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.