You have suggested an arbitrary jurisdiction, but jurisdiction determines the answer to this question. As formulated, your question depends on the interpretation of the phrase practice law in California in section 6125, as applied by the regulators and courts of California. Since you said that you are interested in case law in a comment on another answer, you should read the decision of the Supreme Court of California in Birbrower v. Superior Court, 949 P.2d 1 (Cal. 1998), which explained the term 'practice law in California' as follows:
Although the Act did not define the term "practice law," case law explained it as "the doing and performing services in a court of justice in any matter depending therein throughout its various stages and in conformity with the adopted rules of procedure" ... Merchants included in its definition legal advice and legal instrument and contract preparation, whether or not these subjects were rendered in the course of litigation ...
In addition to not defining the term "practice law," the Act also did not define the meaning of "in California." In today's legal practice, questions often arise concerning whether the phrase refers to the nature of the legal services, or restricts the Act's application to those out-of-state attorneys who are physically present in the state ...
In our view, the practice of law "in California" entails sufficient contact with the California client to render the nature of the legal service a clear legal representation. In addition to a quantitative analysis, we must consider the nature of the unlicensed lawyer's activities in the state. Mere fortuitous or attenuated contacts will not sustain a finding that the unlicensed lawyer practiced law "in California." The primary inquiry is whether the unlicensed lawyer engaged in sufficient activities in the state, or created a continuing relationship with the California client that included legal duties and obligations.
Our definition does not necessarily depend on or require the unlicensed lawyer's physical presence in the state. Physical presence here is one factor we may consider in deciding whether the unlicensed lawyer has violated section 6125, but it is by no means exclusive. For example, one may practice law in the state in violation of section 6125 although not physically present here by advising a California client on California law in connection with a California legal dispute by telephone, fax, computer, or other modern technological means. Conversely, although we decline to provide a comprehensive list of what activities constitute sufficient contact with the state, we do reject the notion that a person automatically practices law "in California" whenever that person practices California law anywhere, or "virtually" enters the state by telephone, fax, e-mail, or satellite. (citations omitted)
So, the concept of 'practising law in California' is a bit too complex to apply to your hypothetical example. It is far from clear that Smith is engaging in legal practice (which is not to say that he clearly isn't). Much more information about the relationship between Smith and Doe is needed, particularly if it is a commercial relationship.