Brawerman v. Loeb & Loeb LLP, No. B305802 (Aug. 3, 2022).
Confirmation of an arbitration award in a legal malpractice case. Attorneys at Firm were alleged to have screwed up in papering a VC’s investment in Client’s company. The arbitrator found that Firm was negligent, but that its negligence was not the cause of Client’s injury. But it came out during the arbitration that one associate on the team was not licensed to practice in California. (He was licensed in New York and New Jersey.) The arbitrator ruled that the fees billed by the associate needed to be disgorged, but otherwise denied relief.
Client moved to vacate the award, on the theory that the retainer agreement was illegal because Firm was engaged in the unlicensed practice of law, and thus that there was no legit basis to compel arbitration. But that doesn’t render the entire agreement void to the extent that it implicates the validity of the arbitration clause. The case law is pretty clear that when out-of-state lawyers practice in California without a license, their fees are disgorgable, but only to the extent that unlicensed work was performed here. In this case, much of the work was done by the California-barred partner. That means that the whole retainer agreement is not facially illegal. So the agreement to arbitrate can be severed from whatever unlawful practice occurred.
Affirmed.
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