the California Bar Associations are conveyed  
               to that entity, as specified.  (Bus. & Prof. Code Sec.  
               6145(a).) 
          
             Existing law  , in relevant part, requires that every two years,  
            the Board shall contract with the California State Auditor's  
            Office to conduct a performance audit of the State Bar's  
            operations for the respective fiscal year. A copy of the  
            performance audit must be submitted as specified, to the  
            board, to the Chief Justice of the Supreme Court, and to the  
            Assembly and Senate Committees on Judiciary.  For these  
            purposes, the California State Auditor's Office may contract  
            with a third party to conduct the performance audit.  This,  
            however, is not intended to reduce the number of audits the  
            California State Auditor's office may otherwise be able to  
            conduct.  (Bus. & Prof. Code Sec. 6145(b).)  

             This bill  would require the board to contract with the  
            California State Auditor's Office for an audit of its  
            revenues, expenditures, reserves, and its financial statements  
            for each fiscal year through 2020.

             This bill  would require the California State Auditor, for the  
            performance audit due in January 2017, to review all of the  
            State Bar's expenses, including, but not limited to, executive  
            salaries and benefits, outside contracts and real estate  
            holdings, to determine the appropriate and necessary expenses  
            of the State Bar and the appropriate member dues level.

           1.Existing law  establishes that the State Bar is governed by a  
            19-member Board of Trustees consisting of 6 board members who  
            are not attorneys (public members) and 13 members who are  
            attorneys.  Six of the 13 attorney board members are elected  
            by other licensed attorneys to represent districts throughout  
            the state.  Five attorneys are appointed by the Supreme Court.  
             One attorney is appointed by the Senate Committee on Rules.   
            One attorney is appointed by the Speaker of the Assembly.   
            Four of the six public members are appointed by the Governor.   
            And, the Senate Rules Committee and Assembly Speaker appoint  
            one public member each.  (Bus. & Prof. Code Secs. 6011-6019.)

             This bill  would require the Board to transition from a 19  
            member board to a 13 member board, as specified.









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             This bill  would remove from the Board attorney members elected  
            from State Bar Districts and would make conforming changes.
             This bill  would require that a minimum of seven members of the  
            Board be public members appointed as follows:  four by the  
            Governor, two by the Assembly, one by the Senate Rules  
            Committee, and none by the Supreme Court.

             This bill  would provide that no motion of the Board can be  
            approved unless a majority of the public members approve the  
            motion. 

             This bill  would require each member of the Board appointed  
            after December 31, 2016, to have demonstrated educational or  
            experience expertise, or both, in one of five specified areas,  
            including public finance.

           2.Existing law  provides that the State Bar officers are a  
            president, vice president, secretary, and treasurer, elected  
            by the Board.  (Bus. & Prof. Code Secs. 6020, 6021.)  
           
             This bill  would require the Supreme Court to instead select  
            from its appointed members a president and vice president of  
            the State Bar.

             This bill  would create a Commission of nine appointed members  
            and require the Commission to evaluate all issues of  
            governance of the State Bar, including, but not limited to, a  
            full review of other states with attorney regulatory  
            structures that are different than the State Bar, in order to  
            recommend the best governance structure for the State Bar and  
            to ensure that protection of the public is the highest  
            priority of the State Bar in its regulatory duties.  

             This bill  would require the Commission to provide a report to  
            the Governor, the Chief Justice of the California Supreme  
            Court, and the Senate and Assembly Committees on Judiciary by  
            April 30, 2017. 

             This bill  would require the Chief Justice to appoint a State  
            Bar enforcement program monitor prior to March 31, 2017, and  
            would require the program enforcement monitor to evaluate the  
            disciplinary system and procedures of the State Bar, as  
            specified.  









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             This bill  would require the program enforcement monitor to  
            submit an initial report no later than October 1, 2019, to  
            issue a final report before March 31, 2020.  This provision  
            would sunset on January 1, 2020.

           3.Existing law  requires the State Bar to annually report on the  
            performance and condition of its discipline system, including  
            the backlog of discipline cases that are six months old and  
            case processing times, as provided.  (Bus. & Prof. Code Sec.  
            6086.15.)

             Existing law  creates the Governance in the Public Interest  
            Task Force, effective February 1, 2013, and requires that the  
            task force report to the Supreme Court, the Governor and the  
            Assembly and Senate Judiciary Committees on Judiciary by May  
            15, 2014, and every three years thereafter, its  
            recommendations for enhancing public protection and ensuring  
            that public protection is the State Bar's highest priority.   
            (The task force has yet to submit its first report.)  (Bus. &  
            Prof. Code Sec. 6001.2.)
            
             Existing law  permits the State Bar, for the purpose of  
            carrying into effect and promoting its objectives, to sell,  
            lease, exchange, convey, transfer, assign, encumber, pledge,  
            or dispose of any of its real or personal property or any  
            interest therein, including without limitation all or any  
            portion of its income or revenues from membership fees paid or  
            payable by members.  (Bus. & Prof. Code Sec. 6001.)

             Existing law  provides that whenever the Board secures an  
            obligation of the State Bar on all or any portion of the fees  
            from membership dues the Legislature may not, until the  
            obligation is repaid in full, reduce membership dues below the  
            maximum amount in effect when the obligation was created and  
            provides that this constitutes a covenant to the holder of the  
            obligation.  (Bus. & Prof. Code Sec. 6008.5.)

             This bill  would delete the provision in law that prohibits the  
            Legislature from reducing membership dues if the Board secures  
            an obligation of the State Bar on membership dues.

           4.Existing law  authorizes the State Bar to raise additional  
            revenue by any lawful means, including, but not limited to,  









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            the creation of foundations or not-for-profit corporations.  
            (Bus. & Prof. Code Sec. 6001.)

             This bill  would prohibit the State Bar from creating any  
            foundation or nonprofit corporations, as specified.

           5.Existing law  requires the board to establish and administer a  
            Client Security Fund to relieve or mitigate pecuniary losses  
            caused by dishonest conduct of active members of the State  
            Bar, as specified.  (Bus. & Prof. Code Sec. 6140.5.)

             This bill  would require the State Bar to conduct a thorough  
            analysis of the Client Security Fund and to submit a report to  
            the Legislature on its analysis of that fund by March 15,  
            2017, as specified.  

           6.Existing law  prohibits a person from practicing law in  
            California unless the person is an active member of the State  
            Bar. (Bus. & Prof. Code Sec. 6125.)

             Existing law  provides for the fine and imprisonment of persons  
            who engage in the unauthorized practice of law, as specified.  
            (Bus. & Prof. Code Sec. 6126(a), (b).)  

             Existing law  , in relevant part, provides that the following  
            acts or omissions in respect to the practice of law are  
            contempts of the authority of the courts: 
                 assuming to be an officer or attorney of a court and  
               acting as such, without authority; and
                 advertising or holding oneself out as practicing or  
               entitled to practice law or otherwise practicing law in any  
               court, without being an active member of the State Bar.  
               (Bus. & Prof. Code Sec. 6127.)
              
             Existing law  provides that in addition to any criminal  
            penalties or contempt proceedings, above, the courts of this  
            state shall have specified jurisdiction when a person  
            advertises or holds himself or herself out as practicing or  
            entitled to practice, or otherwise practices law, without  
            being 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 (hereinafter referred to  
            as the "unauthorized practice of law"). The State Bar, or  
            superior court on its own motion, may make application, as  









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            specified, for assumption by the court of jurisdiction over  
            the practice to the extent provided in this section.  In any  
            proceeding under this section, the State Bar is permitted to  
            intervene and assume primary responsibility for conducting the  
            action. (Bus. & Prof. Code Sec. 6126.3(a)-(c).) 

             Existing law  authorizes the court, if it finds that the facts  
            set forth regarding the unauthorized practice of law have  
            occurred, and that the interests of a client or an interested  
            person or entity will be prejudiced if the proceeding provided  
            herein is not maintained, to make an order assuming  
            jurisdiction over the person's practice, as specified. If the  
            person to whom the order to show cause is directed does not  
            appear, existing law authorizes the court to make its order  
            upon the verified application or upon such proof it may  
            require.  Thereupon, the court must appoint one or more active  
            members of the State Bar to act under its direction to mail a  
            notice of cessation of practice, as specified, and may appoint  
            those appointed attorneys to do one or more of the following,  
            among other things:
                 examine the files and records of the practice and obtain  
               information as to any pending matters that may require  
               attention; 

                 notify persons or entities who appear to be clients in  
               connection to the event or events stated in relation to the  
               unauthorized practice of law, and inform them that it may  
               be in their best interest to obtain other legal counsel; 

                 with the consent of the client, file notices, motions,  
               and pleadings on behalf of the client where jurisdictional  
               time limits are involved and other legal counsel has not  
               yet been obtained; and

                 do any other acts that the court may direct to carry out  
               for the purposes of this section.  (Bus. & Prof. Code Sec.  
               6126.3(e).) 

             Existing law  requires that the court provide a copy of any  
            order issued pursuant to this section on the unauthorized  
            practice of law to the Office of the Trial Counsel of the  
            State Bar. (Bus. & Prof. Code Sec. 6126.3(e).)

             Existing law  provides that upon a finding by the court that it  









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            is more likely than not that the application will be granted  
            and that delay in making orders described above will result in  
            substantial injury to clients or to others, the court, without  
            notice or upon notice as it shall prescribe, may make interim  
            orders containing any provisions that the court deems  
            appropriate under the circumstances.  Such an interim order  
            shall be served, as specified. (Bus. & Prof. Code Sec.  
            6126.3(j).)

             Existing law  provides that an order pursuant to this section  
            on the unauthorized practice of law is not appealable and  
            shall not be stayed by petition for a writ, except as ordered  
            by the superior or appellate court. (Bus. & Prof. Code Sec.  
            6126.3(l).)

             Existing law  provides that a member of the State Bar appointed  
            pursuant to this section on the unauthorized practice of law  
            shall serve without compensation, except as specified. (Bus. &  
            Prof. Code Sec. 6126.3(m).)

             This bill  sets forth specific requirements for the handling of  
            unlawful practice of law complaints, including: specific  
            timeframes for processing those complaints; specified,  
            acceptable resolutions for those complaints; and requiring  
            that those complaints be forwarded to law enforcement.

          
                                        COMMENT
           
        1.Stated need for the bill
            
           According to the author:

            This bill continues the Legislature's important oversight  
            of the State Bar through the annual dues authorization  
            bill, which is part of our general oversight role over  
            agencies in the executive and judicial branches of  
            government.  As the Supreme Court itself acknowledged in In  
            re Garcia (2014) 58 Cal.4th 440, the Legislature may  
            establish reasonable rules regulating the Bar, despite the  
            fact that the Supreme Court has ultimate responsibility for  
            admissions and discipline.  This bill seeks to exercise the  
            Legislature's oversight role over the State Bar after yet  
            another year of extensive and publically reported turmoil  









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                       involving the Bar, some of which has only come to light  
            because of new open government laws that we approved last  
            year and which took effect just months ago.  

            The State Bar was created to license and regulate  
            attorneys, with the protection of the public as its highest  
            priority.  [ . . . ]   Unfortunately, in just this last  
            year alone, far too many instances have come to light that  
            illustrate how far the Bar has strayed from its paramount  
            mission to protect the public.  Hundreds of complaints from  
            the public about the unauthorized practice of law were  
            thrown into a drawer and forgotten for months and even  
            years; an audit of the Bar's discipline system showed that  
            the Bar imposed inappropriately light sanctions on  
            attorneys in an effort to clear its backlog of such cases;  
            the Bar's discipline system has focused on minor abuses  
            that do not threaten the public without properly  
            prioritizing more serious discipline cases; the Bar  
            refinanced a $25 million loan on its property in Los  
            Angeles and took out a new $10 million loan on its property  
            in San Francisco by pledging future bar dues as collateral  
            and tied the hands of the Legislature in the process, all  
            without notice to the Legislature; [ . . . ] it was  
            revealed that the Executive Director (and about a dozen  
            member of her executive team) earn a salary far higher than  
            Governor Brown; the Bar recently hired a public relations  
            professional who makes more money than the White House  
            Press Secretary; the Bar's executive staff receives far  
            greater benefits than the rest of the staff; the Bar  
            unlawfully transferred money between its funds; the Bar  
            held at least one meeting in violation of the Bagley-Keene  
            Open Meetings Law; and the Bar is involved in ongoing  
            litigation with five former Bar employees. And the list of  
            wrong doing goes on and on.  Too often today, the Bar  
            behaves more like a law firm than a regulator and this has  
            resulted in attorney discipline and public protection  
            receiving short shrift.  

            This bill takes critical steps to make the Bar, once and  
            for all, an effective regulator of attorneys and a  
            protector of the public[.]
          
        2.The Supreme Court 
            









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           The Supreme Court is not the State Bar Board of Trustees  
          (Board).  However, in the frustration surrounding the Board, its  
          former Chief Trial Council, and Executive team, the Board and  
          the Supreme Court are being conflated by some critics.  This  
          Supreme Court is arguably the most diverse state Supreme Court  
          in the nation and reflects the new California, in terms of  
          racial, gender, and age diversity. While change is needed with  
          the Board, arguably, this newer Court should be given a  
          reasonable opportunity to address issues within its own branch  
          of government. The Supreme Court is entrusted as the final  
          adjudicator of State laws.  While actions of the State Bar,  
          including by the Board, the former Chief Trial Counsel, and  
          Executive team have generated dozens of critical media reports  
          as well as criticism by the State Auditor, this Committee is not  
          aware of any criticism of the State Bar Court, the Supreme  
          Court, or the Chief Justice regarding their respective roles in  
          licensing and disciplining attorneys.  

        3.The State Bar functions as the administrative arm of the Supreme  
            Court for the purpose of assisting in attorney admissions and  
            discipline, with the Court retaining its inherent judicial  
            authority to disbar or suspend attorneys
            
           As a constitutional matter, the judicial power of California is  
          vested in the Supreme Court, Courts of Appeal, and superior  
          courts.  (Cal. Const., art. VI, Sec. 1.)  The power to regulate  
          the practice of law, including the power to admit and to  
          discipline attorneys, is among the inherent powers of the  
          Supreme Court.  (In re Attorney Discipline System (1998) 19  
          Cal.4th 582, 592; Obrien v. Jones (2000) 23 Cal.4th 40, 48.)  In  
          addressing this inherent authority, the Supreme Court has  
          explained:  "'The important difference between regulation of the  
          legal profession and regulation of other professions is this:   
          Admission to the bar is a judicial function, and members of the  
          bar are officers of the court, subject to discipline by the  
          court.  Hence, under the constitutional doctrine of separation  
          of powers, the court has inherent and primary regulatory  
          power.'"  (In re Attorney Discipline System, supra, 19 Cal.4th  
          at 593.)

          Although originally a creature of statute, the State Bar of  
          California is now "a constitutional entity within the judicial  
          article of the California Constitution."  (Obrien, supra, 23  
          Cal.4th at 48; see Cal. Const., art. VI, Sec. 9; Bus. & Prof.  









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          Code, Sec. 6001.)  The State Bar functions as the administrative  
          arm of the Supreme Court for the purpose of assisting in  
          attorney admissions and discipline, with the court retaining its  
          inherent judicial authority to disbar or suspend attorneys.  (In  
          re Attorney Discipline System, supra, 19 Cal.4th at 599-600; see  
          Keller v. State Bar of California (1990) 496 U.S. 1, 11.)  The  
          State Bar's regulatory assistance is an integral part of the  
          judicial function.  (Obrien, supra, 23 Cal.4th at 48.)   
          Emphasizing the sui generis nature of the State Bar as its  
          administrative arm, the Supreme Court has made clear that  
          "express legislative recognition of reserved judicial power over  
          admission and discipline is critical to the constitutionality of  
          the State Bar Act."  (In re Attorney Discipline System, supra,  
          19 Cal.4th at 600, citing Bus. & Prof. Code Sec. 6087.)

          In addition, the Legislature's exercise, under the police power,  
          of a reasonable degree of regulation and control over the  
          profession and practice of law in California, is well  
          established.  (Obrien, supra, 23 Cal.4th at 48.)  The  
          Legislature also exercises regulatory authority pursuant to the  
          State Bar Act and has authority to set the amount of membership  
          fees necessary to fund the disciplinary system.  The Legislature  
          has enacted statutes making protection of the public the highest  
          priority of the State Bar (Bus. & Prof. Code Sec. 6001.1) and  
          empowering the Bar to promote improvement of the administration  
          of justice (Bus. & Prof. Code Sec. 6031(a).)  And, while the  
          Board has statutory authority to formulate rule proposals, they  
          only take effect if the State Supreme Court approves them.<1> 
           
         4.This bill would marginalize a co-equal branch of government even  
            though the State Bar functions as the administrative arm of  
            the Supreme Court  
            
           This bill would provide that no motion of the Board can be  
          approved unless a majority of the public members approve the  
          motion.  While these provisions are seemingly intended to  
          increase transparency and fairly distribute authority, as  
          drafted this bill would disproportionately favor certain  
          branches of government over others.  Specifically, pursuant to  
          this bill, the Supreme Court continues to appoint no public  
          ---------------------------
          <1> The Rules of Professional Conduct are the professional  
          standards to which California attorneys must adhere.  Violation  
          of the rules may subject an attorney to discipline.  









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          members, the Assembly Speaker appoints two, the Governor  
          continues to appoint four, and the Senate Rules Committee  
          continues to appoint one.  Accordingly, the Governor's  
          appointees could control every motion, whereas the Supreme Court  
          would have no power on the Board, and the Assembly would have  
          double the power of the Senate. The following amendment is  
          suggested to remove this inequitable consequence, by striking  
          the requirement that a majority of the public members approve  
          every motion.

              Suggested Amendment  :

             On page 13, strike out lines 19 and 20.
           
         5.The Chief Justice requests the authority to appoint a Special  
            Master to review issues of governance of the State Bar instead  
            of the creation of a Commission
            
           As discussed in Comment 3, above, the power to regulate the  
          practice of law, including the power to admit and to  
          discipline attorneys, is among the inherent powers of the  
          Supreme Court.  This bill would provide for the creation of  
          the California State Bar Governance Commission (Commission)  
          to study the best governance structure for the State Bar to  
          fulfill its core function of public protection.   
          Specifically, this Commission would be comprised of nine  
          volunteer Commission members.  The Commission members would  
          be appointed by the same entities that currently appoint the  
          Board Members of the State Bar-i.e. the Governor, Chief  
          Justice, Speaker of the Assembly, and Senate Committee on  
          Rules.  The Commission would be tasked with "evaluating all  
          issues of governance of the State Bar, including, but not  
          limited to, a full review of other states with attorney  
          regulatory structures that are different than the State Bar  
          and a possible separation of the State Bar's regulatory and  
          trade association functions [. . .]."  

          The Chief Justice of the California Supreme Court, as the  
          leader of the Court, requests that instead of creating this  
          new commission, she be given the statutory authority to  
          appoint a Special Master.  Under her proposal, the Supreme  
          Court would assess whether changes to the governing board or  
          overall structure of the State Bar would better support  
          regulation of the legal profession, protection of the public,  









          AB 2878 (Committee on Judiciary)
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          and effective administration of justice.  To aid in its  
          assessment, the Supreme Court would be statutorily required  
          to appoint a Special Master on or before March 1, 2017.  The  
          Special Master would be tasked with reviewing issues of  
          governance of the State Bar, including, but not limited to, a  
          full review of other states with attorney regulatory  
          structures that are similar to or different than the State  
          Bar, possible changes to the composition and operation of the  
          Board, and a possible restructuring of the regulatory and  
          non-regulatory functions of the State Bar.  To aid the  
          Special Master in fulfilling his or her duties, the Supreme  
          Court would be required to provide a public list of questions  
          pertaining to governance, regulatory, and other areas  
          perceived as aiding in or interfering with regulation of the  
          legal profession, protection of the public, or the effective  
          administration of justice.  The Supreme Court would also be  
          required to consult with the Administration, the Assembly  
          Committee on Judiciary, and the Senate Committee on  
          Judiciary, all of which would be invited to contribute  
          questions to this list.  

          A Special Master, sometimes called a referee, typically is a  
          lawyer or retired judge who is appointed by a court to hear a  
          case or consider matters involving difficult or specialized  
          issues.  The appointing court may specify or limit the powers  
          of the Special Master and limit the issues considered.   
          Depending on the court's order, the Special Master will take  
          evidence and file a report that may contain findings of fact  
          and conclusions of law.  Once a Special Master's report is  
          filed, the court will ordinarily accept findings of fact  
          unless they are clearly erroneous, but the court may always  
          determine questions of law de novo.  In California, Special  
          Masters have been appointed in a variety of cases.  In 1998  
          when the State Bar fee bill was vetoed, the Supreme Court  
          appointed a Special Master to supervise and oversee the  
          collection, disbursement, and allocation of the collected  
          court-imposed regulatory fees on active members of the Bar.  

          Given that the Supreme Court has the authority over the  
          admission and practice of law in the State of California, it is  
          arguably appropriate that the Supreme Court take the leading  
          role in assessing how the State Bar, as its administrative arm,  
          is best structured and governed to support adequate regulation  
          of the legal profession, protection of the public, and the  









          AB 2878 (Committee on Judiciary)
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          effective administration of justice.  In recognition of the  
          Supreme Court's primary authority over the admission and  
          practice of law and in deference to the Chief Justice, the  
          following amendment is suggested to remove the Commission that  
          would study governance and replace it with the Chief Justice's  
          language whereby the Special Master would review issues of  
          governance of the State Bar. 

              Suggested Amendments  :

             On page 6, in line 4, strike out "SEC. 2." and insert  
             "SEC. 1."

             On page 7, strike out lines 29 through 39.

             On page 8, strike out lines 1 through 37 and insert:

               SEC. 2.  Section 6001.3 is added to the Business and  
               Professions Code, to read:

               (a) In exercise of its oversight role over the State  
               Bar, the Supreme Court shall assess whether changes to  
               the governing board or overall structure of the State  
               Bar would better support regulation of the legal  
               profession, protection of the public, and effective  
               administration of justice.

               (b) To aid in its assessment, the Supreme Court shall  
               appoint a special master on or before March 1, 2017.

               (c) The special master shall review issues of governance  
               of the State Bar, including, but not limited to, a full  
               review of other states with attorney regulatory  
               structures that are similar to or different than the  
               State Bar, possible changes to the composition and  
               operation of the Board of Trustees, and a possible  
               restructuring of the regulatory and non-regulatory  
               functions of the State Bar.

               (d) To aid the special master in fulfilling his or her  
               duties, the Supreme Court shall provide a list of  
               questions pertaining to governance, regulatory, and  
               other areas perceived as aiding in or interfering with  
               regulation of the legal profession, protection of the  









          AB 2878 (Committee on Judiciary)
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               public, or effective administration of justice.  The  
               Supreme Court shall consult with the Administration, the  
               Assembly Committee on Judiciary, and the Senate  
               Committee on Judiciary, who will be invited to  
               contribute questions to this list.  The Supreme Court  
               shall provide written guidelines to the special master  
               for the conduct of his or her duties.  The list of  
               questions and written guidelines shall be made available  
               to the public.

               (e) The special master shall engage in fact-finding to  
               identify:

               (1) Those functions of the State Bar that are  
               regulatory, those functions that are non-regulatory but  
               which reasonably serve to protect the public or improve  
               the administration of justice, and those functions that  
               are non-regulatory and provide little or no value to  
               public protection or the administration of justice.

               (2) All areas that relate to the State Bar's governance  
               structure and interfere with the competent performance  
               of its regulatory and public protection functions and  
               its efforts to improve the administration of justice.

               (3) All changes and refinements in the structure or  
               governance of the State Bar that reasonably should be  
               considered by the Supreme Court as potentially effective  
               in addressing the areas identified in subdivision  
               (f)(2).  In ascertaining which changes reasonably should  
               be considered, the special master shall identify the  
               fiscal and operational implications of the changes.  For  
               each change identified, the special master shall provide  
               a proposed implementation plan that includes  
               specification of all modifications to statutory law,  
               Rules of Court, and Rules of the State Bar that will be  
               necessary to accomplish such change.

               (f) To aid in the fact-finding process, the special  
               master shall hold public hearings to accept written and  
               transcribed oral comments from the public and interested  
               stakeholders, including the authorized State Bar  
               employee bargaining unit representatives.  The special  
               master shall also receive the transcribed and other  









          AB 2878 (Committee on Judiciary)
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               written comments and information previously taken during  
               the public hearings conducted in 2016 by the State Bar's  
               Governance in the Public Interest Task Force.  The  
               special master shall provide bi-monthly written reports  
               of updates on his or her work to the Supreme Court, the  
               Administration, the Assembly Committee on Judiciary, and  
               the Senate Committee on Judiciary.  

                (g) On or before October 1, 2017, the special master  
               shall deliver a written report to the Supreme Court, the  
               Administration, the Assembly Committee on Judiciary, and  
               the Senate Committee on Judiciary.  The report shall set  
               forth the special master's findings of fact as required  
               in this section, and may include other observations made  
               by the special master, if related to the performance or  
               functioning of the State Bar and supported by  
               substantial and credible information.

               (h) Based on its review of the special master's report,  
               and after consultation with the Administration, the  
               Assembly Committee on Judiciary, and the Senate  
               Committee on Judiciary, the Supreme Court shall make its  
               assessment of how the State Bar, as its administrative  
               arm, is best structured and governed to support adequate  
               regulation of the legal profession, protection of the  
               public, and the effective administration of justice.   
               The Supreme Court's written report of its assessments  
               shall be delivered to the Administration, the Assembly  
               Committee on Judiciary, and the Senate Committee on  
               Judiciary on or before March 1, 2018.  It is  
               contemplated that the Legislature will evaluate the  
               Supreme Court's report in exercising its regulatory  
               authority pursuant to the State Bar Act.

               (i) The State Bar shall furnish the special master with  
               all reasonable assistance as necessary.  To pay for the  
               services and expenses of the special master, a  
               per-member fee shall be assessed for all active members  
               at a sum not exceeding ($ ).

        6.Alternative when State Bar due bills fail to be signed into law
           
          If no State Bar dues bill is enacted by January 1, 2017,  
          attorney bar dues may increase.  In last year's State Bar dues  









          AB 2878 (Committee on Judiciary)
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          bill, the Legislature required that the State Bar develop and  
          implement a workforce plan for its discipline system and conduct  
          a public sector compensation and benefits study, including a  
          recommendation for an appropriate backlog goal and an assessment  
          of staffing needed to achieve that goal.  The Legislature  
          further required the State Bar to conduct a thorough analysis of  
          its operating costs and develop a spending plan to determine a  
          reasonable amount for its annual dues.  The workforce plan and  
          the spending plan, which could arguably justify increased dues,   
          were submitted to the Legislature in May 2016.  

          In the event that AB 2878 does not pass or is vetoed, the  
          Supreme Court, in the exercise of its inherent constitutional  
          power over regulation of the legal profession, may order a  
          special regulatory assessment to fund the State Bar's  
          discipline-related functions.  In the case of In re Attorney  
          Discipline System (1998) 19 Cal.4th 582, the Supreme Court  
          considered information provided by the State Bar in ordering  
          that each active member of the State Bar pay a mandatory  
          regulatory fee of $171.44.  The Court also appointed a Special  
          Master to supervise and oversee the collection, disbursement,  
          and allocation of the collected fees, and imposed an additional  
          fee of $1.56 upon each active member of the State Bar to pay for  
          the fees and expenses related to the Special Master and his  
          activities.  If AB 2878 fails, it is likely that the Supreme  
          Court will act in a similar fashion if AB 2878 fails.
        7.Codifying a protocol to protect immigrants from the unauthorized  
            practice of law
            
           In January of this year, the Daily Journal revealed that the  
          State Bar had ignored 59 complaints of unauthorized practice of  
          law dating back to 2007.  (Lyle Moran, State Bar Admits Ignoring  
          Dozens of Complaints Against People Practicing Law Without a  
          License, Daily Journal (Jan. 29, 2016).)  In response, the State  
          Bar acknowledged that "[c]omplaints against non-attorneys often  
          come from immigrants who have been exploited by unscrupulous  
          businesses, and it is important to [the State Bar] to root out  
          this fraud and safeguard the public's interests[.]"  Less than  
          two months later, the Daily Journal reported that the State Bar  
          allowed an additional 270 complaints alleging the unauthorized  
          practice of law to sit idle without assignment to an  
          investigator for months.  (Lyle Moran, State Bar Let Hundreds of  
          Complaints Against Non-Attorneys Sit Idle, Daily Journal (March  
          4, 2016).) 









          AB 2878 (Committee on Judiciary)
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          At a recent Summit organized by the State Bar regarding the  
          Unauthorized Practice of Law, immigration law practitioners  
          shared stories about the State Bar not following through on  
          complaints they filed on behalf of immigrants against those  
          engaged in the unauthorized practice of law and attorneys  
          licensed in other states who practice immigration law in  
          California.  At that Summit, the State Bar revealed new  
          protocols they were developing to handle unauthorized practice  
          of law complaints.  Correctly recognizing that failure to  
          immediately investigate allegations of unauthorized practice of  
          law leaves future victims vulnerable to the perpetrators, and in  
          the interest of protecting the public, this bill would codify  
          those protocols.  

          Also at the Summit, it was clear that the OCTC lacks meaningful  
          experience in immigration law.  The OCTC would arguably benefit  
          from employing an attorney with significant immigration law  
          experience.  Accordingly, the author may wish to consider the  
          following amendment to require the OCTC to employ a supervising  
          attorney with significant immigration experience:

             Suggested amendment  :

            On page 20, in line 23 insert:  "(n) the Office of Chief  
                                              Trial Counsel shall hire at least one supervising attorney  
            with the following experience:  (1) Have at least three  
            years of experience handling asylum, T-Visa, U-Visa, or  
            special immigrant juvenile status cases and have  
            represented at least 25 individuals in these matters.  (2)   
            Have experience in representing individuals in removal  
            proceedings and asylum applications.   
           
        8.The State Bar Enforcement Monitor
           
          Audits by the State Auditor's Office and media accounts have  
          demonstrated that the discipline system at the State Bar in the  
          Office of Chief Trial Counsel (OCTC) is broken.  The 2015 State  
          Auditor's performance audit of the State Bar revealed that the  
          State Bar did not fully and consistently report its backlog of  
          discipline cases or its case processing times to the  
          Legislature.  The Auditor asserted that the manner in which the  
          State Bar reduced its backlog of discipline cases may have  
          caused significant risk to the public.  According to the  









          AB 2878 (Committee on Judiciary)
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          Auditor, "?to reduce its backlog, the State Bar allowed some  
          attorneys whom it otherwise might have disciplined more  
          severely-or even disbarred-to continue practicing law, at  
          significant risk to the public."

          In an effort to improve the processing of complaints from intake  
          to resolution in the OCTC, this bill would require the Chief  
          Justice to appoint a temporary State Bar enforcement program  
          monitor (Monitor) prior to March 31, 2017.  The Monitor would be  
          given various duties, including, monitoring and evaluating the  
          State Bar's disciplinary system and procedures.  The Monitor  
          would be charged with making his or her highest priority the  
          reform and reengineering of the State Bar's enforcement program  
          and operations, and the improvement of the overall efficiency of  
          the State Bar's disciplinary system so that the State Bar may  
          successfully and consistently protect the public.  The Monitor  
          would be required to submit an initial report to the Assembly  
          and Senate Committees on Judiciary and others no later than  
          October 1, 2019, and to issue a final report before March 31,  
          2020.  Statutory authorization for the Monitor would cease on  
          January 1, 2021.  The strong evidence of a broken discipline  
          system in the OCTC arguably warrants the imposition of an  
          independent Monitor.  That being said, staff notes that this  
          Committee has received no complaints regarding the State Bar  
          Court or the Supreme Court regarding their respective roles in  
          State Bar discipline.  Because the Chief Justice is part of the  
          Supreme Court, it would arguably be more appropriate for another  
          person to appoint the Monitor.  Accordingly, the author's office  
          suggests giving that authority to the California Attorney  
          General instead.  The following author's amendments would make  
          that change and also correct an inadvertent error in the bill  
          regarding the year the Monitor provisions sunset.  

              Author's Amendments  :

             On page 14, in line 35, strike out "Chief Justice of the  
             California Supreme" and insert "Attorney General"

             On page 14, in line 36, strike out "Court

             On page 14, in line 37, strike out "the Chief Justice of  
             the California"

             On page 14, strike out line 38









          AB 2878 (Committee on Judiciary)
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             On page 14, in line 39, strike out "conduct interviews of  
             candidates for the position."

             On page 15, in line 6, remove "Chief Justice" and insert  
             "Attorney General"

             On page 15, strike out line 35 and insert "duties."

             On page 15, strike out lines 36 and 37.

             On page 16, in line 16, strike out "2020," and insert  
             "2021,"

        9.Respecting the victims of dishonest attorneys
            
           The Legislature required the Board to establish and administer a  
          Client Security Fund to relieve or mitigate pecuniary losses  
          caused by dishonest conduct of active members of the State Bar.   
          In the May 2016 audit of the State Bar, the State Auditor noted:

             The State Bar has not clearly informed stakeholders of the  
             amounts it estimates it will pay to reimburse members of  
             the public who suffer financial losses because of  
             dishonest attorneys.  By the end of 2015, the State Bar  
             estimated it would pay about $18.9 million from its Client  
             Security Fund for such reimbursements.  Unfortunately, the  
             Client Security Fund had approximately $2.2 million  
             available by that time, severely limiting the State Bar's  
             ability to pay these claims.  However, beginning in 2012,  
             the State Bar eliminated from its financial statements any  
             disclosure of Client Security Fund claims it expected to  
             pay, reporting instead that the fund's balance had  
             improved.  This impeded stakeholders' ability to assess  
             the financial condition of the Client Security Fund. After  
             we discussed this issue with the State Bar, it revised its  
             2015 financial statements to disclose the amount of the  
             Client Security Fund's estimated payouts.  (California  
             State Auditor, State Bar of California: Its Lack of  
             Transparency Has Undermined Its Communications With  
             Decision Makers and Stakeholders, Report 2015-047 (May  
             2016).)

          The State Auditor further reported that by the end of 2015, the  









          AB 2878 (Committee on Judiciary)
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          State Bar had about 5,500 applications that the State Bar  
          estimated would cost $18.9 million.  However, the Client  
          Security fund balance had dropped to $2.2 million, thus reducing  
          the State Bar's ability to pay claims in a timely manner.   
          Because "the State Bar lacked the funds necessary to pay claims,  
          it slowed its claims processing from about 18 months to about 36  
          months?"  

          In response to the State Auditor's report that the State Bar has  
          lacked transparency around providing the Legislature with an  
          ability to accurately assess the financial condition of the  
          Client Security Fund, and in response to claims now taking about  
          36 months to process, this bill would require the State Bar to  
          conduct a thorough analysis of the Client Security Fund and to  
          submit a report to the Legislature on its analysis of that fund  
          by March 15, 2017.  The analysis is intended to help ensure that  
          the Client Security Fund can adequately protect the public and  
          relieve or mitigate financial losses caused by the dishonest  
          conduct of members of the State Bar by paying claims in a timely  
          manner. The author offers the following amendment to clarify  
          what is meant by paying claims in a timely manner and to allow  
          for a review of the governance structure of the Client Security  
          Fund to ensure that the structure provides for the most  
          effective and efficient operation of the Fund.   

             Author's amendment  :

            On page 21, on line 8, after "including" insert "a review  
            of the governance structure of Client Security Fund to  
            ensure that the structure provides for the most effective  
            and efficient operation of the Fund,"

            On page 21, on line 27, after "from the" insert "later of  
            the"

            On page 21, on line 27, after "Bar" insert "and upon the  
            resolution of underlying discipline case involving an  
            attorney member, which is a prerequisite to paying the  
            claim"

        10.Correcting problems identified by the State Auditor in the most  
            recent audit of the State Bar and the authorization of further  
            audits 
           









          AB 2878 (Committee on Judiciary)
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          Last year's State Bar dues bill required the Board to  
          contract with the California State Auditor to conduct an  
          in-depth financial audit of the State Bar, including an audit  
          of its financial statement, internal controls, and relevant  
          management practices. The audit was required to, at a  
          minimum, examine the revenues, expenditures, and reserves of  
          the State Bar, including all fund transfers.  The Auditor  
          submitted the audit in May of 2016 and noted the following:

             We identified other instances in which the State Bar's  
             reports lacked transparency.  For example, the State Bar  
             reported the balance in two of its funds as  
             unrestricted-or available for general use-when, in fact,  
             that money could only be used for specific purposes.  The  
             State Bar also has not clearly reported its budget  
             assumptions to the Legislature, despite the fact that the  
             Legislature relies on that budget to ensure the  
             reasonableness of the State Bar's fees.  In addition, the  
             State Bar recently pledged its member fee revenue when it  
             entered into a loan agreement without informing the  
             Legislature, even though the pledge might have restricted  
             the Legislature's ability to lower the State Bar's fees.   
             After we discussed our concern regarding this loan  
             provision with the State Bar, it replaced this provision  
             with a $7 million debt service reserve.  The State Bar  
             also created and used a nonprofit foundation without  
             sufficient oversight of its Board of Trustees, and  
             recently used almost $14,800 from its general fund to  
             eliminate the foundation's fund deficit without its  
             board's knowledge or approval.  (California State Auditor,  
             State Bar of California: Its Lack of Transparency Has  
             Undermined Its Communications With Decision Makers and  
             Stakeholders, Report 2015-047 (May 2016).

          In response to the State Auditor's report that the State Bar  
          continues to lack transparency in its reports to the  
          Legislature, this bill would require the Board to contract with  
          the California State Auditor's Office for an audit of its  
          revenues, expenditures, reserves, and its financial statements  
          for each fiscal year through 2020.  This would be in addition to  
          the biannual performance audit that the State Bar is required to  
          contract with the State Auditor to perform and the annual audit  
          of the Bar's financial statement that is required to be  
          performed by an independent accounting entity.  Accordingly, in  









          AB 2878 (Committee on Judiciary)
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          the next few years, the Board would have to contract with the  
          State Auditor for two types of audits and also would have to  
          contract with an additional independent auditor for an audit of  
          their financial statement.  SEIU 1000, an authorized State Bar  
          employee bargaining unit representative, writing with a support  
          with amendments position, states: 

             The current language of the bill also sets out a series of  
             reports and audits on top of existing reports and audits.   
             The timing of these reports creates a hardship for our  
             members and, we believe, sets up the State Bar to fail in  
             its regulatory reforms.  We believe that the Legislature,  
             when requiring reports or audits must set reasonable  
             timelines to plan, report, and implement the  
             recommendations in such a way that is productive.

          The author offers the following amendments in an effort to  
          streamline the audits:

             Author's amendments  :

            On page 21, in line 38, strike out "the Supreme Court," and  
            insert "California,"

            On page 22, after line 15, insert:  "The State Auditor  
            shall develop a methodology for auditing the State Bar's  
            revenues, expenditures, reserves, and its financial  
            statement for the audit due to the board, to the Chief  
            Justice of California, and to the Assembly and Senate  
            Committees on Judiciary in 2018, and may, for all financial  
            audits performed subsequently to that audit, contract with  
            a third party to conduct the financial audit following the  
            methodology developed by the State Auditor in this  
            paragraph and subject to State Auditor review.

            On page 22, in line 27, strike out "the Supreme Court," and  
            insert "California,"

            On page 22, in line 35, strike out "the Supreme" and insert  
            "California,"

            On page 22, in line 36, strike out "Court,"

            On page 22, in line 38, strike out "the California Supreme  









          AB 2878 (Committee on Judiciary)
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            Court," and insert "California,"

            On page 23, between lines 4 and 5 insert "The performance  
            audits due to the board, to the Chief Justice of  
            California, and to the Assembly and Senate Committees on  
            Judiciary in 2017 and in 2019 may be combined with the  
            financial audit required in subdivision (a)."

            On page 23, in line 35, strike out "the California Supreme  
            Court," and insert "California,"

            On page 24, in line 20, strike out "the California Supreme  
            Court," and insert "California,"

            On page 24, in line 28, strike out "the Supreme Court," and  
            insert "California,"

          Additionally, in response to State Auditor's finding that the  
          State Bar recently pledged its member fee revenue when it  
          entered into a loan agreement without informing the Legislature,  
          even though the pledge might have restricted the Legislature's  
          ability to lower the State Bar's fees, this bill would delete  
          the provision in law that provides that the Legislature may not  
          reduce membership dues if the Board secures an obligation of the  
          State Bar on membership dues.

          Further, in response to the State Auditor's report that the  
          State Bar also created and used a nonprofit foundation without  
          sufficient oversight of its Board, and recently used almost  
          $14,800 from its general fund to eliminate the foundation's fund  
          deficit without its Board's knowledge or approval, this bill  
          would prohibit the State Bar from creating any foundation or  
          nonprofit corporations as of December 31, 2016.  

        11.Removing politics from governance, streamlining the State Bar  
            Board of Trustees, and being more inclusive of appointees from  
            all appointing authorities
           
          The State Bar Board (Board) consists of 19 Board Member  
          positions.  Of those 19 positions, 6 are public member positions  
          (non-attorneys) and 13 are attorneys.  Of the 6 public members,  
          4 are appointees of the Governor, one is an appointee of the  
          Senate Committee on Rules, and one is an appointee of the  
          Assembly Speaker.  Of the 13 Attorney appointees, 6 represent  









          AB 2878 (Committee on Judiciary)
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          districts within California and are elected by attorneys, 5 are  
          appointed by the Supreme Court, one is appointed by the Senate  
          Committee on Rules, and one is appointed by the Assembly  
          Speaker.  

          This bill would require the Board to transition from a 19 member  
          board to a 13 member board through the gradual elimination of  
          the 6 elected attorney positions.  The bill also removes the  
          attorney appointee from the Speaker of the Assembly and allows  
          the Speaker instead to appoint a public member.  Accordingly,  
          the new Board would consist of 7 public members and 6 attorney  
          members.  This bill would further require each member of the  
          Board appointed after December 31, 2016, to have demonstrated  
          educational or experience expertise, or both, in one of 5  
          specified areas, including public finance.  

          While current law provides that the officers of the State Bar  
          are the president, vice president, secretary, and treasurer, and  
          are elected by the Board, this bill would instead require the  
          Supreme Court to select from its appointed members a president  
          and vice president of the State Bar.  These robust changes to  
          the board structure would arguably lead to a more focused,  
          efficient, and less political Board.  The author seeks the  
          following amendments to further reform the Board structure.  

          The following author's amendments would: (1) allow rather than  
          require the appointing bodies to consider appointees with  
          educational or experience in six areas, including immigration  
          law; (2) would allow the appointees of the Supreme Court and the  
          appointees of the Governor, Senate Committee on Rules and  
          Speaker of the Assembly to serve for a term of four years  
          instead of three; and (3) change the title of Board President  
          and Vice President to Board Chair and Vice-Chair, to allow the  
          Supreme Court to appoint both the Chair and Vice-Chair, and to  
          allow their terms to be two years as Chair and Vice-Chair  
          instead of one year terms, which will arguably allow for more  
          consistency on the Board.

             Author's amendments  :

             1)   On page 9, in line 19, strike out "Each member  
               appointed" and insert "When making appointments to the  
               Board"










          AB 2878 (Committee on Judiciary)
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               On page 9, in line 19, strike out "shall have" and  
               insert "each appointing body should consider appointing  
               members with"

               On page 9, in line 20, strike out "educational" and  
               insert "education"

               On page 9, in line 20, strike out "experience  
               expertise," and insert "experience,"

               On page 9, after line 26, insert "(6) Immigration law"

             2)   On page 9, in line 39, strike out "three" and insert  
               "four"

               On page 10, in line 10, strike out "three" and insert  
               "four"

               On page 11, in line 14, insert "be four years" before  
               "and he"

               Amend Section 6013.1 of the Business and Profession Code  
               to reflect a term of four years, instead of three, for  
               Supreme Court appointments to the Board.  
          .  
             3)   On page 11, in line 34, strike out "its"

               On page 11, in line 35, strike out "appointed" and  
               insert "the"

               On page 11, in line 35, strike out "a president and a  
               vice president" and insert "of the board a chair and a  
               vice-chair"

               On page 11, in line 36, strike out "president." And  
               insert "chair."
               On page 11, strike out lines 37 through 39

               On page 12, in line 1, strike out "year."

               On page 12, in line 4, strike out "president, vice  
               president, and treasurer" and insert "chair and  
               vice-chair"










          AB 2878 (Committee on Judiciary)
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               On page 12, in line 6, strike out "appointment or" and  
               insert "appointment."

               On page 12, strike out line 7.

               On page 12, in line 8, strike out "president" and insert  
               "chair and vice-chair"

               On page 12, in line 8, strike out "one-year, except" and  
               insert "two-years,"

               On page 12, strike out lines 9 through 16

               On page 12, in line 20, strike out "officers" and insert  
               "secretary and treasurer"

          Staff notes, under current law, the 19-member Board consists of  
          a supermajority of attorneys (13) as compared to public members  
          (6).  This bill creates a public member majority Board  
          consisting of seven public members and six attorney members.   
          The arguments offered by proponents of a public member majority  
          board appear to rely on the premise that attorneys would be  
          inherently self-interested and more likely to render decisions  
          as Board members that would advantage attorneys to the detriment  
          of the public. Proponents also argue that the State needs to  
          preserve anti-trust immunity<2> through changing the composition  
          of the Board from a supermajority attorney Board to a majority  
          public member Board.  

          Some letters received by the Committee point to the Supreme  
          Court decision of North Carolina State Board of Dental Examiners  
          v. FTC (2015) 135 S. Ct. 1101 as necessitating a need for a  
          public majority Board with each vote controlled only by the  
          public members.  Staff notes, however, that the Court in the  
          North Carolina State Board of Dental Examiners case in no way  
          held that market participant majority boards would inherently  
          eviscerate the state's anti-trust immunity.  Having a majority  
          ---------------------------
          <2> The United States Supreme Court in Parker v. Brown (1942)  
          317 U.S. 341 interpreted antitrust laws to confer immunity on  
          anticompetitive conduct by the States when acting in their own  
          sovereign capacity.  











          AB 2878 (Committee on Judiciary)
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          public member controlled Boards would not ensure anti-trust  
          immunity with respect to every single decision or action taken  
          by the Board.  They key for a State to receive anti-trust  
          immunity is for a Board to receive active supervision by the  
          State when it is engaging in decisions regarding market  
          participation.  For example in the North Carolina case, the  
          state could not invoke anti-trust immunity because the state was  
          not actively supervising the Board when it determined that teeth  
          whitening could only be performed by dentists and issued  
          cease-and-desist letters to non-dentist teeth whiteners.   
          Notwithstanding the fact that the state had a Dental Practice  
          Act that did not address teeth whitening, the dental board  
          decided that teeth whitening was solely within dentists' scope  
          of practice. 

          Accordingly, it is unclear as to why the very fact specific  
          decision in the North Carolina case should have any impact on  
          how California decides the best composition of its State Bar  
          Board.  The Bar makes suggestions about what rules practicing  
          lawyers should be subject to through their recommendations  
          regarding the Rules of Professional Conduct.  The Supreme Court  
          ultimately determines whether to accept or reject those rules.   
          The State Bar's Office of Chief Trial Counsel makes  
          determinations regarding the discipline of lawyers.  But, the  
          Supreme Court has final say in matters of discipline.  It is the  
          Legislature and Supreme Court who make determinations about  
          criteria for becoming attorneys and what is within the scope of  
          practice of an attorney.  There is nothing to suggest that the  
          State Bar Board has been engaging in the same kind of activity  
          that made the state of North Carolina lose their anti-trust  
          immunity in that specific circumstance.  

          Indeed, the Committee has not been made aware of any instances  
          in which our supermajority attorney Bar Board has been sued for  
          anti-competitive/anti-trust activity.  Staff further notes that  
          other state professional boards, such as the Medical Board, are  
          comprised of a majority of members of the profession.  Notably,  
          the Court in the North Carolina case actually noted that having  
          market participant controlled boards could be beneficial. As  
          stated by the Court, "[t]he States have a sovereign interest in  
          structuring their governments and may conclude that there are  
          substantial benefits to staffing their agencies with experts in  
          complex and technical subjects.  There is, moreover, a long  
          tradition of citizens esteemed by their professional colleagues  









          AB 2878 (Committee on Judiciary)
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          devoting time, energy, and talent to enhancing the dignity of  
          their calling." (Id. At 1115 (internal citations omitted).)  An  
          effective way for the state to preserve its anti-trust immunity  
          is to ensure that appointees are ethical, balanced, and fair.   
                                         Each of the four appointing authorities have the obligation to  
          ensure their appointees, whether attorneys or non-attorneys,  
          possess high ethical standards.  Doing away with  
          attorney-elected appointees, as this bill does, will ensure that  
          the Assembly, Senate, Governor, and Supreme Court maintain all  
          control over the caliber of appointees to the Board.

          The following amendments are suggested to change the board  
          composition to consist of 6 public members and 7 attorney  
          members.

              Suggested amendment  :

             On page 9, in line 37, strike out "Rules." and insert  
             "Rules, and one by the Speaker of the Assembly."

             On page 10, in line 4, strike out "minimum of seven" and  
             insert "maximum of six"

             On page 10, in line 18, strike "two" and insert "one"

             On page 10, in line 19, strike "members" and  insert  
             "member"

             On page 10, strike out lines 27 through 32

          The following suggested author's amendment would require that  
          members of the Executive Committee include at least one  
          appointee by each of the appointing entities.  This will allow  
          for oversight and parity in participation by all appointing  
          entities in the most crucial decisions made by the Board.
             
            Author's amendment  :

            Add a new section to the bill amending Section 6029 of the  
            Business and Professions Code to read:

             (a)   The board may appoint such committees, officers and  
            employees as it deems necessary or proper, and fix and pay  
            salaries and necessary expenses.









          AB 2878 (Committee on Judiciary)
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             (b) The members of the Executive committee shall include at  
            least one member appointed by each of the Supreme Court, the  
            Governor, the Senate Committee on Rules and the Speaker of the  
            Assembly.
           
          The following amendments are suggested to: (1) remove  
          unnecessary provisions due to the removal of elected attorneys  
          and allow the appointing entities to appoint for unexpired terms  
          when vacancies occur; and (2) remove the bill's findings and  
          declarations as this bill is now substantive:

              Suggested amendment  :

             1)   On page 9, in line 39, after "years." insert  
               "Vacancies shall be filled for the remainder of the  
               term."

               On page 10, strike out lines 11 through 15, and insert  
               "years.  Vacancies shall be filled for the remainder of  
               the term."

               On page 11, in line 13, strike out "commence at the  
               conclusion of the annual meeting"

               On page 11, in line 14, strike out "Succeeding his or  
               her election or appointment,"

               On page 11, in line 15, strike out "elected or"
               On page 11, strike out lines 16 through 18 and insert  
               "qualified.  Vacancies shall be filled for the remainder  
               of the term."

             2)   On page 4, strike out lines 1 through 31.

               On page 5, strike out lines 1 through 40.

               On page 6, strike out lines 1 through 3.

        1.Refinements to Bagley-Keene and the California Public Records Act
            
           This bill would provide that access to records of the State Bar  
          Court is subject to the rules and laws applicable to the  
          judiciary instead of the California Public Records Act and would  
          exempt the State Bar Court from the Bagley-Keene Open Meeting  









          AB 2878 (Committee on Judiciary)
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          Act.  Out of an abundance of caution to ensure that the  
          statutory exception to California Public Records Act enacted  
          last year, that prohibited sharing identifying information  
          submitted by an applicant to the State Bar, would not be  
          construed to be violated in the event of sharing information for  
          purposes such as announcing applicants who have passed the bar  
          examination, the author proposes the following amendments.

             Author's amendments  :

             On page 13, in line 4, strike out "to the board"

             On page 14, after line 28, insert "This subdivision shall  
             apply retroactively to January 1, 2016." 

        2.Push for removing the sections of the State Bar from the State  
            Bar
           
          This Committee received letters urging it to amend the bill to,  
          at the very least, remove the sections from the State Bar.   
          Proponents of de-unifying the State Bar assert that the  
          structure is inherently infirm and results in a distracted State  
          Bar that spends too much time on "trade association" matters and  
          not enough time on discipline.  

          In support of decoupling, the Center for Public Interest Law  
          writes the following:

             It is time for action.  It is completely improper for a  
             government agency to mix regulatory duties with trade  
             association activities that are promotional and protective  
             of the profession the agency is supposed to regulate.   
             That creates a conflict of interest, and has resulted in  
             time-consuming and bureaucratic calculations of  
             expenditures which may be funded with compulsory Bar  
             licensing fees and those that may not be so funding.  No  
             other California occupational licensing agency is  
             structured as such; no other agency has a 'Hudson  
             deduction' by which licensees can opt out of paying for  
             trade association activities they choose not to support.
          Also, in support of decoupling, a group of Board Members,  
          including both Senate appointees, assert the following:

             The Board of Trustees is a distracted regulator.  It spends  









          AB 2878 (Committee on Judiciary)
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             much of its energy on professional association matters such  
             as appointments of attorneys to positions of prestige,  
             providing continuing legal education in competition with  
             voluntary bars and for-profit providers while also regulating  
             those providers, conducting an annual conference that draws  
             fewer attendees and requires greater subsidy each year,  
             publishing legal content, selling insurance, etc. [. . .]  
             over that past two years, the Board has spent far more time  
             in closed session addressing personnel, litigation and real  
             estate issues than it has devoted in open session to  
             regulation [. . .].  [T]he aspirations of attorney Trustees  
             to attain the coveted tile of president of the California  
             State Bar have very destructive consequences.  Would-be  
             Presidents often identify themselves from the moment they are  
             seated and begin to compete for an election to be held three  
             years later.  The election season is perpetual.

          Although this bill does not provide for the removal of the  
          sections from the State Bar, it arguably addresses many of the  
          issues raised by those who wish to decouple the State Bar. For  
          example, this bill substantially revises the State Bar Act so as  
          to reduce the politics on the Board, shine light on State Bar  
          finances, provide victims of unauthorized practice of law a  
          better opportunity to be heard, and increases the likelihood  
          that victims of nefarious attorneys are able get restitution  
          from the Client Security Fund.  


           Support  :  California Lawyers Guild; Responsive Law; SEIU Local  
          1000 (support if amended); State Bar Board of Trustees Denny  
          Mangers, Heather Linn Rosing, Glenda Corcoran, and Joanna  
          Mendoza (support if amended); several individuals (support if  
          amended)

          Opposition  :  Center for Public Interest Law (CPIL) (oppose  
          unless amended); several individuals (oppose unless amended)

                                        HISTORY
           
           Source  :  Assembly Committee on Judiciary

           Related Pending Legislation  :  None Known

           Prior Legislation  :  SB 387 (Jackson, Ch. 5, Stats. 2015)  









          AB 2878 (Committee on Judiciary)
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          authorized the State Bar of California to collect active  
          membership dues of up to $390 for the year 2016; required the  
          State Bar to develop and implement a specified workforce plan  
          for its discipline system; required the State Bar to conduct a  
          public sector compensation and benefits study, conduct a  
          thorough analysis of its operating costs and develop a spending  
          plan to determine a reasonable amount for the annual membership  
          fee, as specified; required the State Bar to contract with the  
          California State Auditor's Office to conduct an in-depth  
          financial audit of the State Bar; and made the State Bar subject  
          to the Bagley-Keene Open Meeting Act and the California Public  
          Records Act, as specified.

           Prior Vote  :

          Assembly Floor (Ayes 79, Noes 0)
          Assembly Floor (Ayes 10, Noes 50)
          Assembly Judiciary Committee (Ayes 10, Noes 0)

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