Posted on September 22, 2022.

A new California law limits the ability of the State Bar to increase the scope of practice for paralegals or explore corporate ownership of law firms.

The agency now has a Jan. 15 deadline to report to the legislature how much the bar has spent since 2018 on studying, creating a regulatory sandbox or licensing nonattorneys as paraprofessionals.

Under the law (A.B. 2958) signed late Sunday by Gov. Gavin Newsom (D), any spending on the regulatory sandbox will require lawmakers’ approval.

The legislature regulates lawyers under the state's Business & Professions Code, while the California Supreme Court licenses and disciplines attorneys.

“This year’s State Auditor's report on the State Bar revealed numerous lapses in the discipline system that allowed dishonest or incompetent attorneys to continue to practice law, endangering the public,” a legislative analysis said, citing the audit released last spring.

Lawmakers acted after complaints about lax oversight and widespread attention on disgraced attorney Thomas Girardi, who was disbarred amid allegations he’d violated bar ethics rules and stolen millions of dollars from clients.

The agency is now subject to state Information Practices Act data breach reporting requirements. The bar in February publicly disclosed that a breach of its confidential attorney discipline case data led to thousands of records being posted on a public website that aggregates court records nationwide, prompting a federal lawsuit.

Under the new law, the annual fee of $390 for active licenses will drop by $4, and by $1 for the $97.40 charged to inactive attorneys, if the bar enters into a contract to sell its San Francisco building by Oct. 31. The measure prohibits the bar from using proceeds from that sale without the legislature’s approval.

Each licensee can add up to $5 to the annual fee to support lobbying and related activities. The bar can’t spend more for the support or defense of lobbying and related activities than the amount licensees pay.

The state auditor’s report, due April 15, will evaluate each bar program or division supported by the licensing fees, including assessing how much fee revenue, staff, and resources are currently budgeted and subsequently expended to perform existing tasks and responsibilities.

The audit also will assess how the bar administers discipline cases that require an outside investigator or prosecutor and how that process can be improved, including the cost-effectiveness and timeliness of such investigations and prosecutions.

Source: Bloomberg Law