BILL ANALYSIS Ó
SB 846
Page 1
(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