STEVEN FRYE v. TENDERLOIN HOUSING CLINIC, INC
Filed 3/9/06
IN THE SUPREME COURT OF CALIFORNIA
)
v. )
) Ct. App. 1 No. A104078
TENDERLOIN HOUSING CLINIC, INC. )
Defendant and Respondent. ) Super. Ct. No. 989-112
( Continue from part I……………… ).
D
We return to the issue of the intent of our own Legislature in enacting section 13406(b). In light of the background against which the measure was adopted and the constitutional issues that would be presented under the Court of Appeal's view that section 13406(b) was intended to govern all nonprofit corporations that supply legal services to third parties, we find unpersuasive the conclusion reached by that court. The historical development of the rule against corporate practice of law and the rule's exceptions make it clear that, as the Legislature was well aware when it enacted section 13406(b), the common law prohibition was not as monolithic as the Court of Appeal seems to have believed, but rather was subject to various exceptions.
Not only does the historical background discussed above render the Court of Appeal's interpretation of the intended reach of the statute implausible, but the text and legislative history of section 13406(b) fail to support that court's view of the preclusive effect of the statute. The Professional Corporation Act does not require that every corporation employing an attorney to represent third parties must be a professional corporation.[1] Nor does the language of section 13406(b) state that the statute serves as the exclusive source of authority for nonprofit corporations to employ attorneys, or that common law sources of such authority are abrogated. The legislative history of the enactment makes it evident that it represented an effort to supply an explicit extension of authorization for the corporate practice of law in order to solve a limited problem, not to overturn past practices or to restrict nonprofit corporate practice of law by advocacy groups.
The Legislature's intent to expand nonprofit corporate practice apparently emanated from its desire to ensure the continued functioning of a particular nonprofit law office. In 1992, the Community Law Center of Oakland asked the Attorney General whether it could incorporate as a law corporation under the nonprofit public benefit corporation provisions. The Oakland law center was concerned that it might not be authorized to so incorporate because, unlike a pure legal aid society practice, it accepted fees from clients who had low incomes but were not indigent, and it engaged in a general law practice, primarily in the area of family law. The law center secured an Attorney General opinion on the question, the validity of which is not before us in the present case. The opinion concluded that the nonstatutory legal aid exception to the judicial prohibition on the corporate practice of law was limited to free legal services to indigents, whereas the Oakland law center did not limit its services to indigent persons and charged for its services. (75 Ops.Cal.Atty.Gen. 92, 93 (1992).) In the Attorney General's opinion, the center also did not constitute a membership organization serving the common interests of its members. The opinion concluded that â€
