SACRAMENTO (CN) — The California Senate has all but passed a bill to eliminate convenience fees charged by companies controlling electronic gateways into courthouses. The effort to adopt new technology for California courts has a long and checkered history of mismanagement by state court bureaucrats who spent enormous sums on a failed software project while fighting diehard battles against press access and giving themselves special privileges.
For centuries, the medium of court documents was parchment or paper. But in the last decade, there has been a wave of courts, first federal then state, moving to digital documents. The move has given court officials a stalking horse to limit public access and given private companies a means to extract further profit.
California, with the biggest population, economy and court system of any state in the nation, is currently in a late and at times chaotic transition to that digital world. In the switch, individual superior courts have given what amounts to a local monopoly to one or another software company, allowing it to control that court's e-filing gateway.
Going through that gateway are the runners, a group traditionally embedded in the court ecosystem, the myriad small companies that run documents to a court's intake window. Competition among them is extremely high. But they had been made subservient by the mother software company that keeps the keys to the gateway.
Control over the electronic passageway has also created a river of gold for the software companies because they can rely on a high volume of court filings year in, year out. They can also extract a user fee for each filing and tack on additional convenience fees.
In a move to control that power, the rule-making body for California's courts, the Judicial Council, adopted a policy in June saying California courts can contract with more than one electronic file manager, which would lessen the single gatekeeper's stranglehold. The bill currently pending in the California Legislature would curb another aspect of the gatekeeper's power, the ability to tack a convenience fee onto credit payments.
The bill would limit those convenience fees to the cost of credit, and it would require that the gatekeeper allow alternative forms of payment.
Companies that have set up the e-file managers controlling the e-path into the courthouse range from tiny software developers to a long-established legal publisher to the 800-pound gorilla of e-filing nationally.
Last year, for example, Los Angeles Superior Court, the biggest court in the nation, signed a contract with Journal Technologies to put in place an electronic file manager and upgrade the court's case management system for civil cases, with the court paying roughly $4 million. The deal also allows Journal Tech to charge the public roughly $10 for each filing, a much smaller fee for attorney service companies, and a convenience fee of 2.75 percent on credit payments. It also offers alternative forms of payment that avoid the convenience fee.
Based in Los Angeles, Journal Tech is a wholly owned subsidiary of the Daily Journal Corporation which publishes a string of legal newspapers relying on public notice ads. The company is chaired by Charles Munger who is also vice chairman of Berkshire Hathaway. Journal Tech's business in L.A. and Riverside, apart from the user fees, is estimated to be worth roughly $7.5 million over the next five years.