MINUTES OF MEETING

      ASSEMBLY COMMITTEE ON COMMERCE

 

      Sixty-seventh Session

      April 19, 1993

 

 

 

The Assembly Committee on Commerce was called to order by Chairman Gene T. Porter at 3:39 p.m., Monday, April 19, 1993, in Room 332 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.

 

 

COMMITTEE MEMBERS PRESENT:

 

      Mr. Gene T. Porter, Chairman

      Mr. Morse Arberry, Jr., Vice Chairman

      Ms. Kathy M. Augustine

      Mr. Rick C. Bennett

      Mr. John Bonaventura

      Mr. Val Z. Garner

      Ms. Chris Giunchigliani

      Mr. Dean A. Heller

      Mr. David E. Humke

      Ms. Erin Kenny

      Mr. Richard Perkins

      Mr. Scott Scherer

      Ms. Myrna T. Williams

 

 

COMMITTEE MEMBERS ABSENT:

 

      None

 

GUEST LEGISLATORS PRESENT:

 

      None

 

STAFF MEMBERS PRESENT:

 

      Paul Mouritsen, Senior Staff Analyst, Legislative Counsel Bureau

 

OTHERS PRESENT:

     

      L. Scott Walshaw, Commissioner, Financial Institutions Division;  Ms. Mary Santina, Executive Director, Retail Association of Nevada; Jan Gilbert, Dun & Bradstreet; Mr. Sam McMullen, Credit Reporting Association of Nevada; Mr. Peter Walker; Mr. Ernest Neilsen, Executive Director, Washoe Legal Services; Mr. Russell J. Carpenter; Ms. Janice Palmer; Mr. Robert Dulin; Mr. Daniel Barber, Instructor and Coordinator, Paralegal Certificate Program, University of Nevada, Reno; Mr. Danny Thompson, AFL-CIO; Ms. Christina Lane, Office of the Attorney General; Mr. Glen Greenwell; Ms. Franny Forsman; Ms. Carolyn Embry, Clark County Organization of Legal Assistants; Mr. Bill Maupin, Past President, Defense Trial Lawyers of Nevada; Ms. Kim Fenner, Association of Defense Counsel of Northern Nevada; Ms. Candace Jones, past president, Sierra Nevada Association of Paralegals; Ms. Merrilyn Marsh; Ms. Cheryl D. Schorr;

 

ASSEMBLY BILL 333Clarifies that provisions governing trust companies are not applicable to person acting as trustee under mortgage if he is not otherwise engaged in business of trust company.

 

L. Scott Walshaw, Commissioner, Financial Institutions Division, testified.  He explained the sole purpose of AB 333 was to eliminate from the Independent Trust Company Act a requirement that anyone acting as a trustee on a deed of trust be licensed as a trust company.

 

      ASSEMBLYMAN BENNETT MOVED DO PASS AB 333.

 

      ASSEMBLYMAN GARNER SECONDED THE MOTION.

 

      THE MOTION CARRIED UNANIMOUSLY.

 

ASSEMBLY BILL 358Regulates reporting of consumer credit.

 

Vice Chairman Arberry left his chair in the committee to testify in support of AB 358.  Mr. Arberry stated credit played a key role in the economy and advised he had worked with various agencies, credit granters, credit bureaus and consumers over a two year period to ensure that AB 358 was a good piece of legislation.  

 

Ms. Mary Santina, Executive Director, Retail Association of Nevada, testified by reading from prepared text (Exhibit C).

 

Chairman Porter referred to Section 8 of AB 358, on page 2, at line 21.  He stated he was unaware that a report of criminal proceedings would be included in the records of credit reporting agencies and asked if TRW tracked criminal proceedings.  Ms. Santina responded, "Generally speaking no." and said the language concerning criminal proceedings should be deleted from  AB 358.

 

Chairman Porter asked Ms. Santina to explain Section 10 of AB 358.  Ms. Santina explained an "adverse action" was a denial of credit.  She said when a consumer applied for a loan and was denied credit, the consumer would receive a letter stating his credit had been denied based on information contained in his TRW report; she advised she would use the designation "TRW" as TRW was the generic term for a credit reporting agency.  She said the consumer then had the right to go to TRW to ascertain what information in his credit report had resulted in denial of his loan.

 

Chairman Porter referred to the proposed amendment to AB 358 to add subsection (a) to Section 10 of the bill (Exhibit C) and said he believed the amendment would include denial of an increase in insurance coverage under the definition of adverse action.  Ms. Santina responded under the Fair Credit Reporting Act, insurance companies had the right to obtain consumer credit reports.  She said an insurance company might obtain a consumer credit report if an individual bought an unusual amount of life insurance.  She said the insurance company would wish to ensure the individual was not attempting to arrange for an estate to pay his debts. 

 

Chairman Porter referred to the proposed amendment to add subsection (b) to Section 10 of AB 358 (Exhibit C) and asked how a reporting agency would know an individual had been denied employment.  Ms. Santina indicated there was a subscriber service which dealt with employment records.  She advised if an employer wished to hire an individual for a position of trust, the individual's ability to gain that position could be adversely affected if his credit file indicated he was not credit worthy or had serious credit problems.  Chairman Porter said, "My question is, how is TRW going to know that I applied to be a clerk at Seven Eleven and was turned down?"  Ms. Santina responded such information would not appear in a TRW report.

 

Chairman Porter asked if an individual's signed permission was  required before his credit could be investigated.   Ms. Santina replied, "It's usually within the application.  It's again under that business purpose clause."

 

Chairman Porter asked if employers in Nevada had the right to check a prospective employee's credit history.  Ms. Santina answered Nevada employers did have such a right and also had the right to check an employee's credit history when considering promoting the employee.  She said an employer must advise an employee of its intent to investigate his credit history, but an employer did have the right to do so.   Chairman Porter asked what statute conveyed to an employer the right to check an employee's credit history.  Ms. Santina responded Section 604 of the Federal Credit Reporting Act set forth permissible purposes of (credit) reports, and she quoted certain portions thereof.  In response to a request by Chairman Porter, Ms. Santina said she would provide the chairman a copy of Section 604 of the Federal Credit Reporting Act.

 

Mrs. Williams asked if all consumer credit reporting companies had offices throughout the state of Nevada.  Ms. Santina replied the only credit reporting company located in the state of Nevada was the Credit Bureau of Southern Nevada.  She said all consumer credit reporting companies had sales offices, 800 telephone numbers and some limited services offices (in Nevada).  Mrs. Williams stated she was concerned about the proposed amendment to AB 358 which said, "The consumer shall be able to review the file in person if he/she appears at the reporting agency...," and asked if it was the intent of the amendment that the consumer must appear in person at the credit reporting agency in order to review his file.  Ms. Santina replied such was not the intent of the amendment.  She said a consumer could request his file by mail or by phone; however, if the consumer chose to appear in the office of a credit reporting agency, his file would be made available to him.

 

Ms. Giunchigliani asked if all credit reporting agencies had the same information (concerning a consumer's credit).  Ms. Santina replied all credit reporting agencies had the same sources of information.  She said however, if a merchant reported only to certain credit reporting agencies and not to others, the information he provided would not appear in the files of those agencies to which he did not report.  She indicated if adverse information regarding a consumer appeared in the report of one credit reporting agency but not in the report of another, the consumer would need to go to each agency to review its file.

 

Ms. Giunchigliani asked if there was general information collected by all credit reporting agencies.  Mr. Santina replied there was and most major businesses dealt with all credit reporting agencies.  Ms. Giunchigliani asked if, although a credit manager determined how credit information should be interpreted, the information (provided by credit reporting agencies) was generally consistent.  Ms. Santina answered affirmatively. 

 

Ms. Giunchigliani asked if AB 358 was in compliance with the Federal Credit Reporting Act.  Ms. Santina replied it was.  Ms. Giunchigliani asked if a consumer was charged for furnishing him a copy of his credit report.  Ms. Santina responded if a consumer was denied credit, he was legally entitled to a copy of his report free of charge, however, if the consumer merely wished to review his report there was a charge of $8.

 

Chairman Porter asked if the federal statute to which Ms. Santina had referred provided a criminal penalty.  Ms. Santina replied she did not know.  Mr. Porter pointed out the proposed amendment to Section 15 of AB 358 (Exhibit C) would provide felony imprisonment as a consequence of certain acts.  Ms. Santina indicated the committee could omit the provision for felony imprisonment if it chose to do so.

 

Mrs. Williams stated she was concerned, in the current hard economic times, about an individual who was unemployed and behind in payment of his bills being denied employment based upon his credit record.  Ms. Santina replied, "...that scenario does exist."  She said in general, employers requested credit reports in connection with "money sensitive jobs."   She advised the credit report provided to a prospective employer was an abridged version, but an employer was allowed under the Fair Credit Reporting Act to obtain such a report.  Mrs. Williams asked if "allowed", as Ms. Santina had used the word, equated to  "may" in the law.  Ms. Santina responded affirmatively.  She indicated it was permissible for prospective employers to obtain credit reports, but they were not required to do so.  She cited Brinks Armored Car as an example of the type of employer who would automatically request the credit report of a prospective employee.  Mrs. Williams indicated her concern was about employers such as Seven Eleven.  Ms. Santina indicated obtaining credit reports was cost prohibitive for employers such as Seven Eleven.  

 

Mr. Perkins observed that the criminal penalties proposed to be included in AB 358 were inconsistent with most criminal sanctions presently provided in the NRS.

 

Jan Gilbert, Dun & Bradstreet, testified.  She reviewed two proposed amendments to AB 358 (Exhibit D).

 

With regard to the proposed amendment that AB 358 not apply to commercial credit reporting agencies but only to consumer credit reporting agencies, Chairman Porter asked what difference it made (if AB 358 applied also to commercial credit reporting agencies).  Ms. Gilbert responded commercial credit was treated quite differently than personal credit.  She posed the hypothetical example of an individual who wished to start an "HMO" but had a record of Medicaid fraud or embezzlement in his previous business ventures, which record would be removed from his credit record after seven years.  She stated from a business standpoint, the general public would prefer the information regarding fraud or embezzlement not be removed from the individual's credit record.  

 

Mr. Sam McMullen, Credit Reporting Association of Nevada, testified.  He advised 450 million credit reports were sold each year and advised there were 170 million credit-active American citizens.  Mr. McMullen provided a written copy of proposed amendments to AB 358 (Exhibit E).

 

Mr. Scott Walshaw, Commissioner, Financial Institutions Division, testified.  He said he was given a fiscal note on AB 358 to which he responded.  He said he recommended AB 358 be amended to permit the Commissioner of the Financial Institutions Division to adopt a regulation allowing the division to charge credit reporting agencies an hourly rate for investigating complaints received by the division.  He said such a charge would generate sufficient funds to pay all or a portion of the division's cost to hire an examiner to deal with complaints received by the division and, depending on the hourly rate charged, could eliminate the fiscal impact of AB 358.

 

Chairman Porter closed the hearing on AB 358 and appointed a subcommittee, comprised of Mr. Arberry and Mr. Scherer, to coordinate the proposed amendments to AB 358.

 

ASSEMBLY BILL 341 - Provides for registration and licensing of                         paralegals.

 

Mr. Bonaventura left his chair in the committee to testify in support of AB 341.  He advised more than one quarter million Nevadans of low and middle incomes had no access to the judicial system with respect to civil cases, because their incomes were above the level which would make them eligible for free legal services but were not sufficient to permit them to pay attorney's fees, a problem he said the Supreme Court of Nevada had recognized in the "Greenwell" case.  He stated on August 14, 1992, the Supreme Court ordered the state bar to investigate the situation (he had just described), however neither the Supreme Court nor the state bar had the ability to change existing law which prevented anyone who was not an active member of the state bar from providing legal assistance to others.

 

He declared if the legislature failed to pass AB 341, 1/4 million Nevadans would be forced to wait an additional two years, until the next legislative session, to gain access to Nevada's justice system.  He asserted if AB 341 was not made law, uncounted numbers of unqualified and unregulated individuals would take advantage of 1/4 million helpless citizens of Nevada.  He said regulating and licensing paralegals was necessary to prevent the proliferation of typing and secretarial services which held themselves out to be paralegals.  He explained AB 341 provided for licensing of paralegals who provided such services as preparing documents to be used in legal proceedings such as summary divorces, pro per labor appeals, child support payment adjustments and others.  He stated by setting minimum educational requirements and standards of quality and by providing requirements for continuing education, AB 341 would ensure that paralegals who served the general public were qualified to do so.  He said AB 341 would help provide much needed legal assistance to those Nevadans who could not now afford such assistance.

 

Mr. Peter Walker testified.  He advised he had a paralegal office in Las Vegas.  He suggested the licensing of paralegals was of primary importance.   He stated an individual who cut hair was required to be licensed although that individual could do little damage to another, but an individual who provided assistance in filling out a power of attorney was not required to be licensed to provide such assistance.

 

Mr. Walker submitted proposed amendments to AB 341 (Exhibit F). He said the proposed amendments defined what licensed paralegals could do rather than what they could not do.  He advised the proposed amendments would permit paralegals to perform legal research and summarize the findings of such research, to prepare legal documents and, in conjunction with those services and at no further compensation, to hold legal consultations.  He stated he did not consider paralegals as a source of legal advice.  He suggested if AB 341 did not become law, there would continue to be a proliferation of unqualified paralegals, and those individuals who lacked access to the legal system might be forced to wait an additional two years to gain such access.

 

Mr. Walker stated there were two different needs for paralegals, a need of those who could not afford to hire "full service legal help" and a need based on geography.  Using Tonopah as an example of geographic need, Mr. Walker advised there was no attorney either in or within a 140 mile radius of Tonopah. 

 

Mr. Walker advised AB 341 would also provide that conversations between attorneys and the paralegals they hired to perform such services as legal research and preparation of legal documents would be confidential.

 

Mr. Walker said he had encountered opposition to use of the term "paralegal", a term no one could be prevented from using to describe his activities.  Mr. Walker proposed that amending AB 341 to change the word "paralegal" to some other word would be a futile act.

 

Mr. Walker provided a document concerned with the Nevada Supreme Court's decision in the "Greenwell" case (Exhibit G).

 

Chairman Porter asked if Mr. Walker's testimony was that he did not intend paralegals to give legal advice.  Mr. Walker replied he did not intend that paralegals be a source of legal advise.  He said unfortunately, it was difficult to hold a conversation with a client, whether a lay person or an attorney, and "not bring in legalities."  He quoted portions of the proposed amendment to section 20 of AB 341 (Exhibit F) pertaining to the giving of legal advice by a paralegal.  Mr. Walker stated he did not believe it was the function of a paralegal to give legal advice, however in conjunction with the services which a paralegal would be allowed to perform under AB 341, the paralegal might accidentally give such advice. 

 

Chairman Porter said he was concerned about the "quality" of an individual who would give legal advice to one who could not afford an attorney and about the possibility of such advice being bad advice.  Mr. Walker responded the concerns Chairman Porter expressed were the reason education and examination requirements were provided in AB 341.  He proposed if AB 341 was passed in the form suggested by the proposed amendments (Exhibit F), regulation of paralegals would be largely governed by the rules of the Supreme Court or of those individual agencies who administered their own examinations.  Mr. Walker said there were presently over 30 federal agencies which allowed individuals who were not attorneys to represent persons appearing before those agencies.

 

Chairman Porter stated subsection (b) of the proposed amendment to section 20, which said a paralegal could prepare legal documents for compensation, was very broad and could include (among the documents a paralegal could prepare) a trust, joint venture agreement, partnership, corporation with preemptive rights and all kinds of documents.  Mr. Walker agreed with Chairman Porter and stated there were paralegals capable of preparing such documents and who did prepare them.  Chairman Porter asked how one could know that paralegals who prepared such documents understood the full legal ramifications of the language they used in those documents.  Mr. Walker likened a paralegal who had passed an examination to achieve that position to a young attorney who had passed the bar, suggesting one could not anticipate the quality of the performance of either.  He suggested the requirement under AB 341 that a paralegal carry malpractice insurance constituted a safeguard for the public.

 

Chairman Porter asked what areas Mr. Walker envisioned would be covered by the paralegal examination.  Mr. Walker responded the examination would cover the areas of legal research, legal writing and legal procedures.  He said the examination would be similar in both scope and depth to the bar examination.  Chairman Porter asked if Mr. Walker envisioned the examination covering such subjects as contracts, real property concepts, wills and trusts.  Mr. Walker replied he foresaw the examination covering those subjects to the same extent the bar examination covered them.  He stated the education and testing required for an individual to become a paralegal would ensure quality.  He said a paralegal who made serious mistakes would eventually become subject to disciplinary action which could result in his license being revoked and his being required to again pass the paralegal examination.

 

A colloquy ensued between Chairman Porter and Mr. Walker.

 

Mr. Ernest Neilsen, Executive Director, Washoe Legal Services, testified.  He advised Washoe Legal Services provided free legal assistance in the area of civil law to low income individuals in Washoe County.  He provided a chart which included information regarding the income limitations for such free services (Exhibit H).   He said Washoe Legal Services also participated in the "Greenwell Committee."  He advised the figures in Exhibit H reflected the demand made upon Washoe Legal Services.  He said of the 7,966 individuals who came to Washoe Legal Services in 1992, services could be provided to only approximately 17 percent of those individuals.  He stated in 1989, the American Bar Association commissioned the Spangenberg Group to analyze the unmet need for legal services in the United States.  He said if the findings of that analysis were extrapolated to the state of Nevada, one would find nearly 15,000 individual cases of need, within the population below 125 percent of poverty, in Washoe County alone.  He said Washoe Legal Services would be able to provide services to only 8 percent of those 15,000 individuals.  He contended there was a substantial, critical need for legal services in Nevada. 

 

Mr. Russell J. Carpenter testified.  Mr. Carpenter quoted the language of Section 31 of AB 341 as set forth on the second page of a document entitled "Paralegal Licensing" (Exhibit I) and said the language  merely provided that a person be "titled" a paralegal for six months.  He said an attorney could hire a paralegal and bill for the paralegal's hours (worked) without that paralegal necessarily being a qualified paralegal.  Mr. Carpenter said he would like to see the language regarding being an active paralegal for at least 180 days deleted from Section 31 of AB 341 and would like to see added to that section the language "meets the criteria for taking the license examination as provided under Section 17 and is employed in the legal industry as of July 1, 1993."   He suggested such a change would provide that an individual have the educational requirements necessary to take the licensing examination.  He said Nevada's status as a "right to work" state precluded its having a process for registration or licensing which did not allow an individual who currently worked in the subject field to be "grandfathered in".

 

Mr. Bonaventura asked if Mr. Carpenter wished to eliminate the grandfather clause.  Mr. Carpenter replied he was not suggesting the grandfather clause should not exist but was suggesting one  requirement for "grandfathering" should be that an individual's eligibility to take the paralegal examination be determined as provided in Section 17 of AB 341 or in some similar manner which would demonstrate reasonable experience or education in the paralegal field.  He said he did not believe six months (employment as an active paralegal) was adequate.  Mr. Bonaventura asked if Mr. Carpenter would agree to a requirement of one year rather than six months.  Mr. Carpenter responded he felt a requirement of one year would be more reasonable.

 

Ms. Janice Palmer testified by reading from prepared text (Exhibit J).

 

Mrs. Williams asked Ms. Palmer to state her educational background.  Ms. Palmer replied she was a certified paralegal "with a two year background of education" and had conducted her paralegal business for over a year.  Mrs. Williams asked if Ms. Palmer was certified on a college level.  Ms. Palmer replied affirmatively.

 

Mr. Robert Dulin testified.  He said he had a paralegal business in Reno.  He advised he was a "CASA" volunteer in Washoe County, sat on the Washoe County grand jury and had some educational background as a paralegal.

 

Mr. Dulin stated he supported AB 341 because there was a public need for affordable legal services, and he declared the public demanded those services be competent.  Mr. Dulin advised anyone could obtain a business license and thereafter prepare legal documents and give legal information and advice.  He posed the question of where a consumer could register a complaint against a paralegal.  He said a consumer could not complain to the state bar because a paralegal could not be a member of the bar.  He suggested a consumer could complain to the Better Business Bureau only if the business about which he wished to complain was a member of the bureau.  He stated AB 341 provided an avenue by which a consumer could receive satisfaction on his complaint. 

Mr. Dulin advised he referred approximately $25,000 to $50,000 of business each year to the attorney with whom he was associated.  He said he did this without compensation in order to provide consumers with an excellent attorney.

 

Mr. Dulin said AB 341 would provide for good paralegals to be set apart from those paralegals who performed incompetently.  He stated AB 341 would establish who could provide affordable legal services and the manner in which those services were to be provided and would enable a consumer to register a complaint and receive satisfaction. 

 

Mrs. Williams asked who would construct the paralegal examination.  Mr. Dulin responded licensing requirements should be established by the committee which was to be appointed by the governor.

 

Mr. Dulin said he believed the paralegal field to be very specialized.  He advised he did no legal research and primarily dealt with uncontested divorces and Chapter 7, pro per bankruptcies.

 

Mr. Daniel Barber, Instructor and Coordinator, Paralegal Certificate Program, University of Nevada, Reno, testified.  He stated the fact that paralegals were not to give legal advice was thoroughly impressed upon students in the paralegal program at the University of Nevada, Reno.  He stated the giving of legal advice by paralegals was against the law in every state, but AB 341 would provide a mechanism by which non-lawyers would be permitted to give limited legal advice.  Mr. Barber advised he was not in favor of licensing paralegals in general.  He indicated paralegals worked for attorneys and an attorney was responsible for the actions of his subordinates.  He said however, some paralegals who worked independently did give legal advice.  He suggested AB 341 would provide a means to regulate individuals who had proved they had the knowledge necessary to give limited legal advice.

 

Mr. Barber stated he failed to see how paralegals could be licensed without being tested.  He suggested testing should be broken down to specific areas of the law and a paralegal permitted to choose those areas in which he wished to be tested.

Mr. Barber suggested the proposed paralegal council be comprised of paralegals, attorneys and members of the education profession with perhaps three members from each of those groups. 

 

Mr. Bonaventura asked if Mr. Barber understood that the provisions of AB 341 did not apply to individuals employed by members of the state bar.  Mr. Barber responded he did.

 

Mr. Bonaventura pointed out Section 5 of AB 341 provided the paralegal council be comprised of paralegals, a member of the state bar and a member of the general public, and inquired if Mr. Barber's wished to see the composition of the council changed to include a member of the education field.  Mr. Barber responded affirmatively.   

 

Mr. Danny Thompson, AFL-CIO, testified.  He said the AFL-CIO in Nevada was made up of 86 local unions and 23 councils, each of which had its own attorneys and also had individuals, some of whom were paralegals and some of whom were not paralegals, designated to provide assistance to members of the union in a range of matters such as worker's compensation, unemployment insurance, hearings before the Labor Commissioner and other similar matters.  He said the AFL-CIO had no objection to the licensing of paralegals but was concerned about the effect of AB 341 on the activities of the aforementioned individuals.  He asked should AB 341 be assigned to a subcommittee, that the AFL-CIO be allowed to participate in that subcommittee.

 

Ms. Giunchigliani asked if she understood correctly that Mr. Thompson's desire was to clarify whether or not AB 341 would affect those "labor representatives" who were not attorneys and were assigned by the union to act on its behalf.  Mr. Thompson stated Ms. Giunchigliani's understanding was correct.

 

Ms. Christina Lane, Office of the Attorney General, testified.  She advised she was employed by the Attorney General's office as a paralegal.  She stated the Attorney General had taken no position on AB 341 as yet but had prepared a fiscal note on AB 341 indicating, conservatively, a fiscal impact of $34,000.  She said the Attorney General would be pleased to provide a position paper to the committee or to work with any subcommittee appointed to deal with amendments to AB 341.

 

Mr. Glen Greenwell testified.  He advised he and his wife started their paralegal business, Greenwell Services, by providing services to attorneys.  He said the business evolved as members of the public began to request simple, law-related services, mainly in the area of uncontested divorce.  He indicated most individuals who requested such services had low incomes and could not afford the services of an attorney.  Mr. Greenwell stated the activities of his business resulted in the business being sued by the state bar of Nevada.  He indicated the business ultimately lost the suit but was still permitted to provide certain, regulated services to members of the public. 

 

Mr. Greenwell stated he was in favor of legislation to regulate paralegals but had certain concerns he wished to address.  He said one concern was the problem of giving legal advice and what constituted legal advice.  He said a mechanism was needed to enable paralegals to answer certain simple questions and to advise members of the public of their remedies in certain situations. 

 

Mr. Greenwell advised his business often referred prospective clients to attorneys when the business was clearly unable to provide the services required by those clients.   He indicated attorneys sometimes referred individuals to his business for certain services.  He said however, it was nearly impossible to provide services to individuals without the ability to tell those individuals what they were able to do.  He said he doubted AB 341 could resolve the issue of what did and did not constitute legal advise. 

 

Mr. Greenwell stated he was also concerned about "...the six month requirement for grandfathering people in."  He contended six months was hardly a sufficient period of time for an individual to establish a record of competent service to the public and suggested the time period be expanded to a minimum of one year and, preferably, to two or more years.   

 

Ms. Augustine asked Mr. Bonaventura how the requirements (for taking the paralegal examination) specified in section 17 of AB 341 had been determined and suggested some of those requirements seemed inequitable.  She said the requirement in subsection (d), of a bachelor's degree and two years of paralegal training appeared excessive when compared to the requirement in subsection (b), of a high school degree and 120 hours of paralegal training.  Mr. Bonaventura responded the possession of a bachelor's degree did not provide an individual with knowledge concerning those things done by paralegals.  He further advised that the suggestion to amend subsection (b) to require 96 credit hours, rather than 120 credit hours, in a paralegal training course was based on the fact that accredited paralegal courses in university systems consisted of 96 credit hours.  A colloquy ensued between Ms. Augustine and Mr. Bonaventura.

 

Ms. Franny Forsman testified.  She advised she was testifying both as chairman of the state bar committee known as the "Greenwell Committee" and as an attorney whose career had been primarily devoted to ensuring that indigents and low income individuals were provided legal services on a par with those provided more affluent individuals.  She said she was the Federal Public Defender for the district of Nevada. 

 

Ms. Forsman referred to a document entitled "AB 341 Position of the State Bar of Nevada" (Exhibit K).  She advised she agreed, both personally and as chairman of the Greenwell Committee, with the motivation for AB 341 expressed by Assemblyman Bonaventura.  She agreed there were people in Nevada whose legal needs were not being served.  She also agreed there was a need to regulate those individuals who, without any education or background, were attempting to serve people, a problem she said the Supreme Court had recognized by issuing an injunction against the Greenwells.  She advised a detailed and thorough study of the problem was being done at no expense to the taxpayers.  She said the committee conducting the study was comprised of lawyers, paralegals, representatives from pro bono projects and legal services programs, family court judges, family practitioners, bankruptcy practitioners and a judge of general jurisdiction.  She advised the state bar had committed in excess of $10,000 to the study and it was probable a like sum would be provided from the lawyers' admissions fund.

 

Ms. Forsman advised the committee did not oppose the concept of AB 341, but there were many defects in the bill.  She said AB 341 did not define the practice of law nor did it define "legal advice."  She stated the committee was asking the legislature to allow the committee to do its work.

 

She advised the committee had committed funds to a professional legal needs survey.  She stated the committee had sent a survey to all lawyers in Nevada with regard to their fee structures, whether they performed pro bono work and whether they performed work at a discount.  She indicated some individuals who referred to themselves as paralegals charged as much or more than  attorneys charged for the same services.  She suggested there might be a need to recommend to the Supreme Court that attorneys be required to perform a certain amount of pro bono service.  

 

Ms. Forsman reiterated the committee asked to be allowed to complete its work and indicated should AB 341 be reintroduced during the next legislative session, the committee would at that time be able to provide the legislators with good and detailed information.  She stated giving an individual a license created a property right.  She suggested (for the legislature) to create such a property right and then attempt to remove that right when it was determined the right had been created based on insufficient data was to invite litigation.  She suggested regulating paralegals would not have to be postponed for two years.  She advised the constitution of Nevada delegated (regulation of) the practice of law to the Supreme Court, and should the Greenwell Committee recommend regulating individuals such as paralegals, the Supreme Court had authority to do so.  She said if it appeared the issue should be decided by the legislature, she would suggest the legislature wait to make its decision until the Greenwell Committee was able to provide the kind of information which would enable the legislature to make a prudent decision.

 

Chairman Porter asked when the Greenwell Committee anticipated concluding its study.  Ms. Forsman said the committee had to report to the Supreme Court in July (1993).  She indicated the committee had received its surveys on fees and was now awaiting return of surveys it had sent to judges.

 

Ms. Carolyn Embry, Clark County Organization of Legal Assistants, testified.  She said the organization's  written statement of March 24, 1993, (Exhibit L) indicated many courts throughout the United States, including the United States Supreme Court, had determined the word "paralegal" meant one who was qualified to perform legal services for a lawyer, performing certain tasks delegable by and under the supervision of a lawyer.  She stated it was the organization's position that use of the word "paralegal" in AB 341 might cause the public to believe that services performed by individuals licensed under the provisions of AB 341 were performed under the direct supervision of an attorney.  

 

Ms. Embry advised there were paralegal institutes and paralegal programs which prepared individuals to perform services under the supervision of an attorney and there was also a national voluntary examination program for paralegals, but she maintained none of the foregoing prepared an individual who was not a lawyer to offer legal advice and legal services to the public.

 

She stated attorneys were the consumers of the services of paralegals and of legal assistants and the general public was the consumer of the services of "legal technicians", a term she advised was used in other states to identify non-lawyers who worked directly for the public.  She indicated the National Association of Legal Assistants and the National Federation of Paralegal Associations agreed that the terms "legal assistant" and "paralegal" were interchangeable.

 

Ms. Embry discussed the Certified Legal Assistant examination offered by the National Association of Legal Assistants (NALA).  She advised taking the examination was voluntary, and applicants for the examination were required to possess good moral character, be aware of the ethical limitations of the profession of legal assistant, be above reproach in their professional conduct and meet certain requirements of education and experience.  She explained the examination was approximately 15 hours long and was given over a two day period.  She stated successful completion of the examination entitled a legal assistant to use the designation "C.L.A.", meaning Certified Legal Assistant.  She said applicants were tested on communications, ethics, human relations and interviewing techniques, judgment and analytical ability, legal research, legal terminology and the American legal system, as well as four specialty areas, to be chosen by the applicant from the following: administrative law, bankruptcy, contract, business organizations, criminal law, litigation, probate and estate planning, and real estate.  She advised as of December, 1992, there were 5,000 C.L.A.'s throughout the United States and nearly 2,500 legal assistants sought the C.L.A. designation each year.  She said there were over 50 C.L.A.'s in Nevada working under direct supervision of attorneys.  Ms. Embry said despite the fact they passed the Certified Legal Examination, C.L.A.'s were not qualified to give legal advice to the public and risked loss of their C.L.A. designation if they did so.

 

Ms. Embry pointed out Section 20 of AB 341 would allow licensed paralegals to assist in preparing legal documents and to give legal advice to members of the public.  She further pointed out section 17 of AB 341 specified the educational requirements for licensing.  She contended there were no paralegal training courses in Nevada which would qualify an individual who was not an attorney to give legal advice.   

 

Ms. Embry said the organization was concerned because AB 341 did not define the areas of law in which licensed paralegals would be permitted to practice and therefore, arguably, they could assist the public in all areas of law regardless of complexity.  She stated it was the position of the organization and of the National Conference on Access to Justice in the 1990's "that representation by non-lawyers should be a function of the client's problem, not of the client's income."  She declared every state which had investigated the possibility of allowing "non-lawyer practice of law" had limited its consideration to specific areas of law.  She advised no state had as yet passed a bill similar to AB 341 but that many such bills were pending. 

Ms. Embry stated for the reasons she had discussed and for the reasons set forth in Exhibit L, the Clark County Organization of Legal Assistants could not support AB 341 as written.  She said the organization believed AB 341 to be premature, particularly in light of the work being done by the Supreme Court's study committee (the Greenwell Committee).

 

She stated the organization urged that "paralegal" be stricken from AB 341 wherever it occurred and that "legal technician", "scrivener" or "limited law advisor" be inserted in place thereof.

                                                                Mrs. Williams stated it appeared approximately 45 percent of the cases handled by Washoe Legal Services were domestic cases and said she had noticed family law was not included in the (Certified Legal Assistant) examination.  She asked if the area of family law was one which was not addressed (by the examination).  Ms. Embry responded the Certified Legal Assistant examination did not address the subject of family law.  Mrs. Williams asked if there was a reason why the subject of family law was omitted from the Certified Legal Assistant examination.  Ms. Embry replied she was not aware of a reason. 

 

Mr. Bill Maupin, past president, Defense Trial Lawyers of Nevada, testified.  He advised Defense Trial Lawyers of Nevada was composed of a group of member law firms who defended clients  sued for money damages.  He said the clients represented by the group were self-insured businesses and business enterprises and also individuals who, pursuant to their liability insurance contracts, were entitled to legal representation paid for by their liability insurers.

 

Mr. Maupin introduced Ms. Fenner, president of the Association of Defense Counsel in Reno.

 

Mr. Maupin advised both he and Ms. Forsman were members of the State Board of Bar Governors but that he was not present in his capacity as a member of that body.  He declared Ms. Forsman had articulated the official position of the State Board of Bar Governors on AB 341.

 

Mr. Maupin advised his organization's member firms had developed and utilized paralegals in their law practices for many years.  He said the concept of paralegals started in his law firm many years ago with the graduation of very competent secretarial help into paralegal personnel.  He suggested paralegal personnel  enabled law firms to provide less costly services to their clients because paralegals could perform tasks for a lower hourly rate of pay than could attorneys.  He stated however, everything done by a paralegal was either supervised or directed by a licensed attorney.   He declared his organization believed it absolutely necessary that paralegal personnel be utilized in conjunction with attorneys.  He stated any formal action on AB 341 should be deferred until Ms. Forsman's committee had an opportunity to complete its work.

 

Mr. Maupin said one thing which had not been mentioned in connection with unmet legal needs was the effect of the Neighborhood Justice Center project enacted by the last legislature.  He said in his capacity as chairman of the state Supreme Court's implementation subcommittee on Alternate Dispute Resolution (ADR), he had worked with the chairman of the Neighborhood Justice Center project and had gathered much statistical information regarding the number of cases processed through both the ADR program and the Neighborhood Justice Center project.  He advised since 1991, approximately 3,100 cases had been mediated and resolved through the Neighborhood Justice Center without the use of attorneys or of paralegals, scriveners or other persons who would fall within the jurisdiction of AB 341.  He said in the Eighth Judicial District, approximately 11,000 domestic and non-probate cases were filed annually of which approximately 1/3 resulted in formal litigation proceedings.  He indicated there was much additional information to be assessed with regard to a major change in the method by which legal services were provided. 

 

Mr. Maupin stated the state bar was perceived as being opposed to legislation such as AB 341 because attorneys would lose business or be adversely affected by competition from those individuals (sought to be licensed under AB 341).  He advised the law firms which were members of his organization and the    attorney members of those firms were hired by clients such as insurance companies and major corporate industries which would never hire individuals such as those sought to be licensed under AB 341 as opposed to hiring attorneys.  He declared his organization was not threatened by AB 341 but was very concerned that if such a measure was to be implemented, the implementation be done with care to ensure it did not result in greater harm than good.  He suggested a measure as dramatic and all-encompassing as AB 341 should be deferred until the state bar's committee had an opportunity to complete its work.

 

Ms. Kim Fenner, Association of Defense Counsel of Northern Nevada, testified.  She said the association joined in the position advanced by Mr. Maupin. 

 

She pointed out three reasons why AB 341 was not the answer to the goal of providing affordable legal services to certain members of the public.  She said one stated goal of AB 341 was to provide a source for preparation of simple legal documents for civil matters.  She contended the broad and general language of AB 341 did not provide such a limitation.  She pointed out Section 20 of AB 341 said a person who held a license (as a paralegal) could prepare legal documents for compensation but the section contained no indication of limitations consistent with the expressed intent of AB 341.

 

Ms. Fenner addressed the education requirements specified in AB 341 and pointed out that all the stated requirements were "in the alternative."  She advised the language in subsection (e) of Section 17 provided a standard which vitiated education and experience requirements and which was too loose and too vague.

 

She stated Section 25 of AB 341 was not sufficiently clear as to the distinction among "registered paralegal," "licensed paralegal" and "paralegal practitioner."  She suggested the average person might be unable to distinguish among the qualifications and services of individuals using those various titles.

 

Ms. Fenner stated it had been said AB 341 did not address the individual engaged as a paralegal in a law firm or under the direct supervision of an attorney.  She pointed out AB 341 contained a provision which made it unlawful or a misdemeanor for an (unauthorized) individual to use the titles specified in AB 341 or similar titles or designations.  She contended the language of AB 341 was too broad in addressing such regulations.

 

Mr. Bonaventura referenced Section 17, subsection (e) and asked if Ms. Fenner was aware that the evidence to be demonstrated would be that required by the council.  A colloquy ensued between Mr. Bonaventura and Ms. Fenner after which Ms. Fenner responded affirmatively to Mr. Bonaventura's question.

 

Ms. Candace Jones, past president, Sierra Nevada Association of Paralegals, testified.  She said she currently worked as a paralegal for United States magistrate Judge Phyllis Halsey Atkins, had earned the Certified Legal Assistant designation, as well as the specialty certification in civil litigation, and taught two courses in the paralegal program at Truckee Meadows Community College (TMCC), those of ethics and paralegal practice and procedure.

 

Ms. Jones advised she was also a member of the TMCC legal assistant advisory board, comprised of attorneys, judges and paralegals.  She advised one task of the advisory board was to develop the curriculum of the two year (paralegal) program at TMCC.  She said the program was an excellent one, with required core courses including civil and criminal law, ethics, legal research and legal writing and numerous electives in such areas as bankruptcy, domestic relations and probate law.  She said the program was directed by an attorney and all paralegal courses were taught by licensed attorneys with the exception of the two courses she, herself, taught.  She said TMCC was involved in the process of gaining "ABA" approval. 

 

She expressed pride in the quality of the TMCC legal assistant program but declared no paralegal program in the United States provided sufficient education and training to permit paralegals to give legal advice to the public as section 20, subsection (b) of AB 341 would allow them to do.

 

Ms. Jones referred to Section 17, subsection (b) of AB 341 and stated the only paralegal program in Nevada which purported to offer a 96 hour course was a six week course offered by the continuing education program at the University of Nevada, Reno.  She said the courses offered at two year community colleges were "60 plus courses, 62 to 64."

 

Ms. Jones asserted she had worked very hard and had spent thousands of dollars and untold hours in education, study and preparation to attain her present position.  She contended section 31 of AB 341 "grandfathers in all kinds of people with who knows what kind of education, experience or background."  She stated any individual who in the six months prior to July 1, 1993, had called himself a paralegal and had been so employed could be "grandfathered in" and would be allowed to provide services directly to the public without the supervision of an attorney.  She advised nothing in AB 341, other than the language "good legal and moral character" in Section 17, subsection (b), would preclude ex-felons or "jail-house lawyers" from being licensed (as paralegals); she declared that language was too broad and provided no protection to the very public AB 341 was intended to serve.

 

Ms. Jones asked the committee not to pass AB 341 in its present form.

 

Ms. Merrilyn Marsh testified.  She said she was employed by the law firm of Belding and Harris.  She stated she attained the designation "Certified Legal Assistant" in 1990, and in the past year, had become one of the first Certified Legal Assistants with a bankruptcy specialty, which specialty enabled her to use the designation "CLAS".

 

She advised after working in the legal field seven years, she qualified to take the CLA examination .  She said after taking the examination she was able to use the designation (CLA) but both her business cards and the letterhead of her firm's stationary identified her as a "paralegal" with the CLA designation following her name.  She explained she initially worked in an apprenticeship program with a lawyer in her firm who taught her much about the judicial system.  She stated she spent countless hours in seminars and classes to gain continuing legal education.

 

Ms. Marsh advised she made independent judgments based on her training and education but that the attorney for whom she worked was responsible for reviewing her final work product.  She stated although she was a bankruptcy paralegal with a specialty designation, she did not feel qualified to advise the general public in a bankruptcy matter and believed such advice should be given by a licensed attorney.

 

Ms. Marsh contended AB 341 had numerous flaws.  She said none of the qualifications specified in AB 341 would enable an individual to provide legal services or legal advice.  She explained existing academic programs taught entry-level, substantive legal theories and taught about the legal system and legal procedures but none of those programs would ready an individual to give legal advice. 

 

 

She contended AB 341 did not address the automatic licensing, without any qualification, of existing legal technicians.  She proposed a $25,000 bond would not compensate the damage which could be done to members of the public.  She stated AB 341 would permit an individual (licensed as a paralegal) to advise members of the public of their community property rights in a divorce action and to entice or recommend a settlement or release of liability in a personal injury action, and such an individual might fail to analyze a given fact situation in light of all the applicable laws.  She declared knowledge of substantive law alone did not qualify an individual to apply a set of facts to the law and recommend the appropriate solution or remedy. 

 

Ms. Marsh asserted the legislature should use caution in passing AB 341.  She contended AB 341 would not serve the best interests of the public.

 

Ms. Jones asked Chairman Porter if she might respond to an earlier question by Mrs. Williams.  The Chairman replied she might do so.  Ms. Jones said the reason the CLA examination did not include family law or domestic relations was because the examination was a nationwide examination and divorce laws changed from state to state.   She stated the CLA examination encompassed only more uniform, federal laws.  Mrs. Williams said she believed in many areas of law covered by the CLA examination, the laws differed from state to state.  Ms. Jones responded Mrs. Williams was correct, but there were federal laws which governed all areas (of law) except the area of domestic relations.

 

Ms. Cheryl D. Schorr testified.  She said the clients of her law partnership were predominately low income or middle income individuals.  She stated her partnership's charge for a typical, noncontested divorce was approximately $350, including filing fees.  She advised in the past year, she had handled approximately 100 divorces and for only three of those divorces did the charge exceed $1,000.  She said she believed her partnership served the low income public.

 

Ms. Schorr said she was concerned about lack of adequate (legal) representation.  She said the Supreme Court held that everyone was entitled to equal standing (before the law).

 

She explained Elko was mainly a mining community.  She advised Elko's average per capita income was very high but that 90 percent of that income was earned by the male members of the community.  She stated 90 percent of her partnership's female clients earned minimum wages or were unemployed.  She advised often female clients would say, "I want a simple, non-contested divorce, the least expensive."  She said she would then explain to them that a simple, uncontested divorce was not always the least expensive.  She enumerated some of the rights and issues involved in a divorce action.

 

Ms. Schorr said often a party to an action did not realize he had a legal standing on many issues.  She indicated an attorney could assist such a party by asking questions and advising which matters were worth fighting for and which were not. 

 

Ms. Schorr stated she had severe reservations about the legislature passing AB 341 in its present form.

 

Mr. Peter Walker gave rebuttal testimony.  He stated a prior witness mentioned seeing a television program, which he also had seen, in which an individual was promoting a book and advising if one bought the book, one could become a paralegal.  Mr. Walker said this (type of activity) pointed out the urgency of providing at least a cursory form of regulation (of paralegals).

 

Chairman Porter closed the hearing on AB 341 and assigned AB 341 to a subcommittee comprised of Ms. Giunchigliani, Ms. Augustine and himself.

 

There being no further business to come before the committee, Chairman Porter adjourned the meeting.

 

                                        RESPECTFULLY SUBMITTED,

 

 

 

                                        _______________________

                                        SARA J. KAUFMAN

                                        Committee Secretary

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Assembly Committee on Commerce

April 19, 1993

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