California Bar Journal
OFFICIAL PUBLICATION OF THE STATE BAR OF CALIFORNIA - FEBRUARY 2001
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A New Day For State’s Paralegals

New rules limit activities, establish educational requirements and protect the consumer 

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By DAVID M.M. BELL
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David M.M. BellWith the passage of AB 1761 (Brewer) last year, new rules now regulate the paralegal profession in Califor-nia. These rules, found in Bus. & Prof. Code 6450-6455, define who may hold themselves out as “paralegals,” create educational requirements for paralegals, and circumscribe permissible paralegal activities and services. Regulation of paralegals occurred with the support of the California Alliance of Paralegal Associations (CAPA) and was considered necessary to protect consumers from untrained and unqualified individuals who provide poor services and tarnish the good name of qualified paralegals.

Overview of the Law

Pursuant to the new rules, a “paralegal” means a person who contracts with or is employed by an attorney, law firm, corporation, governmental agency or other entity, who performs substantial, specifically delegated legal work under the direction and supervision of an active member of the State Bar of California or an attorney practicing law in the California federal courts. (Bus. & Prof. Code 6450(a).)

Under this definition, a paralegal may not contract with, or be employed by, a natural person other than an attorney to perform paralegal services. (Bus. & Prof. Code 6450(b)(6).)

Attorneys billing clients for support staff services should take note that the terms “paralegal,” “legal assistant,” “attorney assistant,” “freelance paralegal,” “independent paralegal” and “contract paralegal” are synonymous for purposes of the new rules. (Bus. & Prof. Code 6454.)

The rules clarify that a “paralegal” does not include a non-lawyer who provides legal services directly to members of the public, nor does it include a “legal document assistant” or “unlawful detainer assistant” as defined in Bus. & Prof. Code 6400. (Bus. & Prof. Code 6450(a).) Addi-tionally, any individual employed by the State of California as a paralegal, legal assistant, legal analyst or similar title, is exempt from these new paralegal rules. (Bus. & Prof. Code 6456.)

Tasks that can be performed by a paralegal include, but are not limited to: case planning, development, and management; legal research; interviewing clients; fact gathering and retrieving information; drafting and analyzing legal documents; and collecting, compiling, and utilizing technical information to make an independent decision and recommendation to the supervising attorney. (Bus. & Prof. Code 6450(a).)

A paralegal who otherwise meets the definition may also represent clients before state or federal administrative agencies if that representation is permitted by statute, court rule, or administrative rule or regulation. (Bus. & Prof. Code 6450(a).)

While these permissible activities appear expansive, there are a number of expressly prohibited activities. A paralegal may not provide legal advice, represent a client in court or otherwise engage in conduct that constitutes the unlawful practice of law. (Bus. & Prof. Code 6450(b)(1), (b)(2), and (b)(5), respectively.) As such, a paralegal may not select, explain, draft or recommend the use of any legal document to or for any person other than the attorney who directs and supervises the paralegal. (Bus. & Prof. Code 6450(b)(3).) Additionally, a paralegal may not act as a “runner” or “capper” who solicits clients for an attorney. (Bus. & Prof. Code 6450(b)(4).)

Fee requirements

In providing paralegal services, a paralegal is expressly prohibited from inducing a person to make an investment, purchase a financial product or service, or enter a transaction from which income or profit purportedly may be derived. (Bus. & Prof. Code 6450(b)(7).)

Regarding fees for services, a paralegal may set the fee paid to the paralegal by the supervising attorney, but cannot set the fee the supervising attorney charges to the attorney’s client for the paralegal’s services. (Bus. & Prof. Code 6450(b)-(8).)

Additionally, a paralegal is subject to the same duty as an attorney to maintain inviolate the confidentiality of client information, as found in Bus. & Prof. Code 6068(e). (Bus. & Prof. Code 6453.)

The new rules create educational prerequisites for paralegals, which can be met by various combinations of schooling and experience. (Bus. & Prof. Code 6450(c)(1)-(c)(4).)

While the rules should be reviewed for specific requirements, generally, a paralegal must posses either: (1) a certificate of completion or a degree from an approved paralegal program or post-secondary institution; (2) a baccalaureate degree, combined with a minimum of one year of law-related experience under the supervision of a qualified attorney; or (3) a high school diploma or general equivalency diploma, combined with a minimum of three years of law-related experience under the supervision of a qualified attorney.

The third qualification will sunset in 2003. The qualified attorney must be an active member of the State Bar of California for at least the preceding three years, or have practiced in the federal courts in California for at least the preceding three years. (Bus. & Prof. Code 6450(c)(3), (c)(4).) Where the educational prerequisite is met by a combination of schooling and experience, the paralegal must obtain a written declaration from the supervising attorney stating that the individual is qualified to perform paralegal services. (Id.)

Fly-by-night paralegal schools, beware!

CLE requirements

The new rules also create mandatory continuing legal education requirements for paralegals. (Bus. & Prof. Code 6450(d).) Paralegals must complete four hours of continuing education in legal ethics (every three years) and four hours in either general law or a specialized area of law (every two years). All continuing education courses are required to meet the requirements of Bus. & Prof. Code 6070 regarding attorney MCLE. (Id.) Certification of the paralegal’s continuing education requirements must be made with the paralegal’s supervising attorney, and the paralegal is responsible for keeping a record of the paralegal’s certifications. (Id.)

Advertising requirements

It is now also unlawful for an individual to hold out as a paralegal on any advertisement, letterhead, business card or sign, or elsewhere, unless the individual has met educational prerequisites and performs all services under the direction and supervision of a qualified attorney. (Bus. & Prof. Code 6452(a).)

The business card of a paralegal must include the name of the law firm where the paralegal is employed, or a statement that the paralegal is employed by, or contracting with, a licensed attorney. (Id.) Remember that the terms “paralegal,” “legal assistant,” “attorney assistant,” “freelance paralegal,” “independent paralegal” and “contract paralegal” are synonymous for this purpose.

Violation of the unlawful activity or holding out rules is an infraction for the first violation, punishable upon conviction by a fine of up to $2,500 as to each consumer to whom a violation occurs. (Bus. & Prof. Code 6455(b).)

Each subsequent violation is a misdemeanor punishable upon conviction by a fine of $2,500 as to each consumer to whom a violation occurs, or imprisonment in a county jail for not more than one year, or by both fine and imprisonment. (Id.) Any person convicted will be ordered to pay restitution to the victim. (Id.) The attorney who uses the services of a paralegal is liable for any harm caused as the result of the paralegal’s negligence, misconduct, or violation of the new paralegal rules. (Bus. & Prof. Code 6152(b).)

Consumers injured by a violation of the new rules may file a complaint and seek redress in municipal or superior court for injunctive relief, restitution and damages. (Bus. & Prof. Code 6455(a).) Attorney’s fees will be awarded to the prevailing plaintiff. (Id.)

Compliance and Enforcement

The new paralegal rules raise a number of practical compliance questions and enforcement issues. For example, who supervises and directs the paralegal where there is no in-house attorney at the corporation, governmental agency or other entity where the paralegal works? In such a situation, may existing (or specifically retained) outside counsel provide such supervision and direction?

In my opinion, this should be permissible, as the rules nowhere require the “direct” supervision or “specific” direction of the supervising attorney.

However, the rules do require that the paralegal’s work be “specifically delegated” by an attorney.  As such, I would recommend that the outside attorney prepare written paralegal guidelines and meet on a regular basis with in-house paralegals to specifically delegate legal work, define paralegal activities, and certify CLE compliance (in-house supervising attorneys should meet with paralegals on a regular basis as well). Additionally, I believe that outside counsel should be able to provide the declaration of qualification necessary to grandfather in paralegals based upon their work experience, so long as the outside attorney has worked with the entity for the requisite period of time necessary to provide such declaration. 

When hiring new paralegals, attorneys should be careful to check their academic credentials. Thereafter, attorneys should make certain that their paralegals obtain necessary CLE.

Caution about titles

Law firms should be cautious with employee titles. There is a recent trend to give legal secretaries the title of “legal assistant.” This practice must cease under the new law. Review your employees’ titles for compliance, and then also review all letterhead, business cards, billings and any other pertinent legal advertising and/or documents before you are challenged under the new law.

Assemblywoman Marilyn Brewer, co-author of AB1761, has prepared a list of frequently asked questions about the bill and compliance therewith, that is now archived in the legislative records. A copy may be viewed at the website of the California Alliance of Paralegal Associations, www.caparalegal.org.

Regarding enforcement, the new rules depend upon self-enforcement by consumers through use of the courts, making them considerably less effective than the disciplinary rules governing lawyers, which are enforced with the assistance of the State Bar of California. Additionally, unlike an attorney, a paralegal who violates the rules does not risk losing his or her license to perform services because there is no licensing requirement for paralegals.

While consumers will often direct paralegal complaints to the State Bar of California, it is important to understand that the State Bar does not have jurisdiction over paralegals. (See Bus. & Prof. Code 6076.)

However, the State Bar can investigate and discipline attorneys who fail to competently supervise their non-attorney employees, including paralegals. (See California Rule of Professional Conduct 3-110, Discussion.)

Self-enforcement may also occur where billings are challenged and firms must prove that paralegals, and others with synonymous names, are in compliance with the law.

The new paralegal rules follow upon years of debate. How they play out in practice remains to be seen. Raising the bar for paralegals should result in higher quality services and effectuate greater consumer protection, but may also raise the costs of legal services to consumers.

Ethics expert David M.M. Bell, now in private practice, formerly ran the State Bar’s Ethics Hotline and currently serves as vice chair of the bar’s Law Practice Management & Technology Section. He can be reached at dmbell@dnai.com.