California Assembly Bill AB2878 Amended / Bill

 BILL NUMBER: AB 2878AMENDED BILL TEXT AMENDED IN ASSEMBLY MAY 27, 2016 AMENDED IN ASSEMBLY APRIL 18, 2016 INTRODUCED BY Committee on Judiciary (Assembly Members Mark Stone (Chair), Alejo, Chau, Chiu, Cristina Garcia, and Holden) FEBRUARY 25, 2016 An act to amend  Section   Sections 6001, 6011, 6015, 6016, 6019, 6021, 6022, 6026.7, 6060.2, 6060.25, 6086.5, and  6140 of,  to add Section 6140.56,  and to repeal  Section 6008.5   Sections 6008.5, 6009.7, 6012, 6013.2, 6018, and 6026.5  of, the Business and Professions Code, relating to  attorneys.   the State Bar.  LEGISLATIVE COUNSEL'S DIGEST AB 2878, as amended, Committee on Judiciary. Attorneys:  annual membership fees.   State Bar: board of trustees.  The State Bar Act provides for the licensure and regulation of attorneys by the State Bar of California, a public corporation governed by a board of trustees.  Existing law,   That act requires 6 members of the 19-member board to be attorneys elected from State Bar Districts. That act provides that the State Bar is subject to the Bagley-Keene Open Meeting Act and the California Public Records Act, as specified. That act,  until January 1, 2017, requires the board to charge an annual membership fee for active members of up to $315 for 2016. Existing law prohibits the Legislature, when the board of trustees places a charge upon or otherwise makes available all or any portion of the income or revenue from membership fees for the payment of security of an obligation of the State Bar and so long as any obligation remains unpaid, from reducing the maximum membership fee below the maximum in effect at the time the obligation is created or incurred and provides that this provision constitutes a covenant to the holder of such an obligation.  That act establishes the State Bar Court to act in the place of the board of trustees in the determination of disciplinary proceedings, as specified. That act authorizes the State Bar to raise additional revenue by any lawful means, including, but not limited to, the creation of foundations or not-for-profit corporations. That act requires the board to establish and administer a Client Security Fund to relieve or mitigate pecuniary losses caused by dishonest conduct of active members of the State Bar, as specified.   This bill would provide that the board of trustees consist of no more than 19 members and no fewer than 13 members and would require the board to transition to a 13-member board, as specified. The bill would remove from the board attorney members elected from State Bar Districts and would make conforming changes. The bill would require each member of the board appointed after December 31, 2016, to have demonstrated educational or experience expertise, or both, in one of 5 specified areas, including public finance. This bill would provide that access to records of the State Bar Court is subject to the rules and laws applicable to the judiciary instead of the California Public Records Act and would exempt the State Bar Court from the Bagley-Keene Open Meeting Act.  This  bill would,   bill,  until January 1, 2018,  would  require the board to charge an annual membership fee in  the same   a specified  amount for 2017. The bill would repeal the  above  provision prohibiting the Legislature from reducing the maximum membership fee and  the provision authorizing the State Bar to raise additional revenue by any lawful means. The bill would require the State Bar to conduct a thorough analysis of the Client Security Fund and to submit a report to the Legislature on its analysis of that fund by March 15, 2017, as specified. The bill  would state various findings and declarations of the Legislature.  Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.   This bill would make legislative findings to that effect.  Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares all of the following: (a) The protection of the public is required, by statute, to be the highest priority of the State Bar of California and must be the paramount focus of the State Bar, its employees, and, most importantly, its board of trustees. All other duties and activities of the State Bar are ancillary to its regulatory oversight of the state's more than 250,000 attorneys, over 185,000 of whom are active members. (b) Throughout its history, the State Bar has been the subject of substantial controversies, including allegations of serious fiscal and management improprieties, and most recently failure to properly protect the public against the unauthorized practice of law, including allowing hundreds of complaints to languish in a drawer. (c) In May 2015, the California State Auditor released its biannual performance audit of the State Bar, reviewing the State Bar' s backlog of discipline cases and its recent $75,000,000 purchase and renovation of a building in Los Angeles at three times the cost originally estimated and requiring a loan against the Public Protection Fund, which is designed to be an emergency fund to protect the public in the event of a financial emergency. The audit uncovered significant, questionable decisions made by the State Bar in the handling of both matters, including that the State Bar had not fully or consistently reported its backlog of discipline cases and that, in order to reduce its backlog of discipline cases, the State Bar made questionable choices, potentially causing "significant risk to the public." (d) Most recently and without consultation with the Legislature, the State Bar chose to replace the loan on the Los Angeles building, along with a brand new loan for updating its San Francisco building, with a securitization on future members dues, potentially tying the hands of the Legislature in setting future dues amounts. (e) As a result of the troubling findings of the audit, the Legislature, as part of the 2015 State Bar dues legislation, imposed important new preliminary reforms on the State Bar. First, the Legislature mandated that the State Bar be subject to both the California Public Records Act and the Bagley-Keene Open Meetings Act. These good government reforms help ensure the integrity, transparency, and accountability of the State Bar. Second, the Legislature directed the California State Auditor to conduct a full financial audit of the State Bar, which is due on May 15, 2016. Finally, the State Bar must develop a workforce plan for its attorney discipline system and a spending plan to determine the level for dues to recommend to the Legislature, which are both due on May 15, 2016. These reports should help inform the Legislature regarding the appropriate actions to take in its oversight responsibility of the State Bar and its own determination of the proper dues amount. (f) In 2011, the Legislature directed the State Bar to establish a Governance in the Public Interest Task Force to make recommendations to the Governor, the Supreme Court, and the Legislature every three years, beginning May 15, 2014, for, among other things, enhancing the protection of the public and ensuring that protection of the public is the highest priority in the licensing, regulation, and discipline of attorneys, to be reviewed by the Assembly and Senate Committees on Judiciary in their regular consideration of the annual State Bar dues measure. That first report is now two years overdue and, although the Governance in the Public Interest Task Force finally began holding meetings this year, it appears that this already long overdue report will not be completed during this legislative session. (g) It is the intent of the Legislature, in fulfilling its important oversight responsibility over the State Bar and the proper amount State Bar members must pay in annual dues, that this bill serve as the vehicle to implement possible recommendations for substantially improving the operations, effectiveness, and efficiency of the State Bar based on the 2016 California State Auditor's audit of the State Bar, along with the State Bar's discipline workforce and spending plans and any draft Governance Task Force report or other information, in order to ensure that the dues are the appropriate amount, that the State Bar becomes more accountable to the public, and that public protection is, and remains, the State Bar's top priority.  SEC. 2.   Section 6001 of the   Business and Professions Code   is amended to read:  6001. The State Bar of California is a public corporation. It is hereinafter designated as the State Bar. The State Bar has perpetual succession and a seal and it may sue and be sued. It may, for the purpose of carrying into effect and promoting its objectives: (a) Make contracts. (b) Borrow money, contract debts, issue bonds, notes and debentures and secure the payment or performance of its obligations. (c) Own, hold, use, manage and deal in and with real and personal property. (d) Construct, alter, maintain and repair buildings and other improvements to real property. (e) Purchase, lease, obtain options upon, acquire by gift, bequest, devise or otherwise, any real or personal property or any interest therein. (f) 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. (g) Do all other acts incidental to the foregoing or necessary or expedient for the administration of its affairs and the attainment of its purposes. Pursuant to those powers enumerated in subdivisions (a) to (g), inclusive, it is recognized that the State Bar has authority to raise revenue in addition to that provided for in Section 6140 and other statutory provisions.  The State Bar is empowered to raise that additional revenue by any lawful means, including, but not limited to, the creation of foundations or not-for-profit corporations.  The State Bar shall conspicuously publicize to its members in the annual dues statement and other appropriate communications, including its Web site and electronic communications, that its members have the right to limit the sale or disclosure of member information not reasonably related to regulatory purposes. In those communications the State Bar shall note the location of the State Bar's privacy policy, and shall also note the simple procedure by which a member may exercise his or her right to prohibit or restrict, at the member' s option, the sale or disclosure of member information not reasonably related to regulatory purposes. On or before May 1, 2005, the State Bar shall report to the Assembly and Senate Committees on Judiciary regarding the procedures that it has in place to ensure that members can appropriately limit the use of their member information not reasonably related to regulatory purposes, and the number of members choosing to utilize these procedures. No law of this state restricting, or prescribing a mode of procedure for the exercise of powers of state public bodies or state agencies, or classes thereof, including, but not by way of limitation, the provisions contained in Division 3 (commencing with Section 11000), Division 4 (commencing with Section 16100), and Part 1 (commencing with Section 18000) and Part 2 (commencing with Section 18500) of Division 5, of Title 2 of the Government Code, shall be applicable to the State Bar, unless the Legislature expressly so declares. Notwithstanding the foregoing or any other law, pursuant to Sections 6026.7 and 6026.11, the State Bar is subject to the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and, commencing April 1, 2016, the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code).  SEC. 2.   SEC. 3.  Section 6008.5 of the Business and Professions Code is repealed.  SEC. 4.   Section 6009.7 of the   Business and Professions Code   is repealed.   6009.7. (a) (1) The State Bar shall determine the manner by which to reduce the board of trustees from 23 members to 19 members, as described in Section 6011, pursuant to the election and appointment processes specified in Sections 6012, 6013.1, 6013.2, and 6013.3. (2) The State Bar shall develop a plan for implementing the transition to a 19-member board by January 31, 2012. (3) By January 31, 2012, the State Bar shall submit a written report to the Senate and Assembly Committees on Judiciary that includes, but is not limited to, the implementation plan described in paragraph (2). (b) The State Bar shall complete the transition to a 19-member board no later than October 31, 2014. (c) The State Bar shall not change, reduce, shorten, lengthen, or abolish the terms of board members commencing prior to December 31, 2011, or force any board member to resign in order to institute a 19-member board pursuant to this section. (d) The State Bar shall report annually to the Senate and Assembly Committees on Judiciary on its progress toward implementing the transition to a 19-member board.   SEC. 5.   Section 6011 of the   Business and Professions Code   is amended to read:  6011. (a) The board shall consist of no more than  23   19  members and no  less  fewer  than  19   13  members. (b) It is the intent of the Legislature that the board consist of no more than  23   19  members and no  less   fewer  than  19   13  members during the period of transition from a  23-member  19-member  board to a  19-member board, as described in Section 6009.7.   13-member board.  It is the intent of the Legislature that the  board, pursuant to the plan developed by the State Bar as described in Section 6009.7, gradually   board  decrease its size without shortening, lengthening, or abolishing terms commencing prior to December 31,  2011,   2016,  with the ultimate goal of instituting a  19-member   13-member  board no later than October 31,  2014, pursuant to Section 6009.7.   2019. It is the intent of the Legislature that this transition occur by the expiration of the terms of the elected members who are serving on the board as of December 31, 2016.   (c) Each member appointed after December 31, 2016, shall have demonstrated educational or experience expertise, or both, in at least one of the following:   (1) Public finance.   (2) Public administration.   (3) Business or financial management.   (4) State government, particularly prior regulatory experience.   (5) Legal ethics.   SEC. 6.   Section 6012 of the   Business and Professions Code   is repealed.   6012. (a) State Bar Districts, as they existed on December 31, 2011, pursuant to Section 6012.5, as added by Chapter 1223 of the Statutes of 1989, shall cease, pursuant to the act that added this section, for purposes of the election of attorney members of the board. However, attorney members who were elected in 2009, 2010, or 2011 to serve for a three-year term commencing at the conclusion of the annual meeting held in those years shall be eligible to serve their full three-year terms. (b) Commencing on January 1, 2012, State Bar Districts shall be based on the six court of appeal districts as constituted pursuant to Section 69100 of the Government Code, as they existed on December 31, 2011. The board shall provide for the election of six attorney members of the board from these six State Bar Districts as specified in Section 6013.2.   SEC. 7.   Section 6013.2 of the   Business and Professions Code  is repealed.   6013.2. (a) Six members of the board shall be attorneys elected from the State Bar Districts created by the board pursuant to Section 6012. (b) An attorney member elected pursuant to this section shall serve for a term of three years. An elected attorney member may run for reelection, but may be reelected to only serve one additional term.   SEC. 8.   Section 6015 of the   Business and Professions Code   is amended to read:  6015. No person is eligible for attorney membership on the board unless  both   all  of the following conditions are satisfied: (a) He or she is an active member of the State Bar. (b) Either: (1)  If   Prior to October 31, 2019, if  elected, he or she maintains his or her principal office for the practice of law within the State Bar district from which he or she is elected. (2) If appointed by the Supreme Court or the Legislature, he or she maintains his or her principal office for the practice of law within the State of California.  (c) If newly appointed after December 31, 2016, he or she satisfies the requirements of subdivision (c) of Section 6011.   SEC. 9.   Section 6016 of the   Business and Professions Code   is amended to read:  6016. The term of office of each attorney member of the board shall commence at the conclusion of the annual meeting next succeeding his or her election or appointment, and he or she shall hold office until his or her successor is elected or appointed and qualified. For the purposes of this section, the time intervening between any two successive annual meetings shall be deemed to be one year.  Except as specified in Section 6013.1, vacancies in the board of trustees shall be filled by the board by special election or by appointment for the unexpired term.  The board of trustees may provide by rule for an interim board to act in the place and stead of the board when because of vacancies during terms of office there is less than a quorum of the board.  SEC. 10.   Section 6018 of the   Business and Professions Code   is repealed.  6018. Nominations of elected members of the board shall be by petition signed by at least 20 persons entitled to vote for such nominees. Only active members of the State Bar maintaining their principal offices for the practice of the law in the respective State Bar districts shall be entitled to vote for the member or members of the board therefrom.   SEC. 11.   Section 6019 of the   Business and Professions Code   is amended to read:  6019. Each place upon the board for which a member is to be  elected or  appointed shall for the purposes of the  election or  appointment be deemed a separate office.  If only one member seeks election to an office, the member is deemed elected. If two or more members seek election to the same office, the election shall be by ballot. The ballots shall be distributed to those entitled to vote at least twenty days prior to the date of canvassing the ballots and shall be returned to a site or sites designated by the State Bar, where they shall be canvassed at least five days prior to the ensuing annual meeting. At the annual meeting, the count shall be certified and the result officially declared.   In all other respects the elections shall be as the board may by rule direct.   SEC. 12.   Section 6021 of the   Business and Professions Code   is amended to read:  6021. (a) (1) Within the period of 90 days next preceding the annual meeting, the board, at a meeting called for that purpose, shall elect the president, vice president, and treasurer for the ensuing year. The president, the vice president, and the treasurer shall be elected from among all members of the board. (2) The newly elected president, vice president, and treasurer shall assume the duties of their respective offices at the conclusion of the annual meeting following their election. (b) The term of the board president shall be one year, except that he or she may be reelected to a second one-year term as the board president. (c) Notwithstanding the provisions of  Sections 6009.7 and   Section  6011 regarding a  19-member   13-member  board, if the president is elected from among those members of the board whose terms on the board expire  by  that year and has not been  reelected or  reappointed to another term under Section  6013.1, 6013.2, 6013.3,   6013.1  or 6013.5, the president shall serve as a  20th   14th  member of the board during his or her one-year term, and he or she may vote.  SEC. 13.   Section 6022 of the   Business and Professions Code   is amended to read:  6022. The  secretary   officers of the State Bar  shall be selected annually by the board and need not be a member of the State Bar.  SEC. 14.   Section 6026.5 of the   Business and Professions Code   , as added by Section 3 of Chapter 537 of the Statutes of 2015, is repealed.   6026.5. (a) Pursuant to Section 6026.7, every meeting of the board shall be open to the public except those meetings, or portions thereof, relating to: (1) Consultation with counsel concerning pending or prospective litigation. (2) Involuntary enrollment of active members as inactive members due to mental infirmity or illness or addiction to intoxicants or drugs. (3) The qualifications of judicial appointees, nominees, or candidates. (4) The appointment, employment, or dismissal of an employee, consultant, or officer of the State Bar or to hear complaints or charges brought against such employee, consultant, or officer, unless such person requests a public hearing. (5) Disciplinary investigations and proceedings, including resignations with disciplinary investigations or proceedings pending, and reinstatement proceedings. (6) Appeals to the board from decisions of the Board of Legal Specialization refusing to certify or recertify an applicant or suspending or revoking a specialist's certificate. (7) Appointments to or removals from committees, boards, or other entities. (8) Joint meetings with agencies provided in Article VI of the California Constitution. (b) This section shall become operative on April 1, 2016.   SEC. 15.   Section 6026.7 of the   Business and Professions Code   , as added by Section 5 of Chapter 537 of the Statutes of 2015, is amended to read:  6026.7. (a) The State Bar is subject to the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code) and all meetings of the State Bar are subject to the Bagley-Keene Open Meeting Act. (b) Notwithstanding any other law, the Bagley-Keene Open Meeting Act shall not apply to the Judicial Nominees Evaluation  Commission or   Commission,  the Committee of Bar  Examiners.   Examiners, or the State Bar Court.   (c) This section shall become operative on April 1, 2016.   (c) In addition to the grounds authorized in the Bagley-Keene Open Meeting Act, a closed session may be held for those meetings, or portions thereof, relating to both of the following:   (1) Appeals to the board from decisions of the Board of Legal Specialization refusing to certify or recertify an applicant or suspending or revoking a specialist's certificate.   (2) The preparation, approval, grading, or administration of examinations for certification of a specialist.   SEC. 16.   Section 6060.2 of the   Business and Professions Code   is amended to read:  6060.2.  (a)    All investigations or proceedings conducted by the State Bar concerning the moral character of an applicant shall be confidential and shall not be disclosed pursuant to any state law, including, but not limited to, the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) unless the applicant, in writing, waives the confidentiality.  However, the   (b)     Notwithstanding subdivision (a), the  records of the proceeding may be  subject   disclosed in response  to  lawfully   either of the following:   (1)     A lawfully  issued  subpoenas.   subpoena.   (2) A written request from a government agency responsible for either the enforcement of civil or criminal laws or the professional licensing of individuals that is conducting an investigation about the applicant.   SEC. 17.   Section 6060.25 of the   Business and Professions Code   is amended to read:  6060.25.  (a)    Notwithstanding any other law, any identifying information submitted by an applicant to the State Bar for admission and a license to practice law and all State Bar admission records, including, but not limited to, bar examination scores, law school grade point average (GPA), undergraduate GPA, Law School Admission Test scores, race or ethnicity, and any information contained within the State Bar Admissions database or any file or other data created by the State Bar with information submitted by the applicant that may identify an individual applicant,  other than information described in subdivision (b),  shall be confidential and shall not be disclosed pursuant to any state law, including, but not limited to, the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code).  (b) This section does not prohibit the disclosure of any of the following:   (1) The names of applicants who have passed any examination administered, given, or prescribed by the Committee of Bar Examiners.   (2) Information that is provided at the request of an applicant to another jurisdiction where the applicant is seeking admission to the practice of law.   (3) Information provided to a law school that is necessary for the purpose of the law school's compliance with accreditation or regulatory requirements.   (4) Information provided to the National Conference of Bar Examiners or a successor nonprofit organization in connection to the State Bar's administration of any examination.   (c) Disclosure of any of the information in paragraphs (2) to (4), inclusive, of subdivision (b) shall not constitute a waiver under Section 6254.5 of the Government Code of the exemption from disclosure provided for in subdivision (a) of this section.   SEC. 18.   Section 6086.5 of the   Business and Professions Code   is amended to read:  6086.5. The board of trustees shall establish a State Bar Court, to act in its place and stead in the determination of disciplinary and reinstatement proceedings and proceedings pursuant to subdivisions (b) and (c) of Section 6007 to the extent provided by rules adopted by the board of trustees pursuant to this chapter. In these proceedings the State Bar Court may exercise the powers and authority vested in the board of trustees by this chapter, including those powers and that authority vested in committees of, or established by, the board, except as limited by rules of the board of trustees within the scope of this chapter.  Access to records of the State Bar Court shall be governed by court rules and laws applicable to records of the judiciary and not the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code).  For the purposes of Sections 6007, 6043, 6049, 6049.2, 6050, 6051, 6052, 6077 (excluding the first sentence), 6078, 6080, 6081, and 6082, "board" includes the State Bar Court. Nothing in this section shall authorize the State Bar Court to adopt rules of professional conduct or rules of procedure. The Executive Committee of the State Bar Court may adopt rules of practice for the conduct of all proceedings within its jurisdiction. These rules may not conflict with the rules of procedure adopted by the board, unless approved by the Supreme Court.  SEC. 3.   SEC. 19.  Section 6140 of the Business and Professions Code is amended to read: 6140. (a) The board shall fix the annual membership fee for active members for 2017 at a sum not exceeding three hundred fifteen dollars ($315). (b) The annual membership fee for active members is payable on or before the first day of February of each year. If the board finds it appropriate and feasible, it may provide by rule for payment of fees on an installment basis with interest, by credit card, or other means, and may charge members choosing any alternative method of payment an additional fee to defray costs incurred by that election. (c) This section shall remain in effect only until January 1, 2018, and, as of that date, is repealed, unless a later enacted statute, that is enacted before January 1, 2018, deletes or extends that date.  SEC. 20.   Section 6140.56 is added to the   Business and Professions Code   , to read:   6140.56. (a) To ensure that the Client Security Fund can adequately protect the public and relieve or mitigate financial losses caused by the dishonest conduct of members of the State Bar by paying claims in a timely manner, the State Bar shall conduct a thorough analysis of the Client Security Fund, including a determination of the ongoing needs of the fund to satisfy claims in a timely manner, a review of additional efforts that can be taken to increase the collection of payments from the responsible attorneys, and a review of other State Bar expenditures to determine whether other expenditures that do not directly impact the State Bar's public protection functions, including, but not limited to, executive salaries and benefits, can be reduced or redirected in order to better fund the Client Security Fund through existing revenue, and, whether, after all other options have been fully and thoroughly exhausted, an increase in membership dues is necessary to ensure that the Client Security Fund can timely pay claims. (b) The State Bar shall submit a report on its analysis of the Client Security Fund to the Legislature by March 15, 2017, so that the plans can be reviewed in conjunction with the bill that would authorize the imposition of the State Bar's membership fee. The report shall be submitted in compliance with Section 9795 of the Government Code. (c) For purposes of this section, "timely manner" means within 12 months from the time the claim is received by the State Bar.   SEC. 21.   The Legislature finds and declares that Sections 17 and 20 of this act, which amend Sections 6026.7 and 6086.5 of the Business and Professions Code, impose a limitation on the public's right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:   In order to protect the decisionmaking process of the State Bar Court in a manner that is similar to the deliberative functions of other courts and in order to ensure that personal or sensitive information regarding discipline by the State Bar Court is kept confidential, including for persons participating in discussions and offers of settlement pursuant to arbitration or mediation, it is necessary to exempt the State Bar Court from the provision of the Bagley-Keene Open Meeting Act and the California Public Records Act.