<p>When unscrupulous law firms began operating an ill-disguised protection racket that shook down small California businesses for money, the Legislature - or at least its Democratic majority - found itself in a dilemma.</p>
<p>The shakedown lawyers were combing through the records of state agencies, looking for firms that had committed tiny transgressions of regulatory rules. They threatened their owners with expensive lawsuits under a provision of California law allowing private actions for so-called "unfair business practices," then offered to go away if the businesses paid specified sums.</p>