"The public is fed up with the way the (legal) practice operates. And maybe we have to recognize that the process itself is at fault."
Mike Beatty, former chairman, Colorado Democratic Party, addressing an American Bar Assn. meeting in 1994.
Here's more good news (and some bad) for attorneys. The Colorado Bar Association (CBA) is pushing two measures in the Colorado legislature that will increase legal incomes. One bill revises our nonprofit corporation act. The other changes Colorado's partnership law.
SB 91, by Sen. Doug Linkhart (D) and Rep. Tambor Williams (R) is 194 pages of capital letters (which no one in his or her right mind could read, will read, or much less understand) and 15 pages of conforming amendments for nonprofit corporations. It won't be law until July l, 1998, but ALL nonprofit Colorado corporations incorporated since 1968 WILL be governed by this new statute whether they want to or not.
The difference between nonprofit and profit? Nonprofits don't pay dividends to stockholders. But both can (and do) pay a lot of money to officers and directors and employees. Nonprofits are also the type of corporation you give "donations" to.
Do you recall recent national TV newscasts about a corporation that took three to four million dollars in donations to build a wall of names honoring those soldiers who died on the Normandy beaches in 1944, and then didn't build it? That was a nonprofit corporation.
SB 91 includes language not even permitted in profit corporations. For instance 7-121-402 allows a nonprofit corporation to give "notice by radio or television" when "notice" is required under the law, such as "Hello out there, we're going to have a meeting next week." That language was considered outrageous when attempted in the 1996 profit corporation law, and removed.
Sometimes, stockholders sue corporations when they think officers or directors or other stockolders are screwing up. It's called a "derivative action". Under 7-126-401 in SB 91, you have to be a member with five percent of voting power in the corporation to bring the action.
But SB 91 doesn't like "derivative" lawsuits and states the court can require you to put up security to pay off corporation expenses if your lawsuit is lost. That "security" requirement doesn't apply to shareholders holding 5 percent in a profit making corporation.
The present nonprofit corporation act forbids lending corporate money to directors and officers. But SB 91 allows loans to a director or a director's relatives as long as a majority of disinterested directors approve it.
Among those prepared to take advantage of the lending opportunity are the beneficiaries of SB 18 by Sen. Jim Congrove (R) and Rep. Doug Dean (R). SB 18 has already passed the Senate containing language allowing charter schools to be non-profit corporations.
If SB 18 and SB 91 pass without amendment, it is possible that money scheduled for use by charter schools for education could instead be loaned to a charter school director.
Those are just three examples of changes. Others will be more difficult for anyone, including lawyers, to ferret out of the bill in deciding whether the revisions are good or not. Is SB 91 necessary? The present nonprofit corporation act allows directors to use the profit corporation law to fill in any gaps in the statute. It has worked well.
HB 1237 by Rep. Russ George (R) and Sen. Dick Mutzebaugh (R) is 61 pages of a new partnership law promulgated by the Commissioners on Uniform State Laws. And there are eleven pages of explanations and revisions to other statutes.
Revisions prepared for this bill by the CBA never made it into the original printed measure. The Uniform Commissioners didn't want the CBA changes and the CBA did. They compromised, the CBA got a little, and the bill passed out of committee.
Much of what lawyers studied in law school about partnerships must now go into the wastebasket. That's the bad news for lawyers. But it's good news for groups which run continuing education courses at "modest fees" to retrain attorneys.
One example of a major change: Historically, a partnership is an entity as well as an aggregate of the individual partners. This means creditors can get at a partner's personal assets along with partnership assets. But under the new law, partners are off the hook to creditors except for their interest in the partnership.
Attorneys will regain whatever they have to spend on retraining courses, and a LOT more, by notifying clients that their partnership articles will need to be revised. While this new law would go into effect Jan. 1, 1998, present Colorado partnerships can continue to use the old law until Jan.1, 2003. But since the new law does screw creditors of the partnership, why bother waiting?
And if your clients operate nonprofit corporations, you will also be retrained by the CBA and make lots of profitable fees from your nonprofit corporation clients.
Meanwhile, the CBA continues to work on the BIG one, the "Universal Business Entity Act". This hero sandwich is designed to replace corporations, partnerships and limited liability companies with a "one size fits all" law that will be ready about 2002 or earlier. That's good news for attorneys. When (not if) IT becomes law, EVERY business client will be paying for advice.
One final quote from Mr. Beatty as published in the American Bar Assn. Journal of April 1994: "Beatty said lawyers, like the airlines, will be far better off as soon as they realize that the public wants to get from one point to another in the cheapest way possible."
Since 1990, there have been a tremendous number of revisions and new laws pushed by the CBA and the national Commissioners on Uniform State Laws. These have nothing to do with good government and everything to do with increasing law office practice. Once that is recognized, everything happening makes sense.
Following up on last week's column, the Social Workers bill, HB 1283 was killed in House Appropriations. But HB 1317, the bill to set up a separate Psychologists Board to discipline psychologists and thus remove them from the Grievance Board's jurisdiction is still alive.
Hoping to avoid what happened to the social workers bill, lobbyists for the Psychology Association plan to delete language in the original bill that was designed to force the 2,542 unlicensed psychotherapists to stop practicing or get a psychologist license. Considering the long standing antipathy by the psychologists against the unlicensed, is that ploy believable?
British Prime Minister Chamberlain proclaimed there would be "peace in our time" after the 1938 Munich agreement with Germany. But World War II began in 1939. In my opinion, psychologists will either attack the unlicensed in 1998, or when HB 1317 is in the Senate on third reading.
On the number of disciplinary actions taken since July l, 1988 by the Grievance Board, the unlicensed psychotherapists have the worst record: 81 disciplines for 2,542 persons. That is one for every 31.4 unlicensed psychotherapsists. But....
The next worst group is the licensed psychologists which include 137 school psychologists: 53 disciplines for 1,820 psychologists. That is one for every 34.3 psychologists. Then it drops off to one discipline for every 100 social workers.
Between July l, 1961 and July l, 1988, there was a separate Psychology Board to discipline its licensees. In 27 years there were ten disciplinary actions, slightly less than two every five years. Based on those numbers, if a separate Psychology Board had been in control the past nine years, there would have been three psychologists disciplined, not fifty-three.
Since lawyers are, in effect, trained to be legislators, everyone expects lawyer-legislators to always be in the very top positions. Not true. Not one lawyer has presided over the state senate in the past thirty-two years (1967-98). During the same 32 years in the Colorado House, lawyers have served as speaker only ten years.
What has been missing for the lawyer-legislator in the state senate and house has been offset by Colorado's governorship. In the past 42 years (1957 through 1998) every ELECTED Colorado governor has been a practicing lawyer (there have been four of them) and three ascended after Colorado legislative service. So if either Gail Schoettler or Bill Owens wins that election in 1998, the string will be broken.
Lawyer-legislator numbers in Colorado have more or less settled in at 20, contrary to a national trend of declining percentages. If you go back ten years to 1987, there were also 20, and five of the 1987 lawyer-legislators are still members: Jeff Wells (R), Chuck Berry (R), Dick Mutzebaugh (R), Gil Romero (D), and Bill Thiebaut (D).
Lawyer-legislators tend to break fairly even on political lines, 12 to 8 in favor of Republicans in 1987, and 11 to 9 in 1997. But a major difference from 1987 is in chairmanships of Senate and House Judiciary. In 1987, attorneys Ralph Cole (R) and David Bath (R) were in charge. But in 1997, non-attorneys Dorothy Wham (R) and Jeanne Adkins (R) have headed those committees for a number of years.
Of course, not every lawyer who runs for the legislature expects to be elected. Governing Magazine several years ago ran a delightful quote from a law school dean in the rural south who was lecturing his students:
"When you finish law school, go back to your home towns and make yourselves visible. Eat lunch everyday on the benches outside the courthouse. Run for the legislature and pray like hell you get beat."
Jerry Kopel writes a column for the Statesman based on 22 years past experience as a state lawyer-legislator.
Copyright 2015 Jerry Kopel & David Kopel