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Unlicensed Lawyers in Arbitration

Every so often, we get sent to arbitration on a wage and hour claim. It happens rarely, because wage and hour cases have none of the "runaway jury" risks that discrimination and other kinds of employment cases present to employer defendants. In addition, under Armendariz, the employer almost always has to pay virtually all of the arbitration costs. We tend to file even more motions, demurrers to answers and the like when we are in arbitration than when we are in Superior Court.

Nonetheless, we sometimes end up in arbitration, and although we have yet to lose one of those arbitrations, it could happen. When it does, there is always the risk that the employee will be stuck with an adverse award for the employer's attorney's fees.

Often, in wage and hour cases, the reason the defendant broke the law in the first place was because it was headquartered outside California, and its wage and hour policies were designed to comply with FLSA, but not California standards. When that happens, it is not uncommon for the defendant to use its favorite outside firm to handle the case (we've had Florida, Georgia and Massachusetts lawyers on the other side in several recent cases), while retaining local counsel solely to facilitate the pro hac vice application. From time to time, however, the out-of-state lawyers don't bother with the pro hac vice applications when the case has been sent to arbitration. The presents and interesting shift in the allocation of litigation risks.

When the opposing attorney is not licensed to practice in California, before defending the arbitration, they need to comply with Code of Civil Procedure § 1282.4. If they do not, their attorney's fees are not recoverable. In general, that section requires them to file papers with the California State Bar, pay a fee, and notify all counsel and the arbitrator. The full text of the code provides as follows:

(a) A party to the arbitration has the right to be represented by an attorney at any proceeding or hearing in arbitration under this title. A waiver of this right may be revoked; but if a party revokes that waiver, the other party is entitled to a reasonable continuance for the purpose of procuring an attorney.

(b) Notwithstanding any other provision of law, including Section 6125 of the Business and Professions Code, an attorney admitted to the bar of any other state may represent the parties in the course
of, or in connection with, an arbitration proceeding in this state, provided that the attorney, if not admitted to the State Bar of California, satisfies all of the following:
   (1) He or she timely serves the certificate described in subdivision (c).
   (2) The attorney's appearance is approved in writing on that certificate by the arbitrator, the arbitrators, or the arbitral forum.
   (3) The certificate bearing approval of the attorney's appearance is filed with the State Bar of California and served on the parties as described in this section.

(c) Within a reasonable period of time after the attorney described in subdivision (b) indicates an intention to appear in the arbitration, the attorney shall serve a certificate in a form prescribed by the State Bar of California on the arbitrator, arbitrators, or arbitral forum, the State Bar of California, and all other parties and counsel in the arbitration whose addresses are known to the attorney. The certificate shall state all of the following:
   (1) The case name and number, and the name of the arbitrator, arbitrators, or arbitral forum assigned to the proceeding in which the attorney seeks to appear.
   (2) The attorney's residence and office address.
   (3) The courts before which the attorney has been admitted to practice and the dates of admission.
   (4) That the attorney is currently a member in good standing of, and eligible to practice law before, the bar of those courts.
   (5) That the attorney is not currently on suspension or disbarred from the practice of law before the bar of any court.
   (6) That the attorney is not a resident of the State of California.
   (7) That the attorney is not regularly employed in the State of California.
   (8) That the attorney is not regularly engaged in substantial business, professional, or other activities in the State of California.
   (9) That the attorney agrees to be subject to the jurisdiction of the courts of this state with respect to the law of this state governing the conduct of attorneys to the same extent as a member of the State Bar of California.
   (10) The title of the court and the cause in which the attorney has filed an application to appear as counsel pro hac vice in this state or filed a certificate pursuant to this section in the preceding two years, the date of each application or certificate, and whether or not it was granted. If the attorney has made repeated appearances, the certificate shall reflect the special circumstances that warrant the approval of the attorney's appearance in the arbitration.
   (11) The name, address, and telephone number of the active member of the State Bar of California who is the attorney of record.

(d) The arbitrator, arbitrators, or arbitral forum may approve the attorney's appearance if the attorney has complied with subdivision (c). Failure to timely file and serve the certificate described in subdivision (c) shall be grounds for disapproval of the appearance and disqualification from serving as an attorney in the arbitration in which the certificate was filed. In the absence of special circumstances, repeated appearances shall be grounds for disapproval of the appearance and disqualification from serving as an attorney in the arbitration in which the certificate was filed.

(e) Within a reasonable period of time after the arbitrator, arbitrators, or arbitral forum approves the certificate, the attorney shall file the certificate with the State Bar of California and serve the certificate as described in Section 1013a on all parties and counsel in the arbitration whose address is known to the
attorney.

(f) An attorney who fails to file or serve the certificate required by this section or files or serves a certificate containing false information or who otherwise fails to comply with the standards
of professional conduct required of members of the State Bar of California shall be subject to the disciplinary jurisdiction of the State Bar with respect to that certificate or any of his or her acts occurring in the course of the arbitration.

(g) Notwithstanding any other provision of law, including Section 6125 of the Business and Professions Code, an attorney who is a member in good standing of the bar of any state may represent the parties in connection with rendering legal services in this state in the course of and in connection with an arbitration pending in another state.

(h) Notwithstanding any other provision of law, including Section 6125 of the Business and Professions Code, any party to an arbitration arising under collective bargaining agreements in industries and provisions subject to either state or federal law may be represented in the course of, and in connection with, those proceedings by any person, regardless of whether that person is licensed to practice law in this state.

(i) Nothing in this section shall apply to Division 4 (commencing with Section 3201) of the Labor Code.

(j) (1) In enacting the amendments to this section made by Assembly Bill 2086 of the 1997-98 Regular Session, it is the intent of the Legislature to respond to the holding in Birbrower v. Superior
Court (1998) 17 Cal.4th 117, as modified at 17 Cal.4th 643a (hereafter Birbrower), to provide a procedure for nonresident attorneys who are not licensed in this state to appear in California arbitration proceedings.
   (2) In enacting subdivision (h), it is the intent of the Legislature to make clear that any party to an arbitration arising under a collective bargaining agreement governed by the laws of this state may be represented in the course of and in connection with those proceedings by any person regardless of whether that person is licensed to practice law in this state.
   (3) Except as otherwise specifically provided in this section, in enacting the amendments to this section made by Assembly Bill 2086 of the 1997-98 Regular Session, it is the Legislature's intent that nothing in this section is intended to expand or restrict the ability of a party prior to the decision in Birbrower to elect to be represented by any person in a nonjudicial arbitration proceeding, to the extent those rights or abilities existed prior to that decision. To the extent that Birbrower is interpreted to expand or restrict
that right or ability pursuant to the laws of this state, it is hereby abrogated except as specifically provided in this section.
   (4) In enacting subdivision (i), it is the intent of the Legislature to make clear that nothing in this section shall affect those provisions of law governing the right of injured workers to elect to be represented by any person, regardless of whether that person is licensed to practice law in this state, as set forth in Division 4 (commencing with Section 3200) of the Labor Code.

(k) This section shall be operative until January 1, 2011, and on that date shall be repealed.

Rumor has it that defendants and out-of-state counsel get very angry when they first learn of those code section after prevailing at arbitration in a case with fee-shifting statutes, but like we said, we've never lost a wage and hour case, so we don't have any firsthand knowledge.

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