2005 California Business and Professions Code Sections 6175-6177 Article 10.5. Provision of Financial Services by Lawyers

SECTION 6175-6177

6175.  As used in this article, the following definitions apply:
   (a) "Lawyer" means a member of the State Bar or a person who is
admitted and in good standing and eligible to practice before the bar
of any United States court or the highest court of the District of
Columbia or any state, territory, or insular possession of the United
States, or licensed to practice law in, or is admitted in good
standing and eligible to practice before the bar of the highest court
of, a foreign country or any political subdivision thereof, and
includes any agent of the lawyer or law firm or law corporation doing
business in the state.
   (b) "Client" means a person who has, within the three years
preceding the sale of financial products by a lawyer to that person,
employed that lawyer for legal services.  The settlor and trustee of
a trust shall be considered one person.
   (c) "Elder" and "dependent elder" shall have the meaning as
defined in Chapter 11 (commencing with Section 15600) of Part 3 of
Division 9 of the Welfare and Institutions Code.
   (d) "Financial products" means long-term care insurance, life
insurance, and annuities governed by the Insurance Code, or its
   (e) "Sell" means to act as a broker for a commission.
6175.3.  A lawyer, while acting as a fiduciary, may sell financial
products to a client who is an elder or dependent adult with whom the
lawyer has or has had, within the preceding three years, an
attorney-client relationship, if the transaction or acquisition and
its terms are fair and reasonable to the client, and if the lawyer
provides that client with a disclosure that satisfies all of the
following conditions:
   (a) The disclosure is in writing and is clear and conspicuous.
The disclosure shall be a separate document, appropriately entitled,
in 12-point print with one inch of space on all borders.
   (b) The disclosure, in a manner that should reasonably have been
understood by that client, is signed by the client, or the client's
conservator, guardian, or agent under a valid durable power of
   (c) The disclosure states that the lawyer shall receive a
commission and sets forth the amount of the commission and the actual
percentage rate of the commission, if any.  If the actual amount of
the commission cannot be ascertained at the outset of the
transaction, the disclosure shall include the actual percentage rate
of the commission or the alternate basis upon which the commission
will be computed, including an example of how the commission would be
   (d) The disclosure identifies the source of the commission and the
relationship between the source of the commission and the person
receiving the commission.
   (e) The disclosure is presented to the client at or prior to the
time the recommendation of the financial product is made.
   (f) The disclosure advises the client that he or she may obtain
independent advice regarding the purchase of the financial product
and will be given a reasonable opportunity to seek that advice.
   (g) The disclosure contains a statement that the financial product
may be returned to the issuing company within 30 days of receipt by
the client for a refund as set forth in Section 10127.10 of the
Insurance Code.
   (h) The disclosure contains a statement that if the purchase of
the financial product is for the purposes of Medi-Cal planning, the
client has been advised of other appropriate alternatives, including
spend-down strategies, and of the possibility of obtaining a fair
hearing or obtaining a court order.
6175.4.  (a) A client who suffers any damage as the result of a
violation of this article by any lawyer may bring an action against
that person to recover or obtain one or more of the following
   (1) Actual damages, but in no case shall the total award of
damages in a class action be less than five thousand dollars
   (2) An order enjoining the violation.
   (3) Restitution of property.
   (4) Punitive damages.
   (5) Any other relief that the court deems proper.
   (b) A client may seek and be awarded, in addition to the remedies
specified in subdivision (a), an amount not to exceed ten thousand
dollars ($10,000) where the trier of fact (1) finds that the client
has suffered substantial physical, emotional, or economic damage
resulting from the defendant's conduct, (2) makes an affirmative
finding in regard to one or more of the factors set forth in
subdivision (b) of Section 3345 of the Civil Code, and (3) finds that
an additional award is appropriate.  Judgment in a class action may
award each class member the additional award where the trier of fact
has made the foregoing findings.
6175.5.  A violation of this article by a member shall be cause for
discipline by the State Bar.
6175.6.  The court shall report the name, address, and professional
license number of any person found in violation of this article to
the appropriate professional licensing agencies for review and
possible disciplinary action.
6176.  Nothing in this article shall be deemed to limit, reduce, or
preclude enforcement of any obligation, statute, State Bar Rule of
Professional Conduct, or court rule, including, but not limited to,
those relating to the lawyer's fiduciary duties, that are otherwise
applicable to any transaction in which a lawyer is involved.
6177.  The State Bar by December 31 of each year shall report to the
Legislature on the number of complaints filed against California
attorneys alleging a violation of this article.  The report shall
also include the type of charges made in each complaint, the number
of resulting investigations initiated, and the number and nature of
any disciplinary actions take by the State Bar for violations of this

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