 With 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.
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