Enrolled Copy S.B. 274
1 REGULATIONS FOR LEGAL SERVICES
2 2023 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Michael K. McKell
5 House Sponsor: Nelson T. Abbott
6
7 LONG TITLE
8 General Description:
9 This bill enacts and amends provisions related to the regulation of legal services and
10 lawyer referral services.
11 Highlighted Provisions:
12 This bill:
13 < enacts provisions related to lawyer referral consultants, including provisions that:
14 C require certain persons to be registered as lawyer referral consultants;
15 C establish application requirements;
16 C require criminal background checks for lawyer referral consultants;
17 C establish requirements for posting bond;
18 C establish requirements for a contract that a lawyer referral consultant enters into;
19 C require accounting for lawyer referral services;
20 C address delivery, release, and treatment of documents;
21 C provide requirements for posting certain notices; and
22 C provide for enforcement of provisions and recovery of losses;
23 < amends provisions related to exceptions to a prohibition on kickbacks for certain
24 activities;
25 < provides that certain providers of legal services owe a fiduciary duty to the person to
26 whom legal services are provided;
27 < creates a private right of action for a breach of certain fiduciary duties; and
28 < defines terms.
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29 Money Appropriated in this Bill:
30 None
31 Other Special Clauses:
32 This bill provides a special effective date.
33 Utah Code Sections Affected:
34 AMENDS:
35 13-2-1 (Effective 12/31/23), as last amended by Laws of Utah 2022, Chapters 201, 462
36 76-10-3201, as enacted by Laws of Utah 2022, Chapter 415
37 ENACTS:
38 13-63-101, Utah Code Annotated 1953
39 13-63-201, Utah Code Annotated 1953
40 13-63-202, Utah Code Annotated 1953
41 13-63-203, Utah Code Annotated 1953
42 13-63-204, Utah Code Annotated 1953
43 13-63-301, Utah Code Annotated 1953
44 13-63-302, Utah Code Annotated 1953
45 13-63-303, Utah Code Annotated 1953
46 13-63-304, Utah Code Annotated 1953
47 13-63-305, Utah Code Annotated 1953
48 13-63-401, Utah Code Annotated 1953
49 13-63-402, Utah Code Annotated 1953
50 13-63-403, Utah Code Annotated 1953
51 13-63-404, Utah Code Annotated 1953
52 13-64-101, Utah Code Annotated 1953
53 13-64-201, Utah Code Annotated 1953
54 13-64-202, Utah Code Annotated 1953
55
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56 Be it enacted by the Legislature of the state of Utah:
57 Section 1. Section 13-2-1 (Effective 12/31/23) is amended to read:
58 13-2-1 (Effective 12/31/23). Consumer protection division established --
59 Functions.
60 (1) There is established within the Department of Commerce the Division of Consumer
61 Protection.
62 (2) The division shall administer and enforce the following:
63 (a) Chapter 5, Unfair Practices Act;
64 (b) Chapter 10a, Music Licensing Practices Act;
65 (c) Chapter 11, Utah Consumer Sales Practices Act;
66 (d) Chapter 15, Business Opportunity Disclosure Act;
67 (e) Chapter 20, New Motor Vehicle Warranties Act;
68 (f) Chapter 21, Credit Services Organizations Act;
69 (g) Chapter 22, Charitable Solicitations Act;
70 (h) Chapter 23, Health Spa Services Protection Act;
71 (i) Chapter 25a, Telephone and Facsimile Solicitation Act;
72 (j) Chapter 26, Telephone Fraud Prevention Act;
73 (k) Chapter 28, Prize Notices Regulation Act;
74 (l) Chapter 32a, Pawnshop, Secondhand Merchandise, and Catalytic Converter
75 Transaction Information Act;
76 (m) Chapter 34, Utah Postsecondary Proprietary School Act;
77 (n) Chapter 34a, Utah Postsecondary School State Authorization Act;
78 (o) Chapter 41, Price Controls During Emergencies Act;
79 (p) Chapter 42, Uniform Debt-Management Services Act;
80 (q) Chapter 49, Immigration Consultants Registration Act;
81 (r) Chapter 51, Transportation Network Company Registration Act;
82 (s) Chapter 52, Residential Solar Energy Disclosure Act;
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83 (t) Chapter 53, Residential, Vocational and Life Skills Program Act;
84 (u) Chapter 54, Ticket Website Sales Act;
85 (v) Chapter 56, Ticket Transferability Act;
86 (w) Chapter 57, Maintenance Funding Practices Act; [and]
87 (x) Chapter 61, Utah Consumer Privacy Act[.]; and
88 (y) Chapter 63, Lawyer Referral Consultants Registration Act.
89 Section 2. Section 13-63-101 is enacted to read:
90 CHAPTER 63. LAWYER REFERRAL CONSULTANTS REGISTRATION ACT
91 Part 1. General Provisions
92 13-63-101. Definitions.
93 As used in this chapter:
94 (1) "Attorney" means an individual who is authorized to provide legal services in any
95 state or territory of the United States.
96 (2) "Client" means a person that is provided lawyer referral services by a lawyer
97 referral consultant.
98 (3) "Compensation" means anything of economic value that is paid, loaned, granted,
99 given, donated, or transferred to a person for or in consideration of:
100 (a) services;
101 (b) personal or real property; or
102 (c) another thing of value.
103 (4) "Digital marketing service" means an Internet-based company that:
104 (a) advertises legal services on behalf of a law firm; and
105 (b) does not contact prospective clients individually.
106 (5) "Division" means the Division of Consumer Protection in the Department of
107 Commerce.
108 (6) "Law firm" means an entity consisting of one or more licensed lawyers lawfully
109 engaged in the practice of law.
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110 (7) "Lawyer referral consultant" means an individual that engages in lawyer referral
111 service.
112 (8) (a) "Lawyer referral service" means assisting a person to find an attorney or law
113 firm that provides legal services in the legal field appropriate for the person's legal matter.
114 (b) "Lawyer referral service" does not include a digital marketing service.
115 (9) "Legal services" means any form of legal advice or legal representation that is
116 subject to the laws of this state.
117 Section 3. Section 13-63-201 is enacted to read:
118 Part 2. Registration Requirements
119 13-63-201. Requirement to be registered as a lawyer referral consultant.
120 (1) (a) Except as provided in Subsection (1)(b), an individual may not engage in an
121 activity of a lawyer referral consultant for compensation unless the individual is registered
122 under this chapter.
123 (b) Except as provided in Subsections 13-63-303(3) and (4), this chapter does not
124 apply to an attorney.
125 (2) A lawyer referral consultant may only offer nonlegal assistance or advice in
126 providing lawyer referral services.
127 Section 4. Section 13-63-202 is enacted to read:
128 13-63-202. Application for registration.
129 (1) To register as a lawyer referral consultant an individual shall:
130 (a) submit an annual application in a form prescribed by the division;
131 (b) pay an annual registration fee determined by the division in accordance with
132 Section 63J-1-504, which shall include the costs of the criminal background check required
133 under Subsection (1)(e);
134 (c) have good moral character in that the individual has not been convicted of:
135 (i) a felony; or
136 (ii) within the prior 10 years, a misdemeanor involving theft, fraud, or dishonesty;
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137 (d) submit fingerprint cards in a form acceptable to the division at the time the
138 application is filed; and
139 (e) consent to a fingerprint background check of the individual by the Bureau of
140 Criminal Identification regarding the application.
141 (2) The division shall register an individual who qualifies under this chapter as a
142 lawyer referral consultant.
143 Section 5. Section 13-63-203 is enacted to read:
144 13-63-203. Requirement to submit to criminal background check.
145 (1) The division shall require an applicant for registration as a lawyer referral
146 consultant to:
147 (a) submit a fingerprint card in a form acceptable to the division; and
148 (b) consent to a fingerprint criminal background check by the Bureau of Criminal
149 Identification.
150 (2) (a) The division shall obtain information from a criminal background history record
151 maintained by the Bureau of Criminal Identification pursuant to Title 53, Chapter 10, Part 2,
152 Bureau of Criminal Identification.
153 (b) The information obtained under Subsection (2)(a) may only be used by the division
154 to determine whether an applicant for registration as a lawyer referral consultant meets the
155 requirements of Subsection 13-63-202(1)(c).
156 Section 6. Section 13-63-204 is enacted to read:
157 13-63-204. Bonds -- Exemption -- Statements dependent on posting bond.
158 (1) A lawyer referral consultant shall post a cash bond or surety bond:
159 (a) in the amount of $50,000; and
160 (b) payable to the division for the benefit of any person damaged by any of the
161 following acts that a lawyer referral consultant or the lawyer referral consultant's agent,
162 representative, or employee commits:
163 (i) fraud;
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164 (ii) misstatement;
165 (iii) misrepresentation;
166 (iv) unlawful act;
167 (v) omission; or
168 (vi) failure to provide lawyer referral services.
169 (2) A bond under this section shall be:
170 (a) in a form approved by the division;
171 (b) conditioned upon the faithful compliance of a lawyer referral consultant with this
172 chapter and division rules; and
173 (c) maintained at all times while the lawyer referral consultant provides lawyer referral
174 services.
175 (3) A lawyer referral consultant shall keep the bond required under this section in force
176 for one year after:
177 (a) the lawyer referral consultant's registration expires; or
178 (b) the lawyer referral consultant notifies the division in writing that the lawyer referral
179 consultant has ceased all activities regulated under this chapter.
180 (4) (a) If a surety bond posted by a lawyer referral consultant under this section is
181 canceled due to the lawyer referral consultant's negligence, the division may assess a $300
182 reinstatement fee.
183 (b) No part of a bond posted by a lawyer referral consultant under this section may be
184 withdrawn:
185 (i) during the one-year period the registration under this chapter is in effect; or
186 (ii) while a revocation proceeding is pending against the lawyer referral consultant.
187 (5) (a) A bond posted under this section by a lawyer referral consultant may be
188 forfeited if the lawyer referral consultant's registration under this chapter is revoked.
189 (b) Notwithstanding Subsection (5)(a), the division may make a claim against a bond
190 posted by a lawyer referral consultant for money owed to the division under this chapter
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191 without the division first revoking the lawyer referral consultant's registration.
192 (6) An individual may not disseminate by any means a statement indicating that the
193 individual is a lawyer referral consultant, or proposes to engage in the business of a lawyer
194 referral consultant, unless the individual has posted a bond under this section that is maintained
195 throughout the period covered by the statement.
196 (7) A lawyer referral consultant may not make or authorize the making of an oral or
197 written reference to the lawyer referral consultant's compliance with the bonding requirements
198 of this section except as provided in this section.
199 Section 7. Section 13-63-301 is enacted to read:
200 Part 3. Operational Requirements
201 13-63-301. Requirements for written contract -- Prohibited statements.
202 (1) (a) Before a lawyer referral consultant may provide lawyer referral services to a
203 client, the lawyer referral consultant shall provide the client with a written contract.
204 (b) The contents of the written contract described in Subsection (1)(a) shall comply
205 with this section and rules made by the division in accordance with Title 63G, Chapter 3, Utah
206 Administrative Rulemaking Act.
207 (c) A prospective client may cancel a written contract on or before midnight of the
208 third business day after execution of the written contract, excluding weekends and state and
209 federal holidays.
210 (2) A written contract under this section shall be stated in both English and in the
211 client's native language.
212 (3) A written contract under this section shall:
213 (a) state the purpose for which the lawyer referral consultant has been hired;
214 (b) state the one or more lawyer referral services to be performed;
215 (c) state the price for a lawyer referral service to be performed;
216 (d) include a statement printed in 10-point boldface type that the lawyer referral
217 consultant is not an attorney and may not perform the legal services that an attorney performs;
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218 (e) include a provision stating that the client may report complaints relating to a lawyer
219 referral consultant to the division, including a toll-free telephone number and Internet website;
220 (f) include a provision stating that complaints concerning the unauthorized practice of
221 law may be reported to the Utah State Bar, including a toll-free telephone number and Internet
222 website; and
223 (g) in accordance with Subsection (1)(b), include a provision stating in boldface on the
224 first page of the written contract in both English and in the client's native language in
225 accordance with Subsection (2): "You may cancel this contract on or before midnight of the
226 third business day after execution of the written contract."
227 (4) A written contract may not contain a provision relating to a guarantee or promise
228 unless the lawyer referral consultant has some basis in fact for making the guarantee or
229 promise.
230 (5) A lawyer referral consultant may not make a guarantee or promise described in
231 Subsection (4) orally to a client.
232 (6) A written contract is void if not written in accordance with this section.
233 Section 8. Section 13-63-302 is enacted to read:
234 13-63-302. Accounting for services -- Receipts.
235 (1) (a) A lawyer referral consultant shall provide a signed receipt to a client for each
236 payment made by that client.
237 (b) A receipt described in Subsection (1)(a) shall be typed or computer generated on
238 the lawyer referral consultant's letterhead.
239 (2) A lawyer referral consultant shall make a statement of accounting for the lawyer
240 referral services rendered and payments made:
241 (a) in the client's native language;
242 (b) that is typed or computer generated on the lawyer referral consultant's letterhead;
243 (c) that lists the individual and total charges for services; and
244 (d) that lists the payments made by the client.
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245 Section 9. Section 13-63-303 is enacted to read:
246 13-63-303. Notice to be displayed -- Disclosure to be provided in writing.
247 (1) A lawyer referral consultant shall conspicuously display in the lawyer referral
248 consultant's office a notice that shall be at least 12 by 20 inches with boldface type or print with
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