BILL ANALYSIS AB 1761 Page 1 Date of Hearing: March 28, 2000 ASSEMBLY COMMITTEE ON JUDICIARY Sheila James Kuehl, Chair AB 1761 (Brewer and Rod Pacheco) - As Amended: March 20, 2000 SUBJECT : PARALEGALS: DEFINING THE PRACTICE AND PROFESSION KEY ISSUES : 1)SHOULD THE TITLE "PARALEGAL" BE RESERVED FOR INDIVIDUALS WHO WORK UNDER THE SUPERVISION OF AN ATTORNEY, PROVIDE DEFINED TYPES OF LEGAL SERVICES, AND MEET SPECIFIED EDUCATIONAL AND EXPERIENTIAL CRITERIA? 2)IN THE ABSENCE OF A CLEAR DEFINITION OF WHO MAY CALL THEMSELVES PARALEGALS, ARE CONSUMERS AT RISK OF INCORRECTLY AND HARMFULLY ATTRIBUTING GREATER EDUCATION, EXPERIENCE, AND SKILL TO PERSONS WHO CALL THEMSELVES INDEPENDENT PARALEGALS THAN TO PERSONS WHO CALL THEMSELVES LEGAL DOCUMENT ASSISTANTS (LDAs)? 3)SHOULD INDIVIDUALS WHO HAVE BEEN DISBARRED OR SUSPENDED FROM THE PRACTICE OF LAW BE PROHIBITED FROM ACTING AS A PARALEGAL, UNDER THE SUPERVISION OF AN ATTORNEY? 4)SHOULD CONSUMERS INJURED BY PARALEGALS OR PERSONS CLAIMING TO BE PARALEGALS BE ENTITLED TO LESSER PROTECTIONS THAN CONSUMERS INJURED BY LDAs OR PERSONS CLAIMING TO BE LDAs? SUMMARY : Seeks to define the paralegal profession and limit those individuals who may call themselves paralegals. Specifically, this bill : 1)Defines a paralegal as a person who either contracts with or is employed by an attorney, law firm, corporation, governmental agency, or other entity, and who performs tasks at the direction and under the supervision of an active member of the State Bar. The term paralegal does not include a nonlawyer who provides legal services directly to members of the public, an LDA, or an unlawful detainer assistant. 2)Specifies that the tasks performed by a paralegal are those traditionally performed by an attorney, and include: case planning, development and management; legal research; client AB 1761 Page 2 interviews; fact gathering; drafting and analyzing legal documents; and collecting, compiling, and utilizing information to make an independent decision and recommendation to an attorney. Paralegals shall not give legal advice, represent clients in court, or set fees. 3)Requires every person who is employed as, and uses the name paralegal to satisfy at least one of the following criteria related to education and experience: a)A certificate of completion of a paralegal program approved by the American Bar Association. b)A certificate of completion of a paralegal program at an accredited postsecondary institution which requires, as a condition of that certificate, a minimum of 24 semester hours of law-related courses. c)A baccalaureate degree or an advanced degree in any subject and a written declaration from an active member of the State Bar who has supervised the person for a minimum of one year and who attests that the person is qualified to perform paralegal tasks. d)A high school diploma or G.E.D., a minimum of three years of law related experience under the supervision of an active member of the State Bar, and a minimum of one year of education provided by an active member of the State Bar on the ethical responsibilities and duties of a paralegal. However, satisfaction of this criteria shall only be sufficient to qualify an individual to practice as a paralegal if this experience and training is completed by January 1, 2004 (grandfathering in persons who may have been practicing as paralegals for years without having an advanced degree). 4)Authorizes an LDA who has registered a business name that includes the term paralegal to continue to use that business name until the LDA is required to renew his or her LDA registration. This provision only applies to LDAs who have so registered prior to January 1, 2001. 5)Prohibits a person who has been disbarred or suspended from the practice of law to use the title paralegal during the period of disbarment. AB 1761 Page 3 6)Prohibits a paralegal from performing any services for a consumer except as directed by the attorney, law firm, corporation, government agency, or other entity that employs or contracts with the paralegal. Violation of this provision is a misdemeanor punishable by a fine of $2,500 for each violation, imprisonment in the county jail for up to one year, or both fine and imprisonment. 7)Makes it unlawful for a person to advertise or identify him or herself as a paralegal (including on business cards, letterhead, signs or elsewhere) unless he or she meets the definition of paralegal, and performs only the services authorized by this bill. Violation of this provision is a misdemeanor punishable by a fine of $2,500 for each violation, imprisonment in the county jail for up to one year, or both fine and imprisonment. 8)Gives a consumer injured by a person acting in violation of the provisions of this measure the right to seek redress in court, including an injunction, restitution, and damages. EXISTING LAW : 1)Prohibits any person who is not an active member of the State Bar from practicing law in California. (Business and Professions Code section 6125. All further references are to this code unless otherwise noted.) 2)Makes it a misdemeanor for any person who is not an active member of the bar to practice law, or to advertise, or hold him or herself out as a practicing lawyer or as entitled to practice law. (Section 6126.) 3)Defines a legal document assistant (LDA), as any person who provides or assists in providing, for compensation, self-help services, as defined, to the public. (Section 6400 4)Prohibits LDAs from providing self-help services to any person unless the LDA is registered in the county in which services are being provided. (Section 6400.) 5)Prohibits LDAs from providing any kind of advice, explanation, opinion, or recommendation to a consumer about legal rights, remedies, defenses, options, selection of forms, or AB 1761 Page 4 strategies. (Section 6400.) 6)Requires an applicant for registration as an LDA to have satisfied certain educational and practice criteria. (Section 6402.1.) 7)Gives any person injured by the unlawful act of an LDA the right to file a complaint and seek redress in any municipal or superior court for injunctive relief, restitution, and damages. Attorney's fees shall be awarded to a prevailing plaintiff. (Section 6412.1.) FISCAL EFFECT : Unknown COMMENTS : In support of the need for this measure, the author makes the following comments: Currently, the terms 'paralegal' and 'legal assistant' are not regulated in California in any way. Anyone who wishes to can award himself the title and begin doing business, without having completing legitimate paralegal training courses at accredited postsecondary educational institutions. . . .Because the traditional definition of a paralegal means supervision by an attorney, consumers are wrongly led to believe the individual calling himself a paralegal is conferring with an attorney on their cases. AB 1761 enhances consumer protection by making it illegal to falsely advertise legal expertise by using the title 'paralegal' or 'legal assistant' unless the individual works under the supervision and license of an attorney and meets specified educational requirements. Effect on the Practice of "Independent Paralegals" . Opponents of the bill argue that by limiting the class of people that may call themselves paralegals, the bill is taking away from consumers the option to use the services of someone other than an attorney. "Independent paralegals must be allowed to earn an honest living within the limits of the law. Passing AB 1761 serves to cause greater hardship to low to moderate-income consumers who must represent themselves and rely on non-lawyer's assistance for help and will increase the unemployment rate by causing many paralegals to close the doors of their businesses for good." AB 1761 Page 5 This bill, however, does not prevent "independent paralegals" from continuing to serve the public. The bill simply recognizes that use of the term paralegal needs to be more appropriately regulated to define those individuals working at the direction and under the supervision of an attorney. Consumers may in fact be deceived by the title "paralegal," thinking they are utilizing the services of an individual who is supervised by an attorney or who has received a certain degree of training. Under the current state of the law, anyone can call themselves an independent paralegal. The types of services someone working without an attorney's supervision may provide are limited by the LDA statutes, but what they choose to call themselves is not. This bill would close that loophole. Furthermore, it is highly likely that a consumer would attribute greater education, skill, and experience to individuals who call themselves paralegals than they would to individuals who, consistent with the terminology of existing law, refers to themselves as legal document assistants. This bill seeks to erase that artificial barrier, and provide a clearer title that will provide consumers with a greater understanding of the type and level of service they can expect to receive when seeking assistance with a legal matter. One opponent to this measure argues that simply because an individual who has received a certificate from an accredited paralegal program chooses not to work under the supervision of an attorney, but rather to provide self-help services, "does not negate the fact they have earned a particular certificate or degree. Is a lawyer who chooses not to practice, but maintains his status as an attorney, no longer a lawyer because he chooses not to practice law?" Effect on Consumers Trying to Find Assistance . Many opponents of the measure argue that by preventing individuals who provide self-help service from using the title "paralegal," consumers will not know how to access the type of self-help assistance they require. Opponents note: The word 'paralegal' has come to be the title generally recognized and accepted by the general public signifying self-help assistance. When looking for self-help assistance the consumer customarily goes to the paralegal classification in the yellow pages or in other advertising AB 1761 Page 6 media. If AB 1761 is allowed to become law the consumer will no longer find paralegals listed in any advertising and will have no idea what classification to look under to find assistance. By prohibiting the use of the publicly recognized title 'paralegal,' the consumer will be unable to find the assistance they seek. In responding to this charge, Assemblymember Brewer notes that "as it is with most services that advertise in the yellow pages, cross references can be utilized to point the inquiry to another section. For example, if a person is looking for a 'paralegal' in the yellow pages, that section could state 'See Legal Document Assistant' or 'See Legal Services'." Adequacy of Educational Criteria . Opponents argue that by allowing individuals who have neither a certificate of completion of a paralegal program approved by the ABA, nor a certification of completion of a paralegal program at an accredited postsecondary institution to call themselves paralegals, while not allowing individuals who have paralegal certification but who choose not to work under the supervision of an attorney to do so, this bill is unfair. At the very least, several opponents suggest eliminating the category of persons who have only a high school diploma or G.E.D. (See page 3, lines 17-26.) The National Federation of Paralegal Associations also suggests that, for those who currently practice as a paralegal but have a baccalaureate or advanced degree and law-related experience, completion of a paralegal program be required within a specified time period. ISSUE #1: ARE THE EDUCATION AND EXPERIENCE CRITERIA ESTABLISHED BY THIS BILL SATISFACTORY ? Law-Related Experience . The bill requires all individuals seeking to call themselves, and perform as, paralegals to meet one of four possible education or experience categories. Among those categories, the bill provides that a person may be a paralegal upon completion of a baccalaureate or advanced degree in any subject with a declaration by an active member of the State Bar who has supervised the person for a minimum of one year and who attests that the person is qualified to perform legal tasks. What the bill fails to specify, however, is that the one-year of experience under the supervision of the member of the State Bar be law-related experience. Making it clear that the individual received law-related experience would be AB 1761 Page 7 consistent with both the education and experience requirements for LDAs (requiring one year of law-related experience), as well as the required three years of law-related experience for persons who have only a high school diploma or G.E.D. and seek to practice as a paralegal. Ongoing Education in Ethical Responsibilities . With regard to individuals who do not have an advanced degree or a certificate of completion of a paralegal program, the bill requires, in addition to three years of law-related experience, "a minimum of one year of education provided by an active member of the State Bar of California on the ethical responsibilities and duties of a paralegal." Although the precise meaning of this requirement is unclear (i.e. what qualifies as a year of education?), it raises an interesting question for the Committee's consideration about the need for continuing legal education for all paralegals on the issue of legal ethics. Paralegals will be performing legal research, will have direct contact with clients, will be engaged in fact gathering, case management, and recommending approaches to their attorney supervisors. Continuing legal education in ethical issues, as is required for attorneys, would seem to be a necessary addition to paralegal training. Such continuing legal education invariably touches on issues of conflict of interests, appropriate and inappropriate relationships with clients, the unauthorized practice of law, and similar subjects which could only serve to enhance a paralegal's training. AMENDMENT #1 : The Committee may therefore wish to amend the bill in the following ways to address the concerns noted above: 1) Amend page 3, lines 12-16 to read as follows: (3) A baccalaureate degree or an advanced degree in any subject ,anda minimun of one year of law-related experience under the supervision of an active member of the State Bar of California, and a written declaration froman active member of the State Bar of California who has supervised the person for a minimum of one year,this attorney stating that the person is qualified to perform paralegal tasks. 2) Amend page 3, lines 22-25 by deleting "and a minimum of one year of education provided by an active member of the State Bar of California on the ethical responsibilities and duties of a paralegal" AB 1761 Page 8 3) On page 3, between lines 27 and 28 insert: (d) All paralegals shall be required to certify completion every three years of four hours of mandatory continuing legal education in legal ethics. All continuing legal education courses shall meet the requirements of Section 6070 of this Code. ISSUE #2: IS THE PROHIBITION ON PARALEGALS PROVIDING LEGAL SERVICES DIRECTLY TO MEMBERS OF THE PUBLIC INCONSISTENT WITH OTHER STATE AND FEDERAL LAWS ? Opponents of this bill, including the National Federation of Paralegal Associations (NFPA), argue that "several state and federal statutes permit the representation of persons by non-lawyers in various venues (i.e., worker's compensation, social security hearings, Medicaid hearings, etc.)." This point is well-taken. Paralegals should not, per se, be prohibited from providing such services. AMENDMENT #2 . In order to address this concern, the Committee may wish to amend the bill at page 3, line 2, to specify that use of the title paralegal does not prevent an individual from providing legal services directly to members of the public where such activities are specifically allowed by statute, case law, or regulation, or court rule. ISSUE #3: SHOULD PERSONS WHO HAVE BEEN DISBARRED OR SUSPENDED FROM THE PRACTICE OF LAW BE PROHIBITED FROM WORKING AS A PARALEGAL ? In an attempt to be consistent with the requirements and prohibitions of the legal document assistant laws, this bill provides that no person who has been disbarred or suspended from the practice of law for disciplinary reasons shall be entitled to practice as a paralegal. However, because of the different nature of the paralegal and legal document assistant practice, the Committee may decide it is inappropriate to carry over the prohibition for disbarred or suspended attorneys. Paralegals, by definition, are required to work at the direction and under the supervision of an active member of the State Bar. Paralegals may not give legal advice or set fees. A paralegal may not be in charge of the client trust fund, or be in a position to harm a client in the manner that led to the disbarment or suspension in the first place. AMENDMENT #3 : The Committee may therefore wish to amend the bill at page 3, lines 38-40, through page 4, line 2, to delete AB 1761 Page 9 this prohibition. ISSUE #4: SHOULD CONSUMERS WHO ARE INJURED BY PERSONS ACTING AS A PARALEGAL IN VIOLATION OF THIS BILL'S REQUIREMENTS BE ENTITLED TO THE SAME TYPES OF DAMAGES AVAILABLE IN A CIVIL ACTION TO CONSUMERS INJURED BY PERSONS ACTING AS A LEGAL DOCUMENT ASSISTANT IN VIOLATION OF THE LDA STATUTES ? Pursuant to Section 6412.1 of the Business and Professions Code, a consumer who is injured by a person acting as an LDA in violation of the LDA statutes may seek redress in any municipal or superior court for injunctive relief, restitution, and damages. Attorney's fees shall be awarded to the prevailing plaintiff. This bill similarly provides that a consumer injured by a violation of this bill's provisions may seek redress in any municipal or superior court for injunctive relief, restitution, and damages. The bill, however, deviates from the LDA statute at this point, not providing for the award of attorney's fees to a consumer who a court finds to have been injured by a person acting as a paralegal in violation of this bill's requirements and specifications (although the original version of this bill did in fact contain such a provision). The author has failed to provide any rationale for this distinction, and Committee counsel have been unable to discern any public policy reason why an individual who suffers harm at the hands of a person purporting to be a paralegal should be entitled to a smaller array of damages than an individual suffering harm at the hands of an LDA. AMENDMENT #4 : The Committee may therefore wish to amend the bill at page 4, lines 23-24 to clarify that, consistent with the LDA statute, attorney's fees shall be awarded to the prevailing plaintiff. TECHNICAL AMENDMENT . AB 2810 by Assemblymember Robert Pacheco amends the legal document assistant statute to provide that legal document assistants need not register (and post a bond) in every county in which they do business. Rather, AB 2810 requires LDAs to register and post a bond in the county in which they have their principal place of business. This bill, AB 1761, allows a legal document assistant who has registered a business name that includes the word paralegal, prior to January 1, 2001, in the county in which services are being provided , to continue to use the term in his or her business name until he or she is required to renew that registration. Should both bills AB 1761 Page 10 be enacted, these two provisions would be inconsistent. AMENDMENT #5 : The Committee may therefore wish to amend this bill to add appropriate double-jointing language to prevent this inconsistency. Related Pending Legislation . AB 2810 (Robert Pacheco), providing that a legal document assistant is not required to register in every county in which he or she provides services, but only in that county that serves as his or her principal place of business. SB 1927 (Haynes), allowing legal document assistants to provide services to the public without satisfying the registration or bonding requirements if the legal document assistant's practice is limited to small claims court matters. Related Prior Legislation . SB 1418 (Rosenthal), 1998 Stats. Ch. 1079, defining legal document assistants, and requiring legal document assistants to register with the county and post a bond in order to provide services to the public. REGISTERED SUPPORT / OPPOSITION : Support California Alliance of Paralegal Associations (sponsor) 2 Individuals Opposition Professional Paralegal Association for the Consumer CA Association of Legal Document Assistants National Federation of Paralegal Associations San Francisco Paralegal Association More than 20 Individuals Analysis Prepared by : Donna S. Hershkowitz / JUD. / (916) 319-2334