BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 846


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          (Without Reference to File)





          SENATE THIRD READING


          SB  
          846 (Anderson)


          As Amended  August 19, 2016


          Majority vote


          SENATE VOTE:  Vote not relevant


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          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Judiciary       |8-0  |Mark Stone, Wagner,   |                    |
          |                |     |Alejo, Chau, Chiu,    |                    |
          |                |     |Cristina Garcia,      |                    |
          |                |     |Holden, Maienschein   |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
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          SUMMARY:  Reauthorizes the State Bar to collect up to $390 for  
          active membership dues for 2017 and implements changes to the  








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          governance of the State Bar to maximize the Bar's prioritization  
          of public protection in all of its activities and makes other  
          reforms to the Bar's governance structure.  Specifically, this  
          bill:  
          1)Reauthorizes the State Bar to collect up to $390 for active  
            membership dues for 2017.

          2)Defines public protection -- the highest priority of the State  
            Bar -- as the core regulatory functions of the State Bar, in  
            the following order of priority:


             a)   Attorneys must be competent and ethical and comply with  
               all laws and standards of professional conduct;


             b)   Appropriate discipline or legal sanction must be imposed  
               upon attorneys who fail to comply with those standards and  
               non-attorneys who practice law without a license;


             c)   Competent and professional legal services must be  
               equally provided without regard to income; and


             d)   The legal profession must represent the broad diversity  
               of California.


          3)Eliminates the six elected State Bar Board of Trustees (Board)  
            members, and reduces the membership of the Board from 19  
            members to 13 members.  States the intent of the Legislature  
            that this reduction of membership number occur through the  
            expiration of the terms of the elected members who are serving  
            as of December 31, 2016.


          4)Extends terms of members of the Board from three to four  
            years.








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          5)Requires those making appointments to the Board after December  
            31, 2016 to consider appointing members with specified  
            expertise.


          6)Provides that the chair and vice chair (previously, the  
            president and vice president) of the Board must be appointed  
            by the Supreme Court instead of elected by the Board.   
            Provides that the term of the chair is two years.  Provides  
            that the Board annually selects the treasurer, who is not  
            required to be a board member.


          7)Requires that any decision of the Board that the California  
            Supreme Court determines may raise antitrust concerns be  
            reviewed by the Court and is subject to modification, veto, or  
            other appropriate action by the Court.


          8)Eliminates the ability of the State Bar to prevent future  
            Legislatures from reducing future membership dues by securing  
            all or any portion of an obligation of the State Bar on future  
            dues.

          9)Eliminates the State Bar's ability to create foundations or  
            non-profit corporations as a means to raise additional  
            revenue.


          10)       Requires Board's approval for contracts for goods or  
            services over $50,000 or information technology (IT) contracts  
            above $100,000.  Requires the Board to adopt policies to  
            require its approval for contracts that could impact the State  
            Bar's ability to protect the public.


          11)       Requires the Attorney General to appoint an  








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            enforcement program monitor, through March 31, 2020, to  
            monitor and evaluate the State Bar's disciplinary system to  
            ensure the Bar is successfully and consistently protecting the  
            public.  Sets forth the duties of the enforcement monitor,  
            including developing recommendations and submitting an initial  
            report to the Supreme Court and the Legislature by October 1,  
            2019, and a final report by March 31, 2020.


          12)       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.


          13)       Eliminates certain State Bar exceptions to the  
            Bagley-Keene Open Meeting Act, and adds an exception from both  
            the Bagley-Keene Open Meeting Act and the California Public  
            Records Act for the State Bar Court.  Provides that access to  
            records of the State Bar Court shall be governed by the laws  
            applicable to the records of the judiciary.


          14)       Provides several exceptions to confidentiality of  
            State Bar admission applications and records, including the  
            names of applicants who passed the Bar examination, and makes  
            those exceptions retroactive to January 1, 2016.


          15)       Requires the State Bar to conduct an analysis of the  
            funds necessary to timely satisfy claims against the Client  
            Security Fund (CSF), including possible additional efforts to  
            increase collection from responsible attorneys, a review of  
            other non-public protection expenditures, including executive  
            salaries and benefits, that can be redirected to better fund  
            the CSF, and after exhausting all other options, whether a  
            dues increase is necessary to ensure timely payment of claims  
            against the CSF.  The report is due to the Legislature by  








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            March 15, 2017.


          16)       Requires that the 2017 performance audit of the State  
            Bar by the State Auditor includes a review of the State Bar's  
            expenses, including executive salaries and benefits, outside  
            contracts and real estate holdings, to determine the  
            appropriate and necessary expenses of the State Bar to protect  
            the public and what an appropriate member dues level should  
            be.  Requires that the audit also include a recommendation for  
            determining Section costs, including a notice and opportunity  
            to challenge process for the Sections.  Requires the State  
            Auditor to conduct a performance audit, due by June 15, 2018,  
            on changes in the State Bar's expenses and ways for the State  
            Bar to increase operational effectiveness and efficiency.


          EXISTING LAW:   


          1)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, requires the annual mandatory membership fee  
            set by the Board to pay for discipline and other functions to  
            be ratified by the Legislature.  (Business and Professions  
            Code Section 6000 et seq.  Unless stated otherwise, all  
            further statutory references refer to that code.)

          2)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 2016.  Provides that the other $75 is pursuant to  
            statutory authorization to assess annually the following fees:  
             $40 for the Client Security Fund; $25 for the disciplinary  
            system; and $10 for the Lawyer Assistance Program.  (Sections  
            6140, 6140.55, 6140.6, 6140.9.)

          3)Authorizes the State Bar to collect $75 in annual membership  
            fees from inactive members for a total annual dues bill of  








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            $115.  Provides that the other $40 is pursuant to statutory  
            authorization to assess annually the following fees:  $10 for  
            the Client Security Fund; $25 for the disciplinary system; and  
            $5 for the Lawyer Assistance Program.  (Sections 6141,  
            6140.55, 6140.6, 6140.9.)

          4)Directs $40 of membership dues to legal services purposes  
            unless a member elects not to support those activities.   
            (Section 6140.03.)

          5)Provides that protection of the public is the highest priority  
            of the State Bar and its Board in exercising their licensing,  
            regulatory and disciplinary functions.  Whenever the  
            protection of the public is inconsistent with other interests  
            sought to be promoted, provides that the protection of the  
            public shall be paramount.  (Section 6001.1.)

          6)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 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.  (Section 6001.2.)

          7)Permits the State Bar, for purpose of carrying into effect and  
            promoting its objectives (of which public protection is its  
            highest priority), to sell, lease, exchange, convey, transfer,  
            assign, encumber, pledge, 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.  (Section 6001.)

          8)Provides, pursuant to a 1950's statute, 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  








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            the holder of the obligation.  (Section 6008.5.)

          9)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.  (Section 6086.15.)

          10)Requires the State Bar to 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.  Requires 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.  Requires that the workforce plan and the  
            spending plan be submitted to the Legislature by May 15, 2016,  
            and be implemented by December 31, 2016.  (Section 6140.16.)


          11)Requires the State Bar's Board to contract with the  
            California State Auditor to conduct a biannual performance  
            audit of the State Bar.  (Section 6145(b).)


          12)Subjects the State Bar to the Public Records Act, with  
            specified exceptions.  Provides that 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  
            state law including the Public Records Act.  (Sections 6001,  
            6026.11.)


          13)Effective April 1, 2016, subjects the State Bar to the  
            Bagley-Keene Open Meeting Act, as provided, with exemptions  
            for the Judicial Nominees Evaluation Commission and the  
            Committee of Bar Examiners.  (Sections 6001 6026.7; Government  
            Code Section 11121.)









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          FISCAL EFFECT:  This bill is keyed fiscal by the Legislative  
          Counsel.


          COMMENTS:  This bill, the second State Bar dues reauthorization  
          and oversight bill considered by this Assembly this year,  
          continues the decades-long tradition of oversight of the Bar via  
          review of the annual dues authorization bill, as part of the  
          general oversight role of the Legislature over the agencies in  
          the executive and judicial branches of government.  This bill  
          comes before this house after yet another year of turmoil  
          involving the Bar, and after the Senate's Judiciary Committee's  
          unwillingness to adequately address the longstanding governance  
          shortfalls of the Bar, or even, at a bare minimum, to  
          effectively prioritize the true public protection functions of  
          the Bar over its lawyer trade association functions.  

          This past year, there has continued to be extensive and  
          publically reported turmoil involving the Bar, some of the  
          information likely coming to light by way of new transparency  
          laws applied to the Bar last year.  First, the media reported  
          that the Bar had failed to investigate over 300 complaints about  
          the unauthorized practice of law, some awaiting assignment to an  
          investigator for years before any action was taken.  According  
          to the Bar, many of those complaints were filed by immigrants  
          seeking legal assistance with, among other things, their legal  
          status in this country.  It goes without saying that failure to  
          immediately investigate and, when appropriate, take action to  
          stop the unauthorized practice of law puts the public at  
          substantial risk and the longer the delays in investigating  
          them, the more the public is put at risk.  The Bar now asserts  
          that these cases are being assigned to an attorney immediately  
          upon receipt and that the backlog has finally been addressed,  
          but when this matter was first made public, over 300 cases were  
          still awaiting intake.  Had this issue not been made public, it  
          is unclear when, if ever, such corrective action would have been  
          taken.  Second, the Bar, without input from or approval by the  
          Legislature, and apparently without fully following its own  








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          newly established procedures recommended by the State Auditor,  
          took out a $10 million loan for upgrades and tenant improvements  
          for its San Francisco building and attempted to secure the loan  
          with a pledge of future member Bar dues, which could have tied  
          the hands of future Legislatures in the setting of dues based on  
          a 1950's era statute.  This apparently only came to light as a  
          result of the State Auditor's most recent audit of the Bar,  
          which was only required by last year's Bar dues legislation.   
          Most recently, it was reported that the Bar, which the Auditor  
          found pays over a dozen of its top executives more than the  
          Governor, hired a public relations (PR) executive who reportedly  
          makes more than the White House Press Secretary and remodeled  
          its executive suite at a cost of $125,000.


          This bill addresses some, but by no mean all, of the governance  
          and operational problems that plague the Bar by, among other  
          things:  1) Defining public protection to include the Bar's key  
          regulatory functions -- admissions, regulation of attorneys,  
          discipline of attorneys and sanctions for unlawful practice of  
          law - which should help the Bar focus on its key purpose -  
          protecting the public from harm - and appropriately reducing  
          board focus on its trade association activities; 2) continuing  
          reform of the Bar's board by eliminating board members elected  
          by licensed attorneys themselves and reducing the board from a  
          supermajority of practicing attorneys to a majority of  
          practicing attorneys; 3) requiring the board to exercise greater  
          oversight of Bar staff; 4) requiring the Supreme Court to review  
          any anticompetitive decisions made by the board's attorney  
          majority to avoid costly antitrust liability; and 5) directing  
          the Attorney General to appoint a monitor to help improve the  
          Bar's long-standing problems disciplining attorneys and properly  
          protecting the public from the unlicensed practice of law.  This  
          bill also maintains member bar dues for 2017 at their same level  
          as this year.  This bill, in an effort to reach a compromise  
          that will keep the Bar fully funded in 2017, helps make this  
          state agency a better regulator of attorneys although still not  
          enacting the larger reforms that many believe are urgently  
          needed to truly make the Bar an effective protector of the  








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          public.



          Analysis Prepared by:                                             
                            Leora Gershenzon / JUD. / (916) 319-2334  FN:  
          0004920