Amicus Curiae Brief — Birbrower, Montalbano, Condon & Frank, P. C. v. ESQ Business Services, Inc.

MOTION FILED

JUN 5—1998

No. 97-1798

Tw!

In The

Supreme Court of the United States

October Term, 1997

¢

BIRBROWER, MONTALBANO, CONDON &

FRANK, P.C., and KEVIN F. HOBBS,

Petitioners,

VS.

SUPERIOR COURT OF SANTA CLARA COUNTY,

Respondent.

+

ESQ BUSINESS SERVICES, INC.,

Real Party in Interest.

e

On Petition For A Writ Of Certiorari To The

Supreme Court Of California

+

MOTION FOR LEAVE TO FILE BRIEF AMICUS

CURIAE AND BRIEF OF THE SECURITIES

INDUSTRY ASSOCIATION AS AMICUS CURIAE

IN SUPPORT OF PETITIONERS

+

Securities INDUSTRY Orrick, HERRINGTON &

ASSOCIATION Sutcurre LLP

Amicus Curiae W. Reece BADER

120 Broadway - 35th Floor Counsel of Record

New York, NY 10271 Darci WINVICK

Telephone: 212-608-1500 Attorneys for Amicus Curiae

1020 Marsh Road

Menlo Park, CA 94025

Telephone: 650-614-7400

Fax: 650-614-7401

Of Counsel:

STUART J. KASWweLt

Sr. Vice President & General Counsel

Freppa L. PLesser

Vice President & Associate General Counsel

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

MOTION OF THE SECURITIES INDUSTRY

ASSOCIATION FOR LEAVE TO FILE BRIEF AMICUS

CURIAE IN SUPPORT OF PETITIONERS!

Amicus Curiae, the Securities Industry Association,

respectfully moves, pursuant to rule 37.2 of the rules of

this Court, for leave to file a brief amicus curiae in

support of petitioner. The consent of counsel for peti-

tioner has been granted; the consent of counsel for

respondents has been sought but not obtained.

Amicus, the Securities Industry Association (“SIA”),

is the principal trade association of the securities indus-

try, with more than 800 member firms in the United

States and Canada. As a member of the Securities Indus-

try Conference on Arbitration, the SIA has been inti-

mately involved in the arbitration process, the principal

dispute resolution mechanism for the securities industry.

One function of the SIA is to address judicial issues, as

well as legislative and regulatory matters, affecting the

securities industry. In the context of arbitration, the SIA

has participated amicus curiae before this Court in Dean

Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S.Ct. 1238,

84 L.Ed.2d (1985); Rodriguez de Quijas v. Shearson/American

Express, Inc., 490 U.S. 477, 109 S.Ct. 1917, 104 L.Ed.2d 526

(1989); Mastrobuono v. Shearson Lehman Hutton, Inc., 514

U.S. 52, 115 S.Ct. 1212, 131 L.Ed.2d 76 (1995), and First

Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct.

1920,131 L.Ed.2d 985 (1995).

! Counsel for a party did not author this brief in whole or

in part. No person or entity, other than the Amicus Curiae, its

members, or its counsel made a monetary contribution to the

preparation and submission of this brief.

No

The decision of the California Supreme Court, hold-

ing that a duly licensed member of the bar of another

state engaged in the unauthorized practice of law in

California by providing legal advice to a long-standing

client in the negotiated resolution of a dispute arising in

interstate commerce and subject to the Federal Arbitra-

tion Act, has highly disruptive consequences for the SIA’s

members and in-house counsel, as well as for other sim-

ilarly situated national corporations. The SIA has a sub-

stantial interest in the resolution of this matter, as well as

experience with the issues which may assist this Court in

determining the importance of the case.

Accordingly, the views of the amicus should provide

a useful supplement to the briefs of the parties.

DATED: June 5, 1998.

Respectfully submitted,

Stuart J. Kaswey W. Reece BApeErR*

Sr. Vice President & Darct WINVICK

General Counsel Orrick, HERRINGTON &

Freppa L. PLesser Sutcurre, L.L.P.

Vice President & 1020 Marsh Road

Associate General Counsel Menlo Park, CA 94025

Securities Inpustry AssociaTION (650) 614-7400

120 Broadway —- 35th Floor

New York, NY 10271

(212) 608-1500

Attorneys for Amicus Curiae

Securities Industry Association

*Counsel of Record

TABLE OF CONTENTS

Page

STATEMENT OF INTEREST OF THE AMICUS -

SN aes Ce ey Cee Ok a edu aoe Ka Maden 1

wumameemy OT ARGUMENT... ... 2.00000... cee eens +

I a ree ee cow hd a Sele bw Sk we enw t 5

A. The Birbrower Decision Fails To Account For

The Multi-jurisdictional Nature Of The Securi-

I ake ky aS VM ic Kh nwa seg we akes s 5

B. The Birbrower Holding Also Fails to Recognize

the Importance of ADR Services ............. 9

EE oo cia AA Gee Vb os Gade w se wos cde ae 3a 12

li

TABLE OF AUTHORITIES

Page

CASES

Advanced Micro Devices, Inc. v. Intel Corp., 9 Cal.

GI SO CED oo i Sis oe es he sae ee es 8

Alexander v. Gardner-Denver Company, 415 U.S. 36,

PR SAH. A011, DP 1. Bk 2d 447. (ISTE esha: 10

In re Amendments to Rules Regulating Florida Bar (1),

Tae NEE Se AEs POPE iad biases sw enuwcaeexs 7

Birbrower, Montalbano, Condon & Frank, et al. v.

Superior Court (ESQ Business Services, Inc.), 17

Res, ROE BAP CEPI 55k ek vee es eae Soe passim

Bluestein v. State Bar, 13 Cal. 3d 162, 118 Cal.Rptr.

Sfp ET CMe Te CAPT ose ph eons tases ieee 4

Bowles Financial Group, Inc. v. Stifel, Nicolaus & Co.,

ic, 44.9. 38 WO (OOM Cie W98R). occ nike 7

Coopers & Lybrand v. Superior Court (Schwartz), 212

Cal.App.3d 524, 260 Cal. Rptr. 713 (1989) .......... 8

Rodriguez de Quijas v. Shearson/American Express,

Inc., 490 U.S. 477, 109 S.Ct. 1917, 104 L.Ed.2d

FO CRE ee eS) 65 es ee a ee 3

Madden v. Kaiser Foundation Hospitals, 17 Cal. 3d

699, 131 Cal. Rptr. 882, 552 P.2d 1178 (1976) ....... 9

McRae v. Superior Court, 221 Cal. App. 2d 166, 34

Ces OR We LUN es Feb sb ad ook Ga ea ea 7

Moncharsh v. Heily & Blase, 3 Cal. 4th 1 (1992) ....... 6

Moses H. Cone Mem. Hosp. v. Mercury Const. Corp.,

ROU AID. Ty BOP AS. Bae CR on ss eens: 9

ili

TABLE OF AUTHORITIES - Continued

Page

Shearson/American Express, Inc. v. McMahon, 482

Ni Gee WW Bn gee BOO CIDE) x bos oe ccc cawasckkscs 1

Volt Information Sciences, Inc. v. Board of Trustees of

Leland Stanford Junior Univ., 489 U.S. 468, 109

PAA NEE CAPM: Ee Sena ee Ree CL tpi a bs Bake cow as 8

Williamson v. John D. Quinn Construction Corpora- i

tion, 537 F.Supp. 613 G.D.N.Y, 1982) 2... <.ssccceius 10

STATUTES

ED S945: BR PORURL TUE, FOGG, FOO oo es ce hia cise 2

Ca. Ries of 01. Role IO ss ce 8

California Business & Professions Code § 6125....... 4

FG. a OR Me At Vda need ieee eet ekis tutes 7

A, SUN She TS FR 6 Gis wien Vek Pea aa ee eee 7

ie ee. OR 528 ee ee 7

Md. Bus. Occ. & Prof. Code. Ann. § 10-206(d) ....... 7

PO: TO: Ses Bes RSG 0S es ob biased oo eee 7

Peer. TRA. Pi BOG NG 5 5 ssi i Gas 7, 10

a: Te A. DAs veo eee css ea beeen ea eas 7

Cee Sees SR RS a eh ii 7

Okla. Stat. Ann. App. Tit. V, § 6 (West 1995)......... 7

reotessions Code Section 6175 «oi. oi cise ives basen 4

Dia eee A ae cas ea uae 7

TABLE OF AUTHORITIES — Continued

MiIscELLANEOUS

Linda D. Fienberg, The NASD Securities Arbitra-

tion Report: A View From The Inside, 10 NO. 4

IE BONE sci aig cde nah ano Senex

Jeffery L. Jacobs, An Unauthorized Practice, 17 No.

Me Re Pe BOR ci ee oho eka i

Long Range Plan for the Federal Courts, Judicial

Conference of the United States, p. 134 (Dec.

1995)

New Jersey Supreme Court Committee on

Unauthorized Practice, Opinion No. 14, 1975

WL 2165 (1975)

Restatement of Law Governing Lawyers, Council

i SU A ape chee AP

Restatement of Law Governing Lawyers, Proposed

Draft No. 2 (Apr. 1998)

Page

BRIEF OF THE

SECURITIES INDUSTRY ASSOCIATION

AS AMICUS CURIAE IN

SUPPORT OF PETITIONERS

STATEMENT OF INTEREST OF THE AMICUS CURIAE

As set forth in the foregoing motion for leave to file an

amicus brief, the SIA is the principal trade association of

the securities industry. Its 800 members, employing more

than 380,000 individuals, are located throughout the

United States and Canada and include investment banks,

broker-dealers, and mutual fund companies. SIA members

perform the full spectrum of professional securities activ-

ities, including retail and institutional brokerage, under-

writing and other investment banking activities, money

management, and investment advisory services. SIA mem-

bers are responsible for over ninety percent of the securi-

ties business in the United States, virtually all of which is

conducted through interstate commerce. The SIA is recog-

nized as a spokesperson for the securities industry in

general and the broker-dealer community in particular.

The securities industry has used arbitration as its

principal dispute resolution vehicle for years, and the SIA

has been intimately involved in the evolution of the arbi-

tration process. The SIA and its members use arbitration

to resolve thousands of customer claims annually.! Thus

' After this Court’s decision in Shearson/American Express,

Inc. v. McMahon, 482 U.S. 220, 96 L.Ed.2d 185 (1987), arbitration

became the principal means of resolving securities disputes

between investors and broker-dealers. Linda D. Fienberg, The

NASD Securities Arbitration Report: A View From The Inside,

10 NO. 4 Insights 7 (April 1996). In 1997, approximately 5,000

claims were filed with the National Association of Securities

SIA members have a significant interest in ensuring that

the process provides a mechanism for resolving disputes

quickly, efficiently, economically and fairly. The ability of

broker-dealers to be represented by counsel of their

choice in arbitration proceedings is an important factor in

ensuring the efficiency and economy of those proceed-

ings. This freedom of choice ensures that broker-dealers

are represented by the counsel most familiar with their

company, the securities industry and its applicable arbi-

tration process. Members of the SIA employ in excess of

one thousand attorneys internally. Not surprisingly, the

vast majority of the legal staffs of its members are located

in New York.

The SIA has a substantial interest in this Court's

accepting review of Birbrower, Montalbano, Condon &

Frank, et al. v. Superior Court (ESQ Business Services, Inc.),

17 Cal. 4th 119, 70 Cal. Rptr. 2d 304, 949 P.2d 1 (1998). The

California Supreme Court’s holding in Birbrower prevents

broker-dealers from being represented by any counsel,

including counsel employed internally, other than Cali-

fornia State Bar members in arbitration proceedings in

California involving the securities industry. Id. at 133.?

Dealers Regulation, Inc., the principal forum for the securities

industry. Claims filed with the New York Stock Exchange and

other self-regulatory organizations number approximately

1,000.

* Security industry proceedings are governed by

arbitration rules adopted by the National Association of

Securities Dealers Regulation, Inc. or by the various exchanges,

such as the New York Stock Exchange Arbitration Rules, all of

which are approved by the Securities and Exchange

Commission pursuant to the Securities Exchange Act of 1934. 15

U.S.C. §§ 78c(a), 78f, 780-3, 78s.

Birbrower presents a significant problem for broker-

dealers because, since most such companies are not based

in California, their internal corporate legal staff are gen-

erally not located in California and thus are not licensed

in California. However, a broker-dealer’s in-house coun-

sel is often the best qualified to handle the arbitration by

virtue of being the most familiar with the company, the

securities industry and the applicable arbitration rules.

The Birbrower holding thus disqualifies the lawyers most

qualified to represent broker-dealers in securities arbitra-

tion proceedings. Moreover, coupled with California’s

broad interpretation of what constitutes that practice of

law, Birbrower even prohibits in-house counsel from inter-

viewing employees located_in California in preparation

for arbitration or litigation. Thus, it deprives in-house

counsel of the ability to evaluate cases involving their

employer.

SIA members believe that the Birbrower decision must

be overruled or narrowed to enable their own internal in-

house lawyers, admitted in states other than California,

to represent them, the corporate employer, in securities

arbitration proceedings in California.%

¢

* Ironically, SIA members’ internal counsel can appear in

California courts through admission pro hac vice, but, under

Birbrower, not in the securities industry’s arbitration process

which this Court has approved. Rodriguez de Quijas v. Shearson/

American Express, Inc., 490 U.S. 477 (1989).

SUMMARY OF ARGUMENT

California’s unauthorized practice of law (“UPL”)

statutes should not be unreasonably interpreted so as to

hinder the ability of broker-dealers engaged in interstate

commerce to use the services of their internal counsel in

the dispute resolution process established through the

Exchange Act’s rule approval mechanism. Birbrower does

exactly that by rendering internal counsel for a broker-

dealer unable to provide national service for that national

client. Birbrower’s holding prevents a company’s in-house

counsel from rendering legal advice or performing a

broad range of legal services “in California” to his or her

employer if not licensed in California.* Birbrower's defini-

tion of “in California” is broad enough to encompass

even services rendered by a lawyer who is not physically

present in California. See Birbrower, supra, 17 Cal.4th at

128 (“Our definition [of in California] does not neces-

sarily depend on or require the unlicensed counsel's

physical presence in the state.”) Such an interpretation of

UPL statutes unreasonably limits a lawyer’s ability to

effectively serve clients, unreasonably and impermissibly

* Birbrower interprets California Business and Professions

Code Section 6125 which prohibits the “practice of law in

California” by anyone who is not an active member of the

California bar. California has defined “practice of law” broadly

to include the giving of legal advice and preparing legal

instruments and contracts. Birbrower, supra, 17 Cal.4th at 128.

The practice of federal law, foreign law or the law of a sister

state is also within the purview of Section 6125. Bluestein v. State

Bar, 13 Cal. 3d 162, 174, 118 Cal.Rptr. 175, 529 P.2d 599 (1974).

Birbrower makes clear that participation in arbitration also

constitutes the practice of law. Birbrower, supra, 17 Cal.4th at

133.

burdens interstate commerce and flies in the face of the

federal self-regulatory scheme set forth in the Securities

Exchange Act.

Corporate counsel for an SIA member must be able to

represent their client/employer in all aspects of corporate

legal affairs, regardless of the jurisdiction in which the

matter arises. As the American Bar Association has noted,

“[t]he business of a single client may involve legal prob-

lems in several states .. . Competent lawyers licensed in a

sister state should not be encumbered and burdened with

unreasonable regulation.” ABA Committee on Ethics and

Professional Responsibility, Formal Opinion 316 (1967).

Nothing could be more accurate for SIA members,

engaged throughout the United States in the securities

business. Birbrower deprives SIA members of the services

of experienced in-house counsel, thus increasing the cost

of business in California, as well as the loss of the intang-

ible benefits of in-house attorneys.

+

ARGUMENT

A. The Birbrower Decision Fails To Account For The

Multi-jurisdictional Nature Of The Securities

Industry.

Broker-dealers are involved daily in national and

international financial markets. Those markets, and the

securities business itself, are rarely limited to the state in

which the firm’s headquarters is located. The need to

provide effective and efficient legal services to the highly

regulated securities industry with such interstate legal

concerns requires that jurisdictions not erect unnecessary

barriers fo interstate law practice. See Restatement of the

Law Governing Lawyers, Proposed Final Draft No. 2 (April

6, 1998) § 3, comment (b).°

Preventing a broker-dealer from being represented

by either its in-house counsel or its primary outside

counsel in securities arbitration proceedings in California

simply because that lawyer is not licensed in California is

an unnecessary barrier to interstate commerce. First, the

rule does not advance the purpose of UPL statutes. UPL

statutes are intended to protect California citizens from

incompetent attorneys. Birbrower, supra, 17 Cal. 4th at 132.

Attorneys admitted elsewhere are generally competent to

try arbitrations, particularly since arbitrators need not

follow the law. Moncharsh v. Heily & Blase, 3 Cal. 4th 1, 11

(1992). Furthermore, in many cases, including cases

involving the securities industry, the law invoked is fed-

eral law.

Securities industry firms typically select an outside

counsel and hire in-house counsel whom they believe are

qualified to handle the firm’s legal needs, whether those

needs be local or multi-jurisdictional. After making this

choice, they should not be forced to hire another lawyer

to handle a matter they believe chosen counsel is compe-

tent and experienced to handle. Indeed, forcing them to

hire another lawyer for a dispute in California burdens

the company’s conduct of business in California.®

5 Proposed Draft No. 2 was recently approved by the

American Law Institute. Notably, the Reporter’s Memorandum

to the Draft criticizes Birbrower as “restrictive” on a lawyer’s

right to practice.

6 Further, it has been noted that such restrictions on a

person’s choice of lawyer may well be “maintained for anti-

Other states have recognized this fact. As a partial

solution, these states permit corporate in-house counsel

to give legal advice to their employer without being

licensed.” See Fla. St. Bar R. 17; Kan. Sup. Ct. R. 706; Ky.

Sup. Ct. R. 2.111; Md. Bus. Occ. & Prof. Code. Ann.

§ 10-206(d); Minn. Sup. Ct. R. VI; Mo. Sup. Ct. R. 8.105;

Ohio Sup. Ct. R VI § 4(A); Okla. Stat. Ann. App. Tit. V, § 6

(West 1995); S.C. Rules of Ct., R. 405; New Jersey

Supreme Court Committee on Unauthorized Practice,

Opinion No. 14, 1975 WL 2165 (1975). Additionally, Mich-

igan permits a lawyer licensed in any state to practice law

in Michigan if the lawyer is in the state temporarily and

is engaged in a particular matter. Mich. Stat. Ann.

§ 600.916.

Second, as applied to securities arbitration, Birbrower

does little to ensure the selection of competent counsel by

the broker-dealer. Although studying for a state’s bar

exam may familiarize lawyers with that state’s local law,

such knowledge is not always required of lawyers partici-

pating in securities arbitration proceedings. State pro-

cedural and other legal rules generally do not apply to

ADR proceedings.®

competitive purposes or with such an effect.” See Restatement of

Law Governing Lawyers, Council Draft No. 13, Title 2,

Introductory Note (October 1997).

7 Florida has observed that a rule requiring all inside

corporate counsel to be locally admitted does not “meet the

legitimate needs of a modern economy.” In re Amendments to

Rules Regulating Florida Bar (1), 593 So.2d 1035, 1036 (Fld. 1991).

8 See McRae v. Superior Court, 221 Cal. App. 2d 166, 172, 34

Cal. Rptr. 346, 350 (1963) (no right to discovery in arbitration

proceedings under either state or federal law); Bowles Financial

For example, by contract the broker-dealers and their

investing clients typically determine the applicable arbi-

tration rules, such as the National Association of Securi-

ties Dealers Arbitration Rules or the New York Stock

Exchange Arbitration Rules or the rules of other self-

regulatory organizations. Volt Information Sciences, Inc. v.

Board of Trustees of Leland Stanford Junior Univ., 489 U.S.

468, 479, 109 S.Ct. 1248, 1256 (1989). Also, the law appli-

cable in an arbitration proceeding may not be the law of

the state in which the proceeding occurs. Choice of law

provisions in arbitration agreements are generally

enforceable to the extent they govern applicable substan-

tive law. See Id.; see also Coopers & Lybrand v. Superior

Court (Schwartz), 212 Cal.App.3d 524, 538, 260 Cal. Rptr.

713, 722 (1989) (federal or state law may be displaced by

arbitration agreement).

Finally, the rule is not necessary to subject lawyers

who practice in California to the state’s ethical rules.

Even lawyers not licensed in California are subject to the

state’s disciplinary standards with respect to services per-

formed in California. Ca. Rules of Ct., Rule 1-100(D)(2).

Thus, there is generally no compelling reason to force a

broker-dealer to retain a lawyer licensed in the state~in

which the securities arbitration proceeding will occur,

especially where in-house counsel or regular outside

Group, Inc. v. Stifel, Nicolaus & Co., Inc., 22 F. 3d 1010, 1013 (10th

Cir. 1994) (rules of evidence not applicable to arbitration

proceeding); AAA Securities Arbitration Rules, Rule 32 (1993)

(arbitrator need not conform to legal rules of evidence);

Advanced Micro Devices, Inc. v. Intel Corp., 9 Cal. 4th 362, 381, 36

Cal. Rptr. 2d 581, 593 (1994) (arbitrator may grant remedy court

could not).

counsel, neither of whom may be licensed in California,

are likely to be the most familiar with not only the

company but also the securities industry, its arbitration

rules, and the issues in dispute.

B. The Birbrower Holding Also Fails to Recognize the

Importance of ADR Services.

Wholly apart from the unique role arbitration plays

in the securities industry, alternative dispute resolution

(“ADR”) plays an increasingly important role in our legal

system. It provides a fast and economical alternative to

resolving a claim in the judicial system. The benefits of

ADR have consistently been recognized by the federal

legislative and judicial branches. For instance, the House

of Representatives recently passed the Alternative Dis-

pute Resolution Act of 1998. The Act, which requires

litigants in civil cases filed in federal court to consider

using ADR, was passed in an attempt to reduce daunting

court backlogs. 1998 HR 3528. This Court’s landmark

ruling in Moses H. Cone Mem. Hosp. v. Mercury Const.

Corp., 460 U.S. 1, 24, 103 S.Ct. 927 941 (1983) reaffirmed

that the Federal Arbitration Act establishes federal policy

favoring arbitration. The United States Judiciary Confer-

ence and its various Advisory Committees have champi-

oned ADR. Long Range Plan for the Federal Courts, Judicial

Conference of the United States, p. 134 (Dec. 1995).

California likewise recognizes the benefits of ADR.

See Madden v. Kaiser Foundation Hospitals, 17 Cal.3d 699,

706-707, 131 Cal. Rptr. 882, 886, 552 P.2d 1178 (1976)

(“Arbitration has become an accepted and favored

method of resolving disputes . . . praised by the courts as

10

an expeditious and economical method of relieving over-

burdened civil calendars.”).

However, Birbrower lessens a party’s desire to partici-

pate in arbitration by limiting a party’s choice of counsel

to lawyers licensed to practice in California. Although

not licensed in California, a company’s corporate counsel

or regular outside counsel, who is generally best suited to

represent the company in ADR proceedings, could repre-

sent the corporate entity if the dispute were being

resolved in court by applying for admission to practice

“pro hac vice.” Cal. Rules of Ct., Rule 983. No pro hac

vice procedure is available for arbitration. By virtue of

being involved in ADR, a favored method of dispute

resolution, instead of litigation, corporate entities, includ-

ing SIA members, are deprived of a means to be repre-

sented by counsel of their choice. No sound reason exists

for California to limit participation in such proceedings to

attorneys licensed in California.

Other states have recognized that permitting only

licensed counsel to participate in arbitration proceedings

is flawed. For example, in New York, an unlicensed law-

yer who participates in arbitration proceedings is not

guilty of unauthorized practice of law. Williamson v. John

D. Quinn Construction Corporation, 537 F. Supp. 613, 616

(S.D.N.Y. 1982) (quoting a report by the Association of the

Bar of the City of New York); see also Mich. Stat. Ann.

Code § 600.916. New York’s position on unauthorized

practice recognizes not only the importance of ADR pro-

ceedings but also the uniqueness of such proceedings.

Arbitration is an informal process which is vastly differ-

ent from the judicial forum. Alexander v. Gardner-Denver

Company, 415 U.S. 36, 58, 94 S.Ct. 1011, 1024, 39 L.Ed.2d

11

147 (1973) (citing differences in the fact-finding process,

evidentiary concerns, and procedure). This Court has

noted that it is this “informality of arbitral procedure that

enables it to function as an efficient, inexpensive and

expeditious means for dispute resolution.” Birbrower both

fails to recognize and undercuts the informality of arbi-

tration proceedings by requiring representation by a

licensed California lawyer.

Further, in contrast to California, New York’s rule

regarding unauthorized practice does not burden corpo-

rate entities by denying them counsel of their choice. A

corporate entity involved in a dispute in California that is

being resolved through arbitration must retain a Califor-

nia lawyer instead of using its in-house counsel, thereby

incurring additional expense as well as intangible detri-

ment. In New York, a corporate entity would not have to

incur that same burden and expense. It has thus been

noted that California’s unauthorized practice law “pri-

marily serves the interest of local sellers instead of buyers

[which could be] called protectionism.” Jeffery L. Jacobs,

An Unauthorized Practice, 17 No.4 Of Counsel 2 (February

16, 1998). This observation rings true in light of the lack

of other convincing justification for California’s extreme

limits on interstate practice.

¢

12

CONCLUSION

For the foregoing reasons, the SIA urges the Court to

grant the petition for certiorari.

DATED: June 5, 1998.

Respectfully submitted,

W. Reece BADER*

Darci WINVICK

Orrick, HERRINGTON &

Sutc.irre, LLP

1020 Marsh Road

Menlo Park, CA 94025

(650) 614-7400

STUART J. KASWELL

Sr. Vice President &

General Counsel

Freppa L. PLEssER

Vice President & Associate

General Counsel

Securities INDUSTRY ASSOCIATION

120 Broadway — 35th Floor

New York, NY 10271

(212) 608-1500

Attorneys for Amicus Curiae

Securities Industry Association

*Counsel of Record