Rep. Norm Thurston — Voting Record

Bill

Number

S.B. 274 Second Substitute (2023GS)

Sponsor

Sen. McKell, M.

Final action

Governor Signed 3/23/2023

Outcome

Became law — signed by Gov. Spencer J. Cox

Summary

What it does

• This bill:
• enacts provisions related to lawyer referral consultants, including provisions that:
• require certain persons to be registered as lawyer referral consultants;
• establish application requirements;
• require criminal background checks for lawyer referral consultants;
• establish requirements for posting bond;
• establish requirements for a contract that a lawyer referral consultant enters into;
• require accounting for lawyer referral services;
• address delivery, release, and treatment of documents;
• provide requirements for posting certain notices; and
• provide for enforcement of provisions and recovery of losses;
• amends provisions related to exceptions to a prohibition on kickbacks for certain activities;
• provides that certain providers of legal services owe a fiduciary duty to the person to whom legal services are provided;
• creates a private right of action for a breach of certain fiduciary duties; and

Every vote on this bill

Bill text

REGULATIONS FOR LEGAL SERVICES
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Michael K. McKell
House Sponsor: 
Nelson T. Abbott
LONG TITLE
General Description:
This bill enacts and amends provisions related to the regulation of legal services and
lawyer referral services.
Highlighted Provisions:
This bill:
▸ enacts provisions related to lawyer referral consultants, including provisions that:
• require certain persons to be registered as lawyer referral consultants;
• establish application requirements;
• require criminal background checks for lawyer referral consultants;
• establish requirements for posting bond;
• establish requirements for a contract that a lawyer referral consultant enters into;
• require accounting for lawyer referral services;
• address delivery, release, and treatment of documents;
• provide requirements for posting certain notices; and
• provide for enforcement of provisions and recovery of losses;
▸ amends provisions related to exceptions to a prohibition on kickbacks for certain
activities;
▸ provides that certain providers of legal services owe a fiduciary duty to the person to
whom legal services are provided;
▸ creates a private right of action for a breach of certain fiduciary duties; and
▸ defines terms.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides a special effective date.
Utah Code Sections Affected:
AMENDS:
13-2-1
 (Effective 12/31/23)
, as last amended by Laws of Utah 2022, Chapters 201, 462
76-10-3201
, as enacted by Laws of Utah 2022, Chapter 415
ENACTS:
13-63-101
, Utah Code Annotated 1953
13-63-201
, Utah Code Annotated 1953
13-63-202
, Utah Code Annotated 1953
13-63-203
, Utah Code Annotated 1953
13-63-204
, Utah Code Annotated 1953
13-63-301
, Utah Code Annotated 1953
13-63-302
, Utah Code Annotated 1953
13-63-303
, Utah Code Annotated 1953
13-63-304
, Utah Code Annotated 1953
13-63-305
, Utah Code Annotated 1953
13-63-401
, Utah Code Annotated 1953
13-63-402
, Utah Code Annotated 1953
13-63-403
, Utah Code Annotated 1953
13-63-404
, Utah Code Annotated 1953
13-64-101
, Utah Code Annotated 1953
13-64-201
, Utah Code Annotated 1953
13-64-202
, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
13-2-1 (Effective 12/31/23)
 is amended to read:
13-2-1 (Effective 12/31/23).
Consumer protection division established --
Functions.
(1) There is established within the Department of Commerce the Division of Consumer
Protection.
(2) The division shall administer and enforce the following:
(a) Chapter 5, Unfair Practices Act;
(b) Chapter 10a, Music Licensing Practices Act;
(c) Chapter 11, Utah Consumer Sales Practices Act;
(d) Chapter 15, Business Opportunity Disclosure Act;
(e) Chapter 20, New Motor Vehicle Warranties Act;
(f) Chapter 21, Credit Services Organizations Act;
(g) Chapter 22, Charitable Solicitations Act;
(h) Chapter 23, Health Spa Services Protection Act;
(i) Chapter 25a, Telephone and Facsimile Solicitation Act;
(j) Chapter 26, Telephone Fraud Prevention Act;
(k) Chapter 28, Prize Notices Regulation Act;
(l) Chapter 32a, Pawnshop, Secondhand Merchandise, and Catalytic Converter
Transaction Information Act;
(m) Chapter 34, Utah Postsecondary Proprietary School Act;
(n) Chapter 34a, Utah Postsecondary School State Authorization Act;
(o) Chapter 41, Price Controls During Emergencies Act;
(p) Chapter 42, Uniform Debt-Management Services Act;
(q) Chapter 49, Immigration Consultants Registration Act;
(r) Chapter 51, Transportation Network Company Registration Act;
(s) Chapter 52, Residential Solar Energy Disclosure Act;
(t) Chapter 53, Residential, Vocational and Life Skills Program Act;
(u) Chapter 54, Ticket Website Sales Act;
(v) Chapter 56, Ticket Transferability Act;
(w) Chapter 57, Maintenance Funding Practices Act; [
and
]
(x) Chapter 61, Utah Consumer Privacy Act[
.
]
; and
(y) Chapter 63, Lawyer Referral Consultants Registration Act.
Section 2. Section 
13-63-101
 is enacted to read:
CHAPTER 63. LAWYER REFERRAL CONSULTANTS REGISTRATION ACT
Part 1. General Provisions
 13-63-101.
Definitions.
As used in this chapter:
(1) "Attorney" means an individual who is authorized to provide legal services in any
state or territory of the United States.
(2) "Client" means a person that is provided lawyer referral services by a lawyer
referral consultant.
(3) "Compensation" means anything of economic value that is paid, loaned, granted,
given, donated, or transferred to a person for or in consideration of:
(a) services;
(b) personal or real property; or
(c) another thing of value.
(4) "Digital marketing service" means an Internet-based company that:
(a) advertises legal services on behalf of a law firm; and
(b) does not contact prospective clients individually.
(5) "Division" means the Division of Consumer Protection in the Department of
Commerce.
(6) "Law firm" means an entity consisting of one or more licensed lawyers lawfully
engaged in the practice of law.
(7) "Lawyer referral consultant" means an individual that engages in lawyer referral
service.
(8) (a) "Lawyer referral service" means assisting a person to find an attorney or law
firm that provides legal services in the legal field appropriate for the person's legal matter.
(b) "Lawyer referral service" does not include a digital marketing service.
(9) "Legal services" means any form of legal advice or legal representation that is
subject to the laws of this state.
Section 3. Section 
13-63-201
 is enacted to read:
Part 2. Registration Requirements
 13-63-201.
Requirement to be registered as a lawyer referral consultant.
(1) (a) Except as provided in Subsection (1)(b), an individual may not engage in an
activity of a lawyer referral consultant for compensation unless the individual is registered
under this chapter.
(b) Except as provided in Subsections 
13-63-303
(3) and (4), this chapter does not
apply to an attorney.
(2) A lawyer referral consultant may only offer nonlegal assistance or advice in
providing lawyer referral services.
Section 4. Section 
13-63-202
 is enacted to read:
 13-63-202.
Application for registration.
(1) To register as a lawyer referral consultant an individual shall:
(a) submit an annual application in a form prescribed by the division;
(b) pay an annual registration fee determined by the division in accordance with
Section 
63J-1-504
, which shall include the costs of the criminal background check required
under Subsection (1)(e);
(c) have good moral character in that the individual has not been convicted of:
(i) a felony; or
(ii) within the prior 10 years, a misdemeanor involving theft, fraud, or dishonesty;
(d) submit fingerprint cards in a form acceptable to the division at the time the
application is filed; and
(e) consent to a fingerprint background check of the individual by the Bureau of
Criminal Identification regarding the application.
(2) The division shall register an individual who qualifies under this chapter as a
lawyer referral consultant.
Section 5. Section 
13-63-203
 is enacted to read:
 13-63-203.
Requirement to submit to criminal background check.
(1) The division shall require an applicant for registration as a lawyer referral
consultant to:
(a) submit a fingerprint card in a form acceptable to the division; and
(b) consent to a fingerprint criminal background check by the Bureau of Criminal
Identification.
(2) (a) The division shall obtain information from a criminal background history record
maintained by the Bureau of Criminal Identification pursuant to Title 53, Chapter 10, Part 2,
Bureau of Criminal Identification.
(b) The information obtained under Subsection (2)(a) may only be used by the division
to determine whether an applicant for registration as a lawyer referral consultant meets the
requirements of Subsection 
13-63-202
(1)(c).
Section 6. Section 
13-63-204
 is enacted to read:
 13-63-204.
Bonds -- Exemption -- Statements dependent on posting bond.
(1) A lawyer referral consultant shall post a cash bond or surety bond:
(a) in the amount of $50,000; and
(b) payable to the division for the benefit of any person damaged by any of the
following acts that a lawyer referral consultant or the lawyer referral consultant's agent,
representative, or employee commits:
(i) fraud;
(ii) misstatement;
(iii) misrepresentation;
(iv) unlawful act;
(v) omission; or
(vi) failure to provide lawyer referral services.
(2) A bond under this section shall be:
(a) in a form approved by the division;
(b) conditioned upon the faithful compliance of a lawyer referral consultant with this
chapter and division rules; and
(c) maintained at all times while the lawyer referral consultant provides lawyer referral
services.
(3) A lawyer referral consultant shall keep the bond required under this section in force
for one year after:
(a) the lawyer referral consultant's registration expires; or
(b) the lawyer referral consultant notifies the division in writing that the lawyer referral
consultant has ceased all activities regulated under this chapter.
(4) (a) If a surety bond posted by a lawyer referral consultant under this section is
canceled due to the lawyer referral consultant's negligence, the division may assess a $300
reinstatement fee.
(b) No part of a bond posted by a lawyer referral consultant under this section may be
withdrawn:
(i) during the one-year period the registration under this chapter is in effect; or
(ii) while a revocation proceeding is pending against the lawyer referral consultant.
(5) (a) A bond posted under this section by a lawyer referral consultant may be
forfeited if the lawyer referral consultant's registration under this chapter is revoked.
(b) Notwithstanding Subsection (5)(a), the division may make a claim against a bond
posted by a lawyer referral consultant for money owed to the division under this chapter
without the division first revoking the lawyer referral consultant's registration.
(6) An individual may not disseminate by any means a statement indicating that the
individual is a lawyer referral consultant, or proposes to engage in the business of a lawyer
referral consultant, unless the individual has posted a bond under this section that is maintained
throughout the period covered by the statement.
(7) A lawyer referral consultant may not make or authorize the making of an oral or
written reference to the lawyer referral consultant's compliance with the bonding requirements
of this section except as provided in this section.
Section 7. Section 
13-63-301
 is enacted to read:
Part 3. Operational Requirements
 13-63-301.
Requirements for written contract -- Prohibited statements.
(1) (a) Before a lawyer referral consultant may provide lawyer referral services to a
client, the lawyer referral consultant shall provide the client with a written contract.
(b) The contents of the written contract described in Subsection (1)(a) shall comply
with this section and rules made by the division in accordance with Title 63G, Chapter 3, Utah
Administrative Rulemaking Act.
(c) A prospective client may cancel a written contract on or before midnight of the
third business day after execution of the written contract, excluding weekends and state and
federal holidays.
(2) A written contract under this section shall be stated in both English and in the
client's native language.
(3) A written contract under this section shall:
(a) state the purpose for which the lawyer referral consultant has been hired;
(b) state the one or more lawyer referral services to be performed;
(c) state the price for a lawyer referral service to be performed;
(d) include a statement printed in 10-point boldface type that the lawyer referral
consultant is not an attorney and may not perform the legal services that an attorney performs;
(e) include a provision stating that the client may report complaints relating to a lawyer
referral consultant to the division, including a toll-free telephone number and Internet website;
(f) include a provision stating that complaints concerning the unauthorized practice of
law may be reported to the Utah State Bar, including a toll-free telephone number and Internet
website; and
(g) in accordance with Subsection (1)(b), include a provision stating in boldface on the
first page of the written contract in both English and in the client's native language in
accordance with Subsection (2): "You may cancel this contract on or before midnight of the
third business day after execution of the written contract."
(4) A written contract may not contain a provision relating to a guarantee or promise
unless the lawyer referral consultant has some basis in fact for making the guarantee or
promise.
(5) A lawyer referral consultant may not make a guarantee or promise described in
Subsection (4) orally to a client.
(6) A written contract is void if not written in accordance with this section.
Section 8. Section 
13-63-302
 is enacted to read:
 13-63-302.
Accounting for services -- Receipts.
(1) (a) A lawyer referral consultant shall provide a signed receipt to a client for each
payment made by that client.
(b) A receipt described in Subsection (1)(a) shall be typed or computer generated on
the lawyer referral consultant's letterhead.
(2) A lawyer referral consultant shall make a statement of accounting for the lawyer
referral services rendered and payments made:
(a) in the client's native language;
(b) that is typed or computer generated on the lawyer referral consultant's letterhead;
(c) that lists the individual and total charges for services; and
(d) that lists the payments made by the client.
Section 9. Section 
13-63-303
 is enacted to read:
 13-63-303.
Notice to be displayed -- Disclosure to be provided in writing.
(1) A lawyer referral consultant shall conspicuously display in the lawyer referral
consultant's office a notice that shall be at least 12 by 20 inches with boldface type or print with
each character at least one inch in height and width, that contains the following information:
(a) the full name, address, and evidence of compliance with any applicable bonding
requirement including the bond number;
(b) a statement that the lawyer referral consultant is not an attorney; and
(c) the name of each lawyer referral consultant employed at each location.
(2) (a) Before providing any services, a lawyer referral consultant shall provide a client
with a written disclosure in the native language of the client that includes the following:
(i) the lawyer referral consultant's name, address, and telephone number;
(ii) the lawyer referral consultant's agent for service of process;
(iii) evidence of compliance with any applicable bonding requirement, including the
bond number; and
(iv) a list of the services that the lawyer referral consultant provides and the current and
total fee for each service.
(b) A lawyer referral consultant shall obtain the signature of the client verifying that the
client received the written disclosure described in Subsection (2)(a) before a service is
provided.
(3) (a) Except as provided in Subsection (3)(b), a lawyer referral consultant who prints,
displays, publishes, distributes, or broadcasts, or who causes to be printed, displayed,
published, distributed, or broadcasted, any advertisement for services as a lawyer referral
consultant, shall include in that advertisement a clear and conspicuous statement that the
lawyer referral consultant is not an attorney.
(b) (i) Subsection (3)(a) does not apply to a person who is not an active member of the
Utah State Bar, but is an attorney licensed in another state or territory of the United States.
(ii) A person described in Subsection (3)(b)(i) shall include in any advertisement for
lawyer referral services a clear and conspicuous statement that the person is not an attorney
licensed to practice law in this state, but is an attorney licensed in another state or territory of
the United States.
(4) If an advertisement subject to this section is in a language other than English, the
statement required by Subsection (3) shall be in the same language as the advertisement.
Section 10. Section 
13-63-304
 is enacted to read:
 13-63-304.
Translations -- Prohibited acts.
(1) As used in this section, "literal translation" of a word or phrase from one language
means the translation of a word or phrase without regard to the true meaning of the word or
phrase in the language that is being translated.
(2) A lawyer referral consultant may not, with the intent to mislead, literally translate,
from English into another language, words or titles, including, "notary public," "notary,"
"licensed," "attorney," "lawyer," or any other terms that imply that the lawyer referral
consultant is an attorney, in any document, including an advertisement, stationery, letterhead,
business card, or other comparable written material describing the lawyer referral consultant.
Section 11. Section 
13-63-305
 is enacted to read:
 13-63-305.
Documents -- Treatment of original documents.
A lawyer referral consultant shall:
(1) deliver to a client a copy of a document completed on behalf of the client;
(2) include on a document delivered to a client the name and address of the lawyer
referral consultant;
(3) retain a copy of a document of a client for not less than three years from the date of
the last service the lawyer referral consultant provides to the client; and
(4) return to a client all original documents that the client has provided to the lawyer
referral consultant.
Section 12. Section 
13-63-401
 is enacted to read:
Part 4. Prohibited Acts and Penalties
 13-63-401.
Unlawful acts.
(1) It is unlawful for a lawyer referral consultant to:
(a) make a false or misleading statement to a client while providing services to that
client;
(b) make a guarantee or promise to a client, unless the guarantee or promise is in
writing and the lawyer referral consultant has some basis in fact for making the guarantee or
promise; or
(c) charge a client a fee for referral of the client to another person for services that the
lawyer referral consultant cannot or will not provide to the client.
(2) A sign describing the prohibition described in Subsection (1)(c) shall be
conspicuously displayed in the office of a lawyer referral consultant.
Section 13. Section 
13-63-402
 is enacted to read:
 13-63-402.
Violations -- Actions by division.
(1) The division shall administer and enforce the provisions of this chapter in
accordance with Chapter 2, Division of Consumer Protection.
(2) The attorney general, upon request, shall give legal advice to, and act as counsel
for, the division in the exercise of the division's responsibilities under this chapter.
(3) (a) In addition to the division's enforcement powers under Chapter 2, Division of
Consumer Protection:
(i) the division director may impose an administrative fine of up to $2,500 for each
violation of this chapter; and
(ii) the division may bring an action in a court of competent jurisdiction to enforce a
provision of this chapter.
(b) In a court action by the division to enforce a provision of this chapter, the court
may:
(i) declare that an act or practice violates a provision of this chapter;
(ii) issue an injunction for a violation of this chapter;
(iii) order disgorgement of any money received in violation of this chapter;
(iv) order payment of disgorged money to an injured purchaser or consumer;
(v) impose a fine of up to $2,500 for each violation of this chapter; or
(vi) award any other relief that the court deems reasonable and necessary.
(4) If a court of competent jurisdiction grants judgment or injunctive relief to the
division, the court shall award the division:
(a) reasonable attorney fees;
(b) court costs; and
(c) investigative fees.
(5) (a) A person who violates an administrative or court order issued for a violation of
this chapter is subject to a civil penalty of no more than $5,000 for each violation.
(b) A civil penalty authorized under this section may be imposed in any civil action
brought by the attorney general on behalf of the division.
(c) All money received for the payment of a fine or civil penalty imposed under this
section shall be deposited into the Consumer Protection Education and Training Fund created
in Section 
13-2-8
.
(6) (a) A person who intentionally violates this chapter:
(i) is guilty of a class A misdemeanor; and
(ii) may be fined up to $10,000.
(b) A person intentionally violates this part if the violation occurs after the division,
attorney general, or a district or county attorney notifies the person by certified mail that the
person is in violation of this chapter.
Section 14. Section 
13-63-403
 is enacted to read:
 13-63-403.
Action by attorney general or district or county attorney.
(1) Upon referral from the division, the attorney general or any district or county
attorney may:
(a) bring an action for temporary or permanent injunctive or other relief in any court of
competent jurisdiction for any violation of this part;
(b) bring an action in any court of competent jurisdiction for the collection of penalties
authorized under Subsection 
13-63-402
(2); or
(c) bring an action under Subsection 
13-63-402
(4).
(2) A court may, upon entry of final judgment, award restitution when appropriate to
any person suffering loss because of a violation of this part if proof of loss is submitted to the
satisfaction of the court.
Section 15. Section 
13-63-404
 is enacted to read:
 13-63-404.
Recovery of losses.
In addition to any other remedies, a person suffering pecuniary loss because of a
violation by another person of this chapter may bring an action in any court of competent
jurisdiction and may recover:
(1) the greater of:
(a) $500; or
(b) twice the amount of the pecuniary loss; and
(2) court costs and reasonable attorney fees as determined by the court.
Section 16. Section 
13-64-101
 is enacted to read:
CHAPTER 64. FIDUCIARY DUTY FOR CERTAIN PROVIDERS OF LEGAL
SERVICES
Part 1. General Provisions
 13-64-101.
Definitions.
As used in this chapter:
(1) "Business entity" means a sole proprietorship, partnership, limited partnership,
limited liability company, corporation, or other legal entity that is:
(a) used to carry on a business for profit; and
(b) a participant in the sandbox.
(2) "Court rule" means rules of procedure, evidence, or practice for use of the courts of
this state.
(3) "Out-of-state attorney" means an individual admitted and licensed to practice law in
another state or territory of the United States who is authorized by court rule to practice law in
this state without being admitted and licensed to practice law in this state.
(4) "Participant" means a business entity or a business entity's officer, director, partner,
or employee that provides legal services under the sandbox:
(a) to a person other than the business entity; and
(b) for the business entity's profit.
(5) "Sandbox" means the regulatory sandbox program established by the Utah Supreme
Court for authorizing nontraditional legal service providers to practice law on a limited and
temporary basis under Utah Supreme Court Rule of Professional Practice 14-802.
Section 17. Section 
13-64-201
 is enacted to read:
Part 2. Duty and Cause of Action
 13-64-201.
Fiduciary duty.
Each officer, director, and partner of a participant owes a fiduciary duty to:
(1) the person to whom legal service is provided;
(2) in relation to legal service provided; and
(3) as applicable, that supersedes the duties described in Subsection 
16-10a-840
(1).
Section 18. Section 
13-64-202
 is enacted to read:
 13-64-202.
Cause of action.
(1) A person may bring an action in a court of competent jurisdiction for:
(a) a breach of the fiduciary duty described in Section 
13-64-201
; or
(b) an out-of-state attorney's breach of a fiduciary duty arising from an attorney-client
relationship.
(2) If a court of competent jurisdiction finds that a person breached a fiduciary duty
described in this chapter, the person who brings an action described in Subsection (1) is
entitled to:
(a) actual damages;
(b) punitive damages;
(c) injunctive relief;
(d) attorney fees; or
(e) any combination of relief described in Subsections (2)(a) through (2)(d).
Section 19. Section 
76-10-3201
 is amended to read:
76-10-3201.
Prohibition on kickbacks.
(1) As used in this section:
(a) "Kickback or bribe" means a rebate, compensation, or any other form of
remuneration, that is:
(i) direct or indirect;
(ii) overt or covert; or
(iii) in cash or in kind.
(b) "Kickback or bribe" does not include
:
(i)
 a fee that is:
[
(i)
] 
(A)
 shared between two or more individuals, each of whom is licensed to practice
law; and
[
(ii)
] 
(B)
 charged for services provided in the individual's capacity as a licensee
described in Subsection (1)(b)(i)[
.
]
; or
(ii) payment for medical services rendered.
(2) (a) An actor may not solicit or receive a kickback or bribe in return for the referral
of a person to another person for the furnishing of any good or service that relates to any
insurance claim or a claim for damages.
(b) An actor may not offer or pay a kickback or bribe to induce the referral of a person
to another person for the furnishing of any good or service that relates to any insurance claim or
a claim for damages.
(3) A violation of Subsection (2)(a) or (b) is a third degree felony.
(4) This section does not apply to an individual licensed to practice law 
or a medical
provider 
when referring[
, without compensation,
] a client for medical treatment or evaluation
,
if the referral is made without compensation
.
(5) This section does not apply to an individual licensed to practice law when:
(a) paying a lien, contractual reimbursement, or medical bill on behalf of a client from
proceeds of a settlement or judgment; or
(b) marketing to, or engaging in client development activities with, an individual
licensed to provide medical treatment or evaluation, if the marketing or client development
activities are not for the purpose of inducing the individual licensed to provide medical
treatment or evaluation to refer a particular person to the individual licensed to practice law.
Section 20. 
Effective date.
This bill takes effect on May 2, 2024.