BILL ANALYSIS
SB 877
Page 1
SENATE THIRD READING
SB 877 (Harman)
As Amended August 2, 2010
Majority vote
SENATE VOTE :31-0
JUDICIARY 10-0
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|Ayes:|Feuer, Tran, Brownley, | | |
| |Evans, Hagman, Huffman, | | |
| |Jones, Knight, Monning, | | |
| |Saldana | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Permits out-of-state lawyers to practice in California
arbitration proceedings. Specifically, this bill would remove
the current sunset provision and make permanent the
authorization for out-of-state lawyers to practice law in
arbitration proceedings despite lacking a license to practice
law in California.
EXISTING LAW provides that a party to an arbitration agreement
has the right to be represented by an attorney at any
arbitration proceeding or hearing and authorizes an out-of-state
attorney until January 1, 2011 to appear on behalf of a client
in arbitration as long as the out-of-state attorney files and
serves a certificate, as specified, and is subject to the
disciplinary jurisdiction of the State Bar of California.
FISCAL EFFECT : None
COMMENTS : In support of the bill the author states that the
out-of-state arbitration program is an effective and useful
program that should be a permanent fixture of California state
law.
Further, the California Dispute Resolution Council (CDRC), a
supporter of the bill, notes that "[t]his statute has worked to
ensure that arbitrations can proceed smoothly in our state,
especially in those cases where out of state counsel are the
lawyers for the parties involved in the arbitration. This is
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not an attempt by these lawyers to avoid becoming members of the
state bar but merely to perform their duties for their clients
when the arbitration occurs in the State of California."
This bill is sponsored by the Securities Industry and Financial
Markets Association. In Birbrower v. Superior Court (1998) 17
Cal.4th 117, the court ruled that out-of-state attorneys were
precluded from representing their clients in California
arbitrations because it constituted the unauthorized practice of
law. In response, the Legislature enacted a statute creating
the Out of State Attorney Arbitration Counsel Program (OSAAC)
under Code of Civil Procedure Section 1282.4 and Rule of Court
9.43.
California courts allow out-of-state attorneys to appear pro hac
vice upon submitting an application and fee to the court and
serving notice of the hearing and the application with the State
Bar of California. Similarly, under OSAAC, out-of-state
attorneys can represent parties in California arbitrations once
they have satisfied, among other things, the following
requirements: 1) obtaining the approval of the arbitrator; 2)
serving notice and a certificate on the arbitrator and State Bar
of California; and 3) submitting to the disciplinary
jurisdiction of the California State Bar.
When it was enacted in 1999, the bill contained a sunset date of
two years. A subsequent report prepared in 2000 by the State
Bar noted that some certificates contained no attorney of record
on file, and many were never filed. Accordingly, there was
little record of adequate compliance by both attorneys in filing
the certificates and by arbitrators in ensuring that the rules
adopted by the Supreme Court for the out-of-state attorney in
arbitration appearances were followed. Various measures
extended the sunset temporarily. Most recently AB 2482 (Harman,
Chapter 357, Statutes of 2006) required the out-of-state
attorney to get the arbitrator's approval of certificate of
intent to appear in arbitration before the out-of-state attorney
filed it with the State Bar. AB 2482 also contained a reporting
requirement by the State Bar.
There are a number of out-of-state attorneys making multiple
appearances in California arbitrations. While most applicants
have only one or two appearances, a few are engaging in a
relatively high number of matters. By most accounts, a lawyer
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appearing in 10 trials in a two-year period would be considered
a busy lawyer, and certainly one doing substantial professional
work in the state. The State Bar reports that it did not
receive any written complaints about the OSAAC program during
the reporting period and it is not aware of any complaints or
alleged violations of Code of Civil Procedure Section 1282.4.
At this time it appears that the dual step requirement of
arbitrator's approval and subsequent filing with the State Bar
is helping to provide greater compliance among out-of-state
attorneys. Although the study period has been relatively brief
in the life of the statute, it reflects some improvement on
prior experience such that elimination of the sunset may be
appropriate in light of the proposed amendments which, it is
hoped, offer arbitrators some added incentive to overcome their
apparent prior resistance and embrace their obligation to assure
the voluntary compliance upon which the program depends,
particularly given that there will be no further reports to the
Legislature if this bill is enacted.
In order to ensure equality between out of state attorneys
appearing in arbitration and those appearing in litigation, the
bill is contingent upon another measure that will provide that
out of state attorneys appearing in arbitration pay the same fee
for that valuable privilege as those who appear in court, with
the funds to be designated for support of ADR programs under the
Dispute Resolution Programs Act.
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334
FN: 0005703