## Facts

- A New York law firm and certain lawyers not admitted in California represented ESQ Business Services, Inc., a California corporation, under a fee agreement selecting California law and providing for AAA arbitration in California.
- The firm performed legal services connected to ESQ’s dispute with Tandem Computers, including multiple trips to California, in-state meetings, advice on California law, and participation in settlement negotiations in California.
- The firm initiated an arbitration in California to recover fees; ESQ filed suit in California superior court asserting malpractice and related claims.
- ESQ argued the firm’s representation constituted the unauthorized practice of law under California Business and Professions Code § 6125, rendering the fee agreement unenforceable.
- The superior court accepted the unauthorized-practice theory in substance; the Court of Appeal largely affirmed, and the California Supreme Court granted review.

## Issues

1. What constitutes “practic[ing] law in California” under Business and Professions Code § 6125 for out-of-state lawyers working on California-related matters.
2. Whether the firm’s contacts and conduct amounted to unauthorized practice of law in California.
3. Whether the fee agreement was unenforceable in whole or in part due to compensation for unauthorized legal services, and whether fees for separable out-of-state services could be recovered.

## Decision

- The court held that § 6125 applies to out-of-state lawyers who perform legal services in California without being active members of the California State Bar.
- The court rejected a rule limiting § 6125 to in-court appearances and reaffirmed that providing legal advice and negotiating on behalf of a client can constitute the practice of law.
- The court held the firm engaged in unauthorized practice to the extent it performed substantial legal services in California for the California client.
- The court held the fee agreement was invalid to the extent it authorized payment for substantial legal services performed in California in violation of § 6125 (and the public policy reflected in § 6126).
- The court declined to create an implied exception for representation connected to arbitration seated in California, stating such policy choices are for the Legislature.
- The judgment was affirmed in part and reversed in part, and the matter was remanded to allow the firm to attempt to prove recoverable fees for limited, severable services lawfully performed in New York, with ESQ permitted to offer contrary evidence.

## Legal Principles

- “Practice of law in California” under Business and Professions Code § 6125 can include out-of-state lawyers’ activities that constitute legal representation of a California client in California, including advice and negotiations, not only court appearances.
- Physical presence in California is not the sole determinant; sufficient contacts with the California client and the nature of the services may bring conduct within § 6125.
- Section 6125 does not automatically reach legal services an out-of-state firm renders in its home state merely because the matter relates to California.
- A fee agreement is unenforceable to the extent it compensates the unauthorized practice of law; any recovery must exclude compensation for unlawful in-state practice.
- Lawful and unlawful components of a fee arrangement may be severable; a firm may recover for clearly separable, lawful out-of-state services if proven on remand.
- Courts will not imply a statutory exception to § 6125 for arbitration-related representation absent legislative authorization.

## Conclusion

The California Supreme Court held that out-of-state lawyers who performed substantial legal services in California for a California client without California licensure violated § 6125, making the fee agreement unenforceable as to compensation for that unauthorized in-state work, while permitting a remand to determine whether severable, lawful fees for limited New York services could be recovered.


Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Court, 17 Cal. 4th 119 (1998)