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F I S C A L I M P A C T R E P O R T

SPONSOR Snyder

ORIGINAL DATE

LAST UPDATED

2/21/07

HB

SHORT TITLE Prohibit Unauthorized Practice of Law

SB 877

ANALYST Ortiz

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$0.1

$0.1

$0.1 Recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to HB 183

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Administrative Office of the Courts (AOC)

Public Education Department (PED)

Energy Minerals and Natural Resources Department (EMNRD)

Corrections Department

SUMMARY

Synopsis of Bill

Senate Bill 877 replaces the current language of Section 36-2-27 regarding the unauthorized

practice of law. The new language includes the definition of the practice of law, what constitutes

the unauthorized practice of law, and what would not be considered the unauthorized practice of

law. The new language establishes criminal and civil penalties, with the civil remedy to include

injunctive relief and an action for damages available to any person damaged by the unauthorized

practice of law. The new language also establishes the authority of the attorney general to bring

a cause of action against the alleged violator engaged in the unauthorized practice of law.

FISCAL IMPLICATIONS

According to the Attorney General’s Office, it will also need extra funding and FTE to enforce

this bill. The agency did not provide an amount.

ENMRD also notes that more attorneys would be needed if non-attorney state employees cannot

prepare and negotiate contracts. This would result in an increase in EMNRD’s personnel costs

Senate Bill 877 – Page

2

and a need for additional operating budget.

SIGNIFICANT ISSUES

According to the AGO, the new language expands and clarifies what may or may not constitute

the unauthorized practice of law, and makes more remedies available to anyone harmed by the

unauthorized practice. Additionally, the attorney general now has authority to bring an action

against anyone engaged in the unauthorized practice of law.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

SB 877 is a companion to HB 183, with the only difference being, SB 877 does not include a $10

thousand general fund appropriation.

ADMINISTRATIVE IMPLICATIONS

If this bill becomes law it could impact the Energy, Minerals and Natural Resources

Department’s (EMNRD) contract and procurement processes as well as its employees’ ability to

negotiate agreements. While EMNRD attorney review joint powers agreements, professional

service contracts, memorandum of agreement or understanding, etc. they do not review standard

purchase agreements for supplies and equipment that the General Services Department provides.

In addition, non-attorney employees often select which attorney-prepared contract form to use

and draft the scope of work. They usually negotiate the contracts or agreements’ scope of work.

EMNRD processes more than 275 contracts annually. If non-attorneys could no longer select

and prepare contracts or negotiate agreements on EMNRD’s behalf, they attorneys’ workload

would increase substantially and EMNRD’s ability to promptly meet its obligations would be

significantly impacted. More attorneys would be required.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

By not enacting this bill the definition of the unauthorized practice will be less clear, and the

remedies available to a person damaged by the unauthorized practice will be more limited.

AMENDMENTS

EMNRD suggests modifying the proposed definition of practice of law to exclude the drafting

and preparation of contracts, purchase agreements, and real estate documents and negotiation by

government officers and employees on local, state, or federal agencies’ behalf or by an entity’s

agent on an entity’s behalf. Clarify that licensed real estate agents may prepare contracts related

to real estate transactions.

The AOC recommends defining “person" as used in the act.

POSSIBLE QUESTIONS

Could the Attorney General’s Office be more specific on the funding and FTE needs.

EO/mt