A chaotic and unpredictable year in Capitol
By Larry Doyle
Chief Legislative Counsel
An unprecedented $38 billion budget deficit, an equally unprecedented effort
to recall Gov. Gray Davis and a wave of abusive lawsuits played key roles in
what was easily the most unpredictable and chaotic legislative year in recent
memory.
The budget deficit dominated most of the legislature's attention for the first
seven months of the year, relegating non-fiscal policy issues largely to the
back burner. Of particular concern to the state's attorneys was the impact of
the budget deficit on the state's judicial system. The budget submitted by Gov.
Davis in January proposed to make profound cuts in the operating budgets for
the state's trial courts and Administrative Office of the Courts, raising the
spectre that court operations would have to be severely cut back. Worse, the
budget as submitted was based upon the implementation of several extremely controversial
and contentious policy changes which, if not made, would have left the courts
in even more dire straits.
Fortunately, the courts had two effective champions in the legislature
Sens. Joe Dunn, D-Santa Ana, and Dick Ackerman, R-Irvine. Attorneys with many
years of private legal practice to their credit, Dunn and Acker-man worked closely
with the Admini-strative Office of the Courts in crafting a compromise budgetary
proposal that avoided draconian cuts in the operating budgets of the courts
and Judicial Council though at the cost of some substantially higher
fees.
Unfortunately, given the fact that the budget eventually adopted by the legislature
this year addressed the fiscal shortfall largely through accounting shifts and
short-term borrowing, current projections are that the state, and therefore
the courts, will be facing a substantial budget deficit next year as well. Indeed,
a series of legal challenges to component parts of the budget deal (e.g., the
sale of bonds without voter approval) may rip its fragile fabric, leaving multibillion
dollar gaps. The prospect remains of additional reductions during the current
budget year which, if implemented, would slash further at programs that have
already been nearly eviscerated.
Many other measures either made concessions or fell victim to the state's financial
difficulties. A bill (AB 1095) to create a task force to analyze the plight
of county law libraries and recommend funding improvements was finally enacted
only after it was amended to ensure that all task force costs would be absorbed
by the participating entities. On the other hand, a Judicial Council-sponsored
proposal to ask the voters to approve the issuance of $4 billion in general
obligation bond funds to be used for the state's courts (SB 655) was put on
hold for the year due to the state's fiscal uncertainty, as was another council-sponsored
proposal to allow the conversion of subordinate judicial officers to judge-
ships under limited circumstances.
Even the State Bar's funding authorization bill (AB 1708) was affected in a
small way by the budget deficit. Though the bar is not funded by taxpayer dollars,
the legislature's concern over all fees and funding was a key factor in the
bar's decision to seek only a single-year funding authorization. Even so, the
bill was a clear success, winning substantial bipartisan majorities in both
houses and making some small but significant reforms. The first permits the
bar to seek money judgments against attorneys who have been assessed disciplinary
costs, or whose actions have required a payment from the Client Security Fund.
Previously these charges could only be added to a member's fees or reinstatement
costs and thus were virtually never paid.
The second reform in AB 1708 revises the ability of attorneys to scale their
bar dues. Originally in-tended as a way for low-income attorneys to receive
a break on their fees, a flaw in the original language permitted this 1999 addition
to the State Bar Act to be used by high-income attorneys to cut those fees by
as much as half. AB 1708 restores much of the original intent of the law, so
that the 50 percent fee reduction will now be available only to the truly low-income.
Not every issue early in the year centered around the budget deficit, however.
One notable exception was the state's unique Unfair Competition Law (UCL). Business
interests have long sought to make sweeping changes to this law, which permits
private attorneys to file suit on behalf of the general public without the necessity
of an injured plaintiff and is seen by its detractors as highly abuseable. These
attempts at revision have been consistently rebuffed over the years by the legislature,
which has held with consumer organizations led by the Consumer Attorneys
of California representing the plaintiffs' bar that the law is an essential
consumer protection tool, and that there was no evidence of the threatened abuse.
That latter argument seemed to be shattered early in the year, when news stories
reported that a handful of law firms were filing (or threatening to file) suit
under the UCL against thousands of minority-owned businesses, then coercing
the defendants or prospective defendants into quick settlements to avoid even
more expensive litigation. The allegations of rampant abuse of the UCL ultimately
re-sulted in the introduction of no fewer than 11 bills to tweak, revise or
gut the law.
Lawmakers also sought an extra-legislative response to the problem, calling
upon the State Bar and the attorney general to take action. Both responded.
The bar launched the largest investigation in its history against one of the
law firms involved, the Trevor Law Group of Beverly Hills. All three TLG attorneys
ultimately were suspended from the practice of law for unethical practice, and
subsequently resigned their licenses rather than be disbarred. The attorney
general filed unfair competition suits against both the Trevor Law Group and
another firm, Brar and Gamulin, under the same law the firms were accused of
abusing. Those suits are still pending.
Relieved of some of the pressure to make sweeping changes in the UCL by the
actions of the bar and attorney general, the legislative leadership rejected
all of the proposals to change the law except two a linked package (SB
122 and AB 95) sponsored by the Consumer Attorneys and authored by the chairs
of the two legislative judiciary committees, Sen. Martha Escutia and Assembly
Mem-ber Ellen Corbett, which proposed to make targeted changes in the law. A
coalition of Republicans and moderate Democrats saw the proposed changes as
too little in the way of reform and banded together to defeat SB 122 on the
final night of the session, leaving nothing done legislatively in the area
and raising the prospect that proponents of more sweeping changes in the law
may go the initiative route.
The defeat of SB 122 was only one episode in a rather chaotic August, made
that way principally by the prospect of the Oct. 7 recall election. Fearful
that the recall might be successful and the governor replaced with a far-less-friendly
successor, liberal lawmakers pushed hard to get every bill they could down to
the governor's desk for signature while their conservative counterparts
tried to make a legislative goal line stand.
Further adding to the end-of-session chaos was another budget-related issue:
The Senate's refusal to take up six budget "trailer" bills containing cuts and
augmentations that Assembly Republicans had demanded and received from their
Democratic counterparts as a condition of finally sending the budget to the
governor in July. The Senate's nonpartisan stance was that, since they had not
been party to the agreement, they were not bound by it. This angered Assembly
Republicans, who responded by withholding the votes needed to pass any 2/3-vote
measure in the final week of the session. This resulted in some serious 11th-hour
scrambling for alternative legislative vehicles for some proposed laws (such
as an essential fix to the newly increased court fees, which ultimately ended
up in AB 296) and the failure to enact others.
Included in this latter group was a bill (AB 1313 – Parra) needed to keep the
state's version of "Megan's Law" creating a database of registered sex offenders
from sunsetting at the end of the year. Given the political sensitivities of
the issue, it's quite possible we will see a special session or a reconvening
of the current session to deal with this and perhaps other issues.
It may not be over yet.
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