BILL NUMBER: AB 2787	CHAPTERED
	BILL TEXT

	CHAPTER   1104
	FILED WITH SECRETARY OF STATE   SEPTEMBER 30, 1996
	APPROVED BY GOVERNOR   SEPTEMBER 29, 1996
	PASSED THE ASSEMBLY   AUGUST 30, 1996
	PASSED THE SENATE   AUGUST 20, 1996
	AMENDED IN SENATE   AUGUST 5, 1996
	AMENDED IN SENATE   JUNE 4, 1996
	AMENDED IN ASSEMBLY   APRIL 10, 1996

INTRODUCED BY  Assembly Member Kuehl

                        FEBRUARY 22, 1996

   An act to amend Sections 6007, 6044.5, 6090.5, 6101, 6102, 6140.7,
6147, 6148, 6200, 6201, 6202, 6203, 6204, and 6204.5 of, to add
Section 6085.5 to, and to repeal Section 6205 of, the Business and
Professions Code, relating to attorneys.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2787, Kuehl.  Attorneys:  State Bar of California.
   The State Bar Act provides that the Board of Governors of the
State Bar may order the involuntary inactive enrollment of an
attorney under specified circumstances.
   This bill would require the board to order the involuntary
inactive enrollment of an attorney upon the filing of a
recommendation of disbarment after hearing or default, as specified.

   Existing law provides that when an investigation or formal
proceeding of the State Bar concerns alleged misconduct that may
subject a member to criminal prosecution for any felony or any lesser
crime committed during the course of the practice of law, or
misconduct where the client was a victim or that may subject the
member to disciplinary action in another jurisdiction, the State Bar
shall disclose, in confidence, certain information to the appropriate
agency responsible for criminal or disciplinary enforcement.
   This bill would also provide that the chief trial counsel or
designee may disclose, in confidence, any information not otherwise
public under the State Bar Act to government agencies responsible for
enforcement of civil and criminal laws or professional licensing of
individuals, and to members of the Judicial Nominees Evaluation
Commission and review committees of the commission with respect to
nominees.
   Existing law provides for disciplinary proceedings against members
of the State Bar, as specified.
   This bill would provide that the appropriate pleas to allegations
of a notice of disciplinary charges or other pleading are admission
of culpability, denial of culpability, and nolo contendere, as
specified.
   Existing law provides that it is a cause for suspension,
disbarment, or other discipline for a member of the State Bar to
require as a condition of a settlement of a civil action for
professional misconduct that the plaintiff agree to not file a
complaint against the member with the disciplinary agency.
   This bill would provide that it is cause for suspension,
disbarment, or other discipline for any member, whether as a party or
an attorney for a party, to agree or seek agreement that the
professional misconduct or the terms of settlement of a claim for
that misconduct not be reported to the disciplinary agency.  This
would also apply to agreements for the plaintiff to withdraw a
complaint or to not cooperate in an investigation or prosecution, and
for the record of any civil action for professional misconduct to be
sealed from review by the disciplinary agency.
   Existing law provides that conviction of a member of the State Bar
of a felony or misdemeanor, involving moral turpitude, constitutes a
cause for disbarment or suspension.  A plea or verdict of guilty, or
a conviction after a plea of nolo contendere, is deemed to be a
conviction for these purposes.
   This bill would provide that an acceptance of a plea of nolo
contendere is also deemed to be a conviction for those purposes.  The
bill would include applicable convictions under the laws of any
state or territory of the United States as cause for disbarment or
suspension, as specified.
   The bill would revise other provisions relating to costs assessed
against publicly reproved or suspended members and attorney fee
arbitrations.
   Existing law provides that certain provisions related to fee
agreements will be repealed on January 1, 1997, and will be replaced
with superseding provisions on that date.
   This bill would extend those dates for 3 years.
   Existing law provides that the board shall establish and maintain
a system for arbitration of fee disputes between attorneys and their
clients.  Arbitration is voluntary for a client and mandatory for an
attorney if arbitration is commenced by a client.
   This bill would provide that arbitration is voluntary for a client
unless the client has agreed in writing to arbitration of all
disputes concerning fees or costs.  The bill would also revise
requirements for notice that an attorney must give to a client in any
proceeding against the client, and revise other procedures related
to resolution of fee disputes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 6007 of the Business and Professions Code is
amended to read:
   6007.  (a) When a member requires involuntary treatment pursuant
to Article 6 (commencing with Section 5300) of Chapter 2 of Division
5 of, or Part 2 (commencing with Section 6250) of Division 6 of the
Welfare and Institutions Code, or when under an order pursuant to
Section 3051, 3106.5, or 3152 of the Welfare and Institutions Code he
or she has been placed in or returned to inpatient status at the
California Rehabilitation Center or its branches, or when he or she
has been determined insane or mentally incompetent and is confined
for treatment or placed on outpatient status pursuant to the Penal
Code, or on account of his or her mental condition a guardian or
conservator, for his or her estate or person or both, has been
appointed, the Board of Governors or an officer of the State Bar
shall enroll the member as an inactive member.
   The clerk of any court making an order containing any of the
determinations or adjudications referred to in the immediately
preceding paragraph shall send a certified copy of that order to the
State Bar at the same time that the order is entered.
   The clerk of any court with which is filed a notice of
certification for intensive treatment pursuant to Article 4
(commencing with Section 5250) of Chapter 2 of Division 5 of the
Welfare and Institutions Code, upon receipt of the notice, shall
transmit a certified copy of it to the State Bar.
   The State Bar may procure a certified copy of any determination,
order, adjudication, appointment, or notice when the clerk concerned
has failed to transmit one or when the proceeding was had in a court
other than a court of this state.
   In the case of an enrollment pursuant to this subdivision, the
State Bar shall terminate the enrollment when the member has had the
fact of his or her restoration to capacity judicially determined,
upon the member's release from inpatient status at the California
Rehabilitation Center or its branches pursuant to Section 3053, 3109,
or 3151 of the Welfare and Institutions Code, or upon the member's
unconditional release from the medical facility pursuant to Section
5304 or 5305 of the Welfare and Institutions Code; and on payment of
all fees required.
   When a member is placed in, returned to, or released from
inpatient status at the California Rehabilitation Center or its
branches, or discharged from the narcotics treatment program, the
Director of Corrections or his or her designee shall transmit to the
State Bar a certified notice attesting to that fact.
   (b) The board shall also enroll a member of the State Bar as an
inactive member in each of the following cases:
   (1) A member asserts a claim of insanity or mental incompetence in
any pending action or proceeding, alleging his or her inability to
understand the nature of the action or proceeding or inability to
assist counsel in representation of the member.
   (2) The court makes an order assuming jurisdiction over the member'
s law practice, pursuant to Section 6180.5 or 6190.3.
   (3) After notice and opportunity to be heard before the board or a
committee, the board finds that the member, because of mental
infirmity or illness, or because of the habitual use of intoxicants
or drugs, is (i) unable or habitually fails to perform his or her
duties or undertakings competently, or (ii) unable to practice law
without substantial threat of harm to the interests of his or her
clients or the public.  No proceeding pursuant to this paragraph
shall be instituted unless the board or a committee finds, after
preliminary investigation, or during the course of a disciplinary
proceeding, that probable cause exists therefor.  The determination
of probable cause is administrative in character and no notice or
hearing is required.
   In the case of an enrollment pursuant to this subdivision, the
board shall terminate the enrollment upon proof that the facts found
as to the member's disability no longer exist and on payment of all
fees required.
   (c) (1) The board may order the involuntary inactive enrollment of
an attorney upon a finding that the attorney's conduct poses a
substantial threat of harm to the interests of the attorney's clients
or to the public or upon a finding based on all the available
evidence, including affidavits, that the attorney has not complied
with Section 6002.1 and cannot be located after reasonable
investigation.
   (2) In order to find that the attorney's conduct poses a
substantial threat of harm to the interests of the attorney's clients
or the public pursuant to this subdivision, each of the following
factors shall be found, based on all the available evidence,
including affidavits:
   (A) The attorney has caused or is causing substantial harm to the
attorney's clients or the public.
   (B) The attorney's clients or the public are likely to suffer
greater injury from the denial of the involuntary inactive enrollment
than the attorney is likely to suffer if it is granted, or there is
a reasonable likelihood that the harm will reoccur or continue.
Where the evidence establishes a pattern of behavior, including acts
likely to cause substantial harm, the burden of proof shall shift to
the attorney to show that there is no reasonable likelihood that the
harm will reoccur or continue.
   (C) There is a reasonable probability that the State Bar will
prevail on the merits of the underlying disciplinary matter.
   (3) In the case of an enrollment under this subdivision, the
underlying matter shall proceed on an expedited basis.
   (4) The board shall order the involuntary inactive enrollment of
an attorney upon the filing of a recommendation of disbarment after
hearing or default.  For purposes of this section, that attorney
shall be placed on involuntary inactive enrollment regardless of the
membership status of the attorney at the time.
   (5) The board shall formulate and adopt rules of procedure to
implement this subdivision.
   In the case of an enrollment pursuant to this subdivision, the
board shall terminate the involuntary inactive enrollment upon proof
that the attorney's conduct no longer poses a substantial threat of
harm to the interests of the attorney's clients or the public or
where an attorney who could not be located proves compliance with
Section 6002.1.
   (d) (1) The board may order the involuntary inactive enrollment of
an attorney for violation of probation upon the occurrence of all of
the following:
   (A) The attorney is under a suspension order any portion of which
has been stayed during a period of probation.
   (B) The board finds that probation has been violated.
   (C) The board recommends to the court that the attorney receive an
actual suspension on account of the probation violation or other
disciplinary matter.
   (2) The board shall terminate an enrollment under this subdivision
upon expiration of a period equal to the period of stayed suspension
in the probation matter, or until the court makes an order regarding
the recommended actual suspension in the probation matter, whichever
occurs first.
   (3) If the court orders a period of actual suspension in the
probation matter, any period of involuntary inactive enrollment
pursuant to this subdivision shall be credited against the period of
actual suspension ordered.
   (e) (1) The board shall order the involuntary, inactive enrollment
of a member whose default has been entered pursuant to the State Bar
Rules of Procedure if both of the following conditions are met:
   (A) The notice was duly served pursuant to subdivision (c) of
Section 6002.1.
   (B) The notice contained the following language at or near the
beginning of the notice, in capital letters:
   IF YOU FAIL TO FILE AN ANSWER TO THIS NOTICE WITHIN THE TIME
ALLOWED BY STATE BAR RULES, INCLUDING EXTENSIONS, OR IF YOU FAIL TO
APPEAR AT THE STATE BAR COURT TRIAL, (1) YOUR DEFAULT SHALL BE
ENTERED, (2) YOU SHALL BE ENROLLED AS AN INVOLUNTARY INACTIVE MEMBER
OF THE STATE BAR AND WILL NOT BE PERMITTED TO PRACTICE LAW UNLESS THE
DEFAULT IS SET ASIDE ON MOTION TIMELY MADE UNDER THE RULES OF
PROCEDURE OF THE STATE BAR, (3) YOU SHALL NOT BE PERMITTED TO
PARTICIPATE FURTHER IN THESE PROCEEDINGS UNLESS YOUR DEFAULT IS SET
ASIDE, AND (4) YOU SHALL BE SUBJECT TO ADDITIONAL DISCIPLINE.
   (2) The board shall terminate the involuntary inactive enrollment
of a member under this subdivision when the member's default is set
aside on motion timely made under the State Bar Rules of Procedure or
the disciplinary proceedings are completed.
   (3) The enrollment under this subdivision is administrative in
character and no hearing is required.
   (4) Upon the involuntary inactive enrollment of a member under
this subdivision, the notice required by subdivision (b) of Section
6092.5 shall be promptly given.
   (5) The board may delegate its authority under this subdivision to
the presiding referee or presiding judge of the State Bar Court or
his or her designee.
   (f) The pendency or determination of a proceeding or investigation
provided for by this section shall not abate or terminate a
disciplinary investigation or proceeding except as required by the
facts and law in a particular case.
   (g) No membership fees shall accrue against the member during the
period he or she is enrolled as an inactive member pursuant to this
section.
   (h) The board may order a full range of interim remedies or final
discipline short of involuntary inactive enrollment, including, but
not limited to, conditions of probation following final discipline,
or directly ordered interim remedies, to restrict or supervise an
attorney's practice of law, as well as proceedings under subdivision
(a), (b), (c), or (d), or under Section 6102 or 6190.  They may
include restrictions as to scope of practice, monetary accounting
procedures, review of performance by probation or other monitors
appointed by the board, or such other measures as may be determined,
after hearing, to protect present and future clients from likely
substantial harm.  These restrictions may be imposed upon a showing
as provided in subdivision (c), except that where license restriction
is proposed, the showing required of the State Bar under the factors
described in subparagraph (B) of paragraph (2) of subdivision (c)
need not be made.
  SEC. 2.  Section 6044.5 of the Business and Professions Code is
amended to read:
   6044.5.  (a) When an investigation or formal proceeding concerns
alleged misconduct which may subject a member to criminal prosecution
for any felony, or any lesser crime committed during the course of
the practice of law, or in any manner that the client of the member
was a victim, or may subject the member to disciplinary charges in
another jurisdiction, the State Bar shall disclose, in confidence,
information not otherwise public under this chapter to the
appropriate agency responsible for criminal or disciplinary
enforcement or exchange that information with that agency.
   (b) The Chief Trial Counsel or designee may disclose, in
confidence, information not otherwise public under this chapter as
follows:
   (1) To government agencies responsible for enforcement of civil
and criminal laws or for professional licensing of individuals.
   (2) To members of the Judicial Nominees Evaluation Commission or a
review committee thereof as to matters concerning nominees in any
jurisdiction.
  SEC. 3.  Section 6085.5 is added to the Business and Professions
Code, to read:
   6085.5.  There are three kinds of pleas to the allegations of a
notice of disciplinary charges or other pleading which initiates a
disciplinary proceeding against a member:
   (a) Admission of culpability.
   (b) Denial of culpability.
   (c) Nolo contendere, subject to the approval of the State Bar
Court.  The court shall ascertain whether the member completely
understands that a plea of nolo contendere shall be considered the
same as an admission of culpability and that, upon a plea of nolo
contendere, the court shall find the member culpable.  The legal
effect of such a plea shall be the same as that of an admission of
culpability for all purposes, except that the plea and any admissions
required by the court during any inquiry it makes as to the
voluntariness of, or the factual basis for, the pleas, may not be
used against the member as an admission in any civil suit based upon
or growing out of the act upon which the disciplinary proceeding is
based.
  SEC. 4.  Section 6090.5 of the Business and Professions Code is
amended to read:
   6090.5.  (a) It is cause for suspension, disbarment, or other
discipline for any member, whether as a party or as an attorney for a
party, to agree or seek agreement, that:
   (1) The professional misconduct or the terms of a settlement of a
claim for professional misconduct shall not be reported to the
disciplinary agency.
   (2) The plaintiff shall withdraw a disciplinary complaint or shall
not cooperate with the investigation or prosecution conducted by the
disciplinary agency.
   (3) The record of any civil action for professional misconduct
shall be sealed from review by the disciplinary agency.
   (b) This section applies to all settlements, whether made before
or after the commencement of a civil action.
  SEC. 5.  Section 6101 of the Business and Professions Code is
amended to read:
   6101.  (a) Conviction of a felony or misdemeanor, involving moral
turpitude, constitutes a cause for disbarment or suspension.
   In any proceeding, whether under this article or otherwise, to
disbar or suspend an attorney on account of that conviction, the
record of conviction shall be conclusive evidence of guilt of the
crime of which he or she has been convicted.
   (b) The district attorney, city attorney, or other prosecuting
agency shall notify the Office of the State Bar of California of the
pendency of an action against an attorney charging a felony or
misdemeanor immediately upon obtaining information that the defendant
is an attorney.  The notice shall identify the attorney and describe
the crimes charged and the alleged facts. The prosecuting agency
shall also notify the clerk of the court in which the action is
pending that the defendant is an attorney, and the clerk shall record
prominently in the file that the defendant is an attorney.
   (c) The clerk of the court in which an attorney is convicted of a
crime shall, within 48 hours after the conviction, transmit a
certified copy of the record of conviction to the Office of the State
Bar.  Within five days of receipt, the Office of the State Bar shall
transmit the record of any conviction which involves or may involve
moral turpitude to the Supreme Court with such other records and
information as may be appropriate to establish the Supreme Court's
jurisdiction.  The State Bar of California may procure and transmit
the record of conviction to the Supreme Court when the clerk has not
done so or when the conviction was had in a court other than a court
of this state.
   (d) The proceedings to disbar or suspend an attorney on account of
such a conviction shall be undertaken by the Supreme Court pursuant
to the procedure provided in this section and Section 6102, upon the
receipt of the certified copy of the record of conviction.
   (e) A plea or verdict of guilty, an acceptance of a nolo
contendere plea, or a conviction after a plea of nolo contendere is
deemed to be a conviction within the meaning of those sections.
  SEC. 6.  Section 6102 of the Business and Professions Code is
amended to read:
   6102.  (a) Upon the receipt of the certified copy of the record of
conviction, if it appears therefrom that the crime of which the
attorney was convicted involved, or that there is probable cause to
believe that it involved, moral turpitude or is a felony under the
laws of California, the United States, or any state or territory
thereof, the Supreme Court shall suspend the attorney until the time
for appeal has elapsed, if no appeal has been taken, or until the
judgment of conviction has been affirmed on appeal, or has otherwise
become final, and until the further order of the court.  Upon its own
motion or upon good cause shown, the court may decline to impose, or
may set aside, the suspension when it appears to be in the interest
of justice to do so, with due regard being given to maintaining the
integrity of, and confidence in, the profession.
   (b) For the purposes of this section, a crime is a felony under
the law of California if it is declared to be so specifically or by
subdivision (a) of Section 17 of the Penal Code, unless it is charged
as a misdemeanor pursuant to paragraph (4) or (5) of subdivision (b)
of Section 17 of the Penal Code, irrespective of whether in a
particular case the crime may be considered a misdemeanor as a result
of postconviction proceedings, including proceedings resulting in
punishment or probation set forth in paragraph (1) or (3) of
subdivision (b) of Section 17 of the Penal Code.
   (c) After the judgment of conviction of an offense specified in
subdivision (a) has become final or, irrespective of any subsequent
order under Section 1203.4 of the Penal Code or similar statutory
provision, an order granting probation has been made suspending the
imposition of sentence, the Supreme Court shall summarily disbar the
attorney if the offense is a felony under the laws of California, the
United States, or any state or territory thereof, and an element of
the offense is the specific intent to deceive, defraud, steal, or
make or suborn a false statement, or involved moral turpitude.
   (d) For purposes of this section, a conviction under the laws of
another state or territory of the United States shall be deemed a
felony if:
   (1) The judgment or conviction was entered as a felony
irrespective of any subsequent order suspending sentence or granting
probation and irrespective of whether the crime may be considered a
misdemeanor as a result of postconviction proceedings.
   (2) The elements of the offense for which the member was convicted
would constitute a felony under the laws of the State of California
at the time the offense was committed.
   (e) Except as provided in subdivision (c), if after adequate
notice and opportunity to be heard (which hearing shall not be had
until the judgment of conviction has become final or, irrespective of
any subsequent order under Section 1203.4 of the Penal Code, an
order granting probation has been made suspending the imposition of
sentence), the court finds that the crime of which the attorney was
convicted, or the circumstances of its commission, involved moral
turpitude, it shall enter an order disbarring the attorney or
suspending him or her from practice for a limited time, according to
the gravity of the crime and the circumstances of the case; otherwise
it shall dismiss the proceedings.  In determining the extent of the
discipline to be imposed in a proceeding pursuant to this article,
any prior discipline imposed upon the attorney may be considered.
   (f) The court may refer the proceedings or any part thereof or
issue therein, including the nature or extent of discipline, to the
State Bar for hearing, report, and recommendation.
   (g) The record of the proceedings resulting in the conviction,
including a transcript of the testimony therein, may be received in
evidence.
   (h) The Supreme Court shall prescribe rules for the practice and
procedure in proceedings conducted pursuant to this section and
Section 6101.
   (i) The other provisions of this article providing a procedure for
the disbarment or suspension of an attorney do not apply to
proceedings pursuant to this section and Section 6101, unless
expressly made applicable.
  SEC. 7.  Section 6140.7 of the Business and Professions Code is
amended to read:
   6140.7.  Costs assessed against a member publicly reproved or
suspended, where suspension is stayed and the member is not actually
suspended, shall be added to and become a part of the membership fee
of the member, for the next calendar year.  Unless time for payment
of discipline costs is extended pursuant to subdivision (c) of
Section 6085.10, costs assessed against a member who resigns with
disciplinary charges pending or by a member who is actually suspended
or disbarred shall be paid as a condition of reinstatement of or
return to active membership.
  SEC. 8.  Section 6147 of the Business and Professions Code, as
amended by Section 2 of Chapter 479 of the Statutes of 1994, is
amended to read:
   6147.  (a) An attorney who contracts to represent a client on a
contingency fee basis shall, at the time the contract is entered
into, provide a duplicate copy of the contract, signed by both the
attorney and the client, or the client's guardian or representative,
to the client, or to the client's guardian or representative.  The
contract shall be in writing and shall include, but is not limited
to, all of the following:
   (1) A statement of the contingency fee rate that the client and
attorney have agreed upon.
   (2) A statement as to how disbursements and costs incurred in
connection with the prosecution or settlement of the claim will
affect the contingency fee and the client's recovery.
   (3) A statement as to what extent, if any, the client could be
required to pay any compensation to the attorney for related matters
that arise out of their relationship not covered by their contingency
fee contract.  This may include any amounts collected for the
plaintiff by the attorney.
   (4) Unless the claim is subject to the provisions of Section 6146,
a statement that the fee is not set by law but is negotiable between
attorney and client.
   (5) If the claim is subject to the provisions of Section 6146, a
statement that the rates set forth in that section are the maximum
limits for the contingency fee agreement, and that the attorney and
client may negotiate a lower rate.
   (6) If the attorney does not meet any of the following criteria, a
statement disclosing that fact:
   (A) Maintains errors and omissions insurance coverage.
   (B) Has filed with the State Bar an executed copy of a written
agreement guaranteeing payment of all claims established against the
attorney by his or her clients for errors or omissions arising out of
the practice of law by the attorney in the amount specified in
paragraph (c) of subsection (1) of Section B of Rule IV of the Law
Corporation Rules of the State Bar.  The State Bar may charge a
filing fee not to exceed five dollars ($5).
   (C) If a law corporation, has filed with the State Bar an executed
copy of the written agreement required pursuant to paragraph (a),
(b), or (c) of subsection (1) of Section B of Rule IV of the Law
Corporation Rules of the State Bar.
   (b) Failure to comply with any provision of this section renders
the agreement voidable at the option of the client, and the attorney
shall thereupon be entitled to collect a reasonable fee.
   (c) This section shall not apply to contingency fee contracts for
the recovery of workers' compensation benefits.
   (d) This section shall remain in effect only until January 1,
2000, and of that date is repealed, unless a later enacted statute,
which is enacted before January 1, 2000, deletes or extends that
date.
  SEC. 9.  Section 6147 of the Business and Professions Code, as
amended by Section 3 of Chapter 479 of the Statutes of 1994, is
amended to read:
   6147.  (a) An attorney who contracts to represent a client on a
contingency fee basis shall, at the time the contract is entered
into, provide a duplicate copy of the contract, signed by both the
attorney and the client, or the client's guardian or representative,
to the plaintiff, or to the client's guardian or representative.  The
contract shall be in writing and shall include, but is not limited
to, all of the following:
   (1) A statement of the contingency fee rate that the client and
attorney have agreed upon.
   (2) A statement as to how disbursements and costs incurred in
connection with the prosecution or settlement of the claim will
affect the contingency fee and the client's recovery.
   (3) A statement as to what extent, if any, the client could be
required to pay any compensation to the attorney for related matters
that arise out of their relationship not covered by their contingency
fee contract.  This may include any amounts collected for the
plaintiff by the attorney.
   (4) Unless the claim is subject to the provisions of Section 6146,
a statement that the fee is not set by law but is negotiable between
attorney and client.
   (5) If the claim is subject to the provisions of Section 6146, a
statement that the rates set forth in that section are the maximum
limits for the contingency fee agreement, and that the attorney and
client may negotiate a lower rate.
   (b) Failure to comply with any provision of this section renders
the agreement voidable at the option of the plaintiff, and the
attorney shall thereupon be entitled to collect a reasonable fee.
   (c) This section shall not apply to contingency fee contracts for
the recovery of workers' compensation benefits.
   (d) This section shall become operative on January 1, 2000.
  SEC. 10.  Section 6148 of the Business and Professions Code, as
amended by Section 4 of Chapter 479 of the Statutes of 1994, is
amended to read:
   6148.  (a) In any case not coming within Section 6147 in which it
is reasonably foreseeable that total expense to a client, including
attorney fees, will exceed one thousand dollars ($1,000), the
contract for services in the case shall be in writing.  At the time
the contract is entered into, the attorney shall provide a duplicate
copy of the contract signed by both the attorney and the client, or
the client's guardian or representative, to the client or to the
client's guardian or representative.  The written contract shall
contain all of the following:
   (1) Any basis of compensation including, but not limited to,
hourly rates, statutory fees or flat fees, and other standard rates,
fees, and charges applicable to the case.
   (2) The general nature of the legal services to be provided to the
client.
   (3) The respective responsibilities of the attorney and the client
as to the performance of the contract.
   (4) If the attorney does not meet any of the following criteria, a
statement disclosing that fact:
   (A) Maintains errors and omissions insurance coverage.
   (B) Has filed with the State Bar an executed copy of a written
agreement guaranteeing payment of all claims established against the
attorney by his or her clients for errors or omissions arising out of
the practice of law by the attorney in the amount specified in
paragraph (c) of subdivision (1) of
            Section B of Rule IV of the Law Corporation Rules of the
State Bar.  The State Bar may charge a filing a fee not to exceed
five dollars ($5).
   (C) If a law corporation, has filed with the State Bar an executed
copy of the written agreement required pursuant to paragraph (a),
(b), or (c) of subsection (1) of Section B of Rule IV of the Law
Corporation Rules of the State Bar.
   (b) All bills rendered by an attorney to a client shall clearly
state the basis thereof.  Bills for the fee portion of the bill shall
include the amount, rate, basis for calculation, or other method of
determination of the attorney's fees and costs.  Bills for the cost
and expense portion of the bill shall clearly identify the costs and
expenses incurred and the amount of the costs and expenses.  Upon
request by the client, the attorney shall provide a bill to the
client no later than 10 days following the request unless the
attorney has provided a bill to the client within 31 days prior to
the request, in which case the attorney may provide a bill to the
client no later than 31 days following the date the most recent bill
was provided.  The client is entitled to make similar requests at
intervals of no less than 30 days following the initial request.  In
providing responses to client requests for billing information, the
attorney may use billing data that is currently effective on the date
of the request, or, if any fees or costs to that date cannot be
accurately determined, they shall be described and estimated.
   (c) Failure to comply with any provision of this section renders
the agreement voidable at the option of the client, and the attorney
shall, upon the agreement being voided, be entitled to collect a
reasonable fee.
   (d) This section shall not apply to any of the following:
   (1) Services rendered in an emergency to avoid foreseeable
prejudice to the rights or interests of the client or where a writing
is otherwise impractical.
   (2) An arrangement as to the fee implied by the fact that the
attorney's services are of the same general kind as previously
rendered to and paid for by the client.
   (3) If the client knowingly states in writing, after full
disclosure of this section, that a writing concerning fees is not
required.
   (4) If the client is a corporation.
   (e) This section applies prospectively only to fee agreements
following its operative date.
   (f) This section shall remain in effect only until January 1,
2000, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2000, deletes or extends
that date.
  SEC. 11.  Section 6148 of the Business and Professions Code, as
amended by Section 5 of Chapter 479 of the Statutes of 1994, is
amended to read:
   6148.  (a) In any case not coming within Section 6147 in which it
is reasonably foreseeable that total expense to a client, including
attorney fees, will exceed one thousand dollars ($1,000), the
contract for services in the case shall be in writing.  At the time
the contract is entered into, the attorney shall provide a duplicate
copy of the contract signed by both the attorney and the client, or
the client's guardian or representative, to the client or to the
client's guardian or representative.  The written contract shall
contain all of the following:
   (1) Any basis of compensation including, but not limited to,
hourly rates, statutory fees or flat fees, and other standard rates,
fees, and charges applicable to the case.
   (2) The general nature of the legal services to be provided to the
client.
   (3) The respective responsibilities of the attorney and the client
as to the performance of the contract.
   (b) All bills rendered by an attorney to a client shall clearly
state the basis thereof.  Bills for the fee portion of the bill shall
include the amount, rate, basis for calculation, or other method of
determination of the attorney's fees and costs.  Bills for the cost
and expense portion of the bill shall clearly identify the costs and
expenses incurred and the amount of the costs and expenses.  Upon
request by the client, the attorney shall provide a bill to the
client no later than 10 days following the request unless the
attorney has provided a bill to the client within 31 days prior to
the request, in which case the attorney may provide a bill to the
client no later than 31 days following the date the most recent bill
was provided.  The client is entitled to make similar requests at
intervals of no less than 30 days following the initial request.  In
providing responses to client requests for billing information, the
attorney may use billing data that is currently effective on the date
of the request, or, if any fees or costs to that date cannot be
accurately determined, they shall be described and estimated.
   (c) Failure to comply with any provision of this section renders
the agreement voidable at the option of the client, and the attorney
shall, upon the agreement being voided, be entitled to collect a
reasonable fee.
   (d) This section shall not apply to any of the following:
   (1) Services rendered in an emergency to avoid foreseeable
prejudice to the rights or interests of the client or where a writing
is otherwise impractical.
   (2) An arrangement as to the fee implied by the fact that the
attorney's services are of the same general kind as previously
rendered to and paid for by the client.
   (3) If the client knowingly states in writing, after full
disclosure of this section, that a writing concerning fees is not
required.
   (4) If the client is a corporation.
   (e) This section applies prospectively only to fee agreements
following its operative date.
   (f) This section shall become operative on January 1, 2000.
  SEC. 12.  Section 6200 of the Business and Professions Code is
amended to read:
   6200.  (a) The board of governors shall, by rule, establish,
maintain, and administer a system and procedure for the arbitration,
and may establish, maintain, and administer a system and procedure
for mediation of disputes concerning fees, costs, or both, charged
for professional services by members of the State Bar or by members
of the bar of other jurisdictions.  The rules may include provision
for a filing fee in such amount as the board may, from time to time,
determine.
   (b) This article shall not apply to any of the following:
   (1) Disputes where a member of the State Bar of California is also
admitted to practice in another jurisdiction or where an attorney is
only admitted to practice in another jurisdiction, and he or she
maintains no office in the State of California, and no material
portion of the services were rendered in the State of California.
   (2) Claims for affirmative relief against the attorney for damages
or otherwise based upon alleged malpractice or professional
misconduct, except as provided in subdivision (a) of Section 6203.
   (3) Disputes where the fee or cost to be paid by the client or on
his or her behalf has been determined pursuant to statute or court
order.
   (c) Unless the client has agreed in writing to arbitration under
this article of all disputes concerning fees, costs, or both,
arbitration under this article shall be voluntary for a client and
shall be mandatory for an attorney if commenced by a client.
Mediation under this article shall be voluntary for an attorney and a
client.
   (d) The board of governors shall adopt rules to allow arbitration
and mediation of attorney fee and cost disputes under this article to
proceed under arbitration and mediation systems sponsored by local
bar associations in this state.  Rules of procedure promulgated by
local bar associations are subject to review by the board to insure
that they provide for a fair, impartial, and speedy hearing and
award.
   (e) In adopting or reviewing rules of arbitration under this
section the board shall provide that the panel shall include one
attorney member whose area of practice is either, at the option of
the client, civil law, if the attorney's representation involved
civil law, or criminal law, if the attorney's representation involved
criminal law, as follows:
   (1) If the panel is composed of three members the panel shall
include one attorney member whose area of practice is either, at the
option of the client, civil or criminal law, and shall include one
lay member.
   (2) If the panel is composed of one member, that member shall be
an attorney whose area of practice is either, at the option of the
client, civil or criminal law.
   (f) In any arbitration or mediation conducted pursuant to this
article by the State Bar or by a local bar association, pursuant to
rules of procedure approved by the board of governors, an arbitrator
or mediator, as well as the arbitrating association and its
directors, officers, and employees, shall have the same immunity
which attaches in judicial proceedings.
   (g) In the conduct of arbitrations under this article the
arbitrator or arbitrators may do all of the following:
   (1) Take and hear evidence pertaining to the proceeding.
   (2) Administer oaths and affirmations.
   (3) Compel, by subpoena, the attendance of witnesses and the
production of books, papers, and documents pertaining to the
proceeding.
   (h) Participation in mediation is a voluntary consensual process,
based on direct negotiations between the attorney and his or her
client, and is an extension of the negotiated settlement process.
All discussions and offers of settlement are confidential and may not
be disclosed in any subsequent arbitration or other proceedings.
  SEC. 13.  Section 6201 of the Business and Professions Code is
amended to read:
   6201.  (a) The rules adopted by the board of governors shall
provide that an attorney shall forward a written notice to the client
prior to or at the time of service of summons or claim in an action
against the client, or prior to or at the commencement of any other
proceeding against the client under a contract between attorney and
client which provides for an alternative to arbitration under this
article, for recovery of fees, costs, or both.  The written notice
shall be in the form that the board of governors prescribes, and
shall include a statement of the client's right to arbitration under
this article.  Failure to give this notice shall be a ground for the
dismissal of the action or other proceeding.  The notice shall not be
required, however, prior to initiating mediation of the dispute.
   The rules adopted by the board of governors shall provide that the
client's failure to request arbitration within 30 days after receipt
of notice from the attorney shall be deemed a waiver of the client's
right to arbitration under the provisions of this article.
   (b) If an attorney, or the attorney's assignee, commences an
action in any court or any other proceeding and the client is
entitled to maintain arbitration under this article, and the dispute
is not one to which subdivision (b) of Section 6200 applies, the
client may stay the action or other proceeding by serving and filing
a request for arbitration in accordance with the rules established by
the board of governors pursuant to subdivision (a) of Section 6200.
The request for arbitration shall be served and filed prior to the
filing of an answer in the action or equivalent response in the other
proceeding; failure to so request arbitration prior to the filing of
an answer or equivalent response shall be deemed a waiver of the
client's right to arbitration under the provisions of this article if
notice of the client's right to arbitration was given pursuant to
subdivision (a).
   (c) Upon filing and service of the request for arbitration, the
action or other proceeding shall be automatically stayed until the
award of the arbitrators is issued or the arbitration is otherwise
terminated.  The stay may be vacated in whole or in part, after a
hearing duly noticed by any party or the court, if and to the extent
the court finds that the matter is not appropriate for arbitration
under the provisions of this article.  The action or other proceeding
may thereafter proceed subject to the provisions of Section 6204.
   (d) A client's right to request or maintain arbitration under the
provisions of this article is waived by the client commencing an
action or filing any pleading seeking either of the following:
   (1) Judicial resolution of a fee dispute to which this article
applies.
   (2) Affirmative relief against the attorney for damages or
otherwise based upon alleged malpractice or professional misconduct.

   (e) If the client waives the right to arbitration under this
article, the parties may stipulate to set aside the waiver and to
proceed with arbitration.
  SEC. 14.  Section 6202 of the Business and Professions Code is
amended to read:
   6202.  The provisions of Article 3 (commencing with Section 950)
of Chapter 4 of Division 8 of the Evidence Code shall not prohibit
the disclosure of any relevant communication, nor shall the
provisions of Section 2018 of the Code of Civil Procedure be
construed to prohibit the disclosure of any relevant work product of
the attorney in connection with:  (a) an arbitration hearing or
mediation pursuant to this article; (b) a trial after arbitration; or
(c) judicial confirmation, correction, or vacation of an arbitration
award. In no event shall such disclosure be deemed a waiver of the
confidential character of such matters for any other purpose.
  SEC. 15.  Section 6203 of the Business and Professions Code is
amended to read:
   6203.  (a) The award shall be in writing and signed by the
arbitrators concurring therein.  It shall include a determination of
all the questions submitted to the arbitrators, the decision of which
is necessary in order to determine the controversy.  The award shall
not include any award to either party for costs or attorney's fees
incurred in preparation for or in the course of the fee arbitration
proceeding, notwithstanding any contract between the parties
providing for such an award or costs or attorney's fees.  However,
the filing fee paid may be allocated between the parties by the
arbitrators.  This section shall not preclude an award of costs or
attorney's fees to either party by a court pursuant to subdivision
(c) of this section or of subdivision (d) of Section 6204. The State
Bar, or the local bar association delegated by the State Bar to
conduct the arbitration, shall deliver to each of the parties with
the award, an original declaration of service of the award.
   Evidence relating to claims of malpractice and professional
misconduct, shall be admissible only to the extent that those claims
bear upon the fees, costs, or both, to which the attorney is
entitled.  The arbitrators shall not award affirmative relief, in the
form of damages or offset or otherwise, for injuries underlying any
such claim.  Nothing in this section shall be construed to prevent
the arbitrators from awarding the client a refund of unearned fees,
costs, or both previously paid to the attorney.
   (b) Even if the parties to the arbitration have not agreed in
writing to be bound, the arbitration award shall become binding upon
the passage of 30 days after mailing of notice of the award, unless a
party has, within the 30 days, sought a trial after arbitration
pursuant to Section 6204.  If an action has previously been filed in
any court, any petition to confirm, correct, or vacate the award
shall be to the court in which the action is pending, and may be
served by mail on any party who has appeared, as provided in Chapter
4 (commencing with Section 1003) of Title 14 of Part 2 of the Code of
Civil Procedure; otherwise it shall be in the same manner as
provided in Chapter 4 (commencing with Section 1285) of Title 9 of
Part 3 of the Code of Civil Procedure.  If no action is pending in
any court, the award may be confirmed, corrected, or vacated by
petition to the court having jurisdiction over the amount of the
arbitration award, but otherwise in the same manner as provided in
Chapter 4 (commencing with Section 1285) of Title 9 of Part 3 of the
Code of Civil Procedure.
   (c) Neither party to the arbitration may recover costs or attorney'
s fees incurred in preparation for or in the course of the fee
arbitration proceeding with the exception of the filing fee paid
pursuant to subdivision (a) of this section.  However, a court
confirming, correcting, or vacating an award under this section may
award to the prevailing party reasonable fees and costs incurred in
obtaining confirmation, correction, or vacation of the award
including, if applicable, fees and costs on appeal.  The party
obtaining judgment confirming, correcting, or vacating the award
shall be the prevailing party except that, without regard to
consideration of who the prevailing party may be, if a party did not
appear at the arbitration hearing in the manner provided by the rules
adopted by the board of governors, that party shall not be entitled
to attorney's fees or costs upon confirmation, correction, or
vacation of the award.
   (d) (1) In any matter arbitrated under this article in which the
award is binding or has become binding by operation of law or has
become a judgment either after confirmation under subdivision (c) or
after a trial after arbitration under Section 6204, or in any matter
mediated under this article, if:  (A) the award, judgment, or
agreement reached after mediation includes a refund of fees or costs,
or both, to the client and (B) the attorney has not complied with
that award, judgment, or agreement the State Bar shall enforce the
award, judgment, or agreement by placing the attorney on involuntary
inactive status until the refund has been paid.
   (2) The State Bar shall provide for an administrative procedure to
determine whether an award, judgment, or agreement should be
enforced pursuant to this subdivision.  An award, judgment, or
agreement shall be so enforced if:
   (A) The State Bar shows that the attorney has failed to comply
with a binding fee arbitration award, judgment, or agreement rendered
pursuant to this article.
   (B) The attorney has not proposed a payment plan acceptable to the
client or the State Bar.
   However, the award, judgment, or agreement shall not be so
enforced if the attorney has demonstrated that he or she (i) is not
personally responsible for making or ensuring payment of the refund,
or (ii) is unable to pay the refund.
   (3) An attorney who has failed to comply with a binding award,
judgment, or agreement shall pay administrative penalties or
reasonable costs, or both, as directed by the State Bar.  Penalties
imposed shall not exceed 20 percent of the amount to be refunded to
the client or one thousand dollars ($1,000), whichever is greater.
Any penalties or costs, or both, that are not paid shall be added to
the membership fee of the attorney for the next calendar year.
   (4) The board shall terminate the inactive enrollment upon proof
that the attorney has complied with the award, judgment, or agreement
and upon payment of any costs or penalties, or both, assessed as a
result of the attorney's failure to comply.
   (5) A request for enforcement under this subdivision shall be made
within four years from the date (A) the arbitration award was
mailed, (B) the judgment was entered, or (C) the date the agreement
was signed.  In an arbitrated matter, however, in no event shall a
request be made prior to 100 days from the date of the service of a
signed copy of the award.  In cases where the award is appealed, a
request shall not be made prior to 100 days from the date the award
has become final as set forth in this section.
  SEC. 16.  Section 6204 of the Business and Professions Code is
amended to read:
   6204.  (a) The parties may agree in writing to be bound by the
award of the arbitrators at any time after the dispute over fees,
costs, or both, has arisen.  In the absence of such an agreement,
either party shall be entitled to a trial after arbitration if sought
within 30 days, pursuant to subdivisions (b) and (c), except that if
either party willfully fails to appear at the arbitration hearing in
the manner provided by the rules adopted by the board of governors,
that party shall not be entitled to a trial after arbitration.  The
determination of willfulness shall be made by the court.  The party
who failed to appear at the arbitration shall have the burden of
proving that the failure to appear was not willful.  In making its
determination, the court may consider any findings made by the
arbitrators on the subject of a party's failure to appear.
   (b) If there is an action pending, the trial after arbitration
shall be initiated by filing a rejection of arbitration award and
request for trial after arbitration in that action within 30 days
after mailing of notice of the award.  If the rejection of
arbitration award has been filed by the plaintiff in the pending
action, all defendants shall file a responsive pleading within 30
days following service upon the defendant of the rejection of
arbitration award and request for trial after arbitration.  If the
rejection of arbitration award has been filed by the defendant in the
pending action, all defendants shall file a responsive pleading
within 30 days after the filing of the rejection of arbitration award
and request for trial after arbitration.  Service may be made by
mail on any party who has appeared; otherwise service shall be made
in the manner provided in Chapter 4 (commencing with Section 413.10)
of Title 5 of Part 2 of the Code of Civil Procedure.  Upon service
and filing of the rejection of arbitration award, any stay entered
pursuant to Section 6201 shall be vacated, without the necessity of a
court order.
   (c) If no action is pending, the trial after arbitration shall be
initiated by the commencement of an action in the court having
jurisdiction over the amount of money in controversy within 30 days
after mailing of notice of the award.  After the filing of such an
action, the action shall proceed in accordance with the provisions of
Part 2 (commencing with Section 307) of the Code of Civil Procedure,
concerning civil actions generally.
   (d) The party seeking a trial after arbitration shall be the
prevailing party if that party obtains a judgment more favorable than
that provided by the arbitration award, and in all other cases the
other party shall be the prevailing party.  The prevailing party may,
in the discretion of the court, be entitled to an allowance for
reasonable attorneys' fees and costs incurred in the trial after
arbitration, which allowance shall be fixed by the court.  In fixing
the attorneys' fees, the court shall consider the award and
determinations of the arbitrators, in addition to any other relevant
evidence.
   (e) Except as provided in this section, the award and
determinations of the arbitrators shall not be admissible nor operate
as collateral estoppel or res judicata in any action or proceeding.

  SEC. 17.  Section 6204.5 of the Business and Professions Code is
amended to read:
   6204.5.  (a) The State Bar shall provide by rule for an
appropriate procedure to disqualify an arbitrator or mediator upon
request of either party.
   (b) The State Bar, or the local bar association delegated by the
State Bar to conduct the arbitration, shall deliver a notice to the
parties advising them of their rights to judicial relief subsequent
to the arbitration proceeding.
  SEC. 18.  Section 6205 of the Business and Professions Code is
repealed.