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End-of-life notice: American Legal Ethics Library

As of March 1, 2013, the Legal Information Institute is no longer maintaining the information in the American Legal Ethics Library. It is no longer possible for us to maintain it at a level of completeness and accuracy given its staffing needs. It is very possible that we will revive it at a future time. At this point, it is in need of a complete technological renovation and reworking of the "correspondent firm" model which successfully sustained it for many years.

Many people have contributed time and effort to the project over the years, and we would like to thank them. In particular, Roger Cramton and Peter Martin not only conceived ALEL but gave much of their own labor to it. We are also grateful to Brad Wendel for his editorial contributions, to Brian Toohey and all at Jones Day for their efforts, and to all of our correspondents and contributors. Thank you.

We regret any inconvenience.

Some portions of the collection may already be severely out of date, so please be cautious in your use of this material.


Texas Legal Ethics

V. LAW FIRMS AND ASSOCIATIONS

5.1   Rule 5.1 Responsibilities of a Partner and Supervisory Lawyer

5.1:100   Comparative Analysis of Texas Rule

Primary Texas References: TX Rule 5.01
Background References: ABA Model Rule 5.1, Other Jurisdictions
Commentary:

5.1:101      Model Rule Comparison

Texas Rule 5.01, "Responsibilities of a Partner or Supervisory Lawyer," takes its name from Model Rule 5.1. The rules share some similarities but are not identical. The Texas Rule provides in full:

A lawyer shall be subject to discipline because of another lawyer's violation of these rules of professional conduct if:

(a)   The lawyer is a partner or supervising lawyer and orders, encourages, or knowingly permits the conduct involved; or

(b)   The lawyer is a partner in the law firm in which the other lawyer practices, is the general counsel of a government agency's legal department in which the other lawyer is employed, or has direct supervisory authority over the other lawyer, and with knowledge of the other lawyer's violation of these rules knowingly fails to take reasonable remedial action to avoid or mitigate the consequences of the other lawyer's violation.

Texas Rules Rule 5.01. The Texas Rule is generally similar to paragraph (c) of the Model Rule. Paragraph (b) of the Texas Rule is very close in language to paragraph (c)(2) of the Model Rule but explicitly includes, for instance, certain government lawyers. Paragraph (a) of the Texas Rule generally parallels paragraph (c)(1) of the Model Rule, but the language is not identical. Model Rule 5.1(c)(1) provides that a lawyer shall be responsible for another lawyer's violation if "the lawyer orders or, with knowledge of the specific conduct, ratifies the conduct involved . . .."

Paragraphs (a) and (b) of the Model Rule, which affirmatively call for reasonable efforts by partners and supervisory lawyers to ensure compliance with professional responsibility standards, are not paralleled in the text of Texas Rule 5.01.

5.1:102      Model Code Comparison

There does not appear to be a directly parallel rule in the Model Code.

5.1:200   Duty of Partners to Monitor Compliance with Professional Rules

Primary Texas References: TX Rule 5.01
Background References: ABA Model Rule 5.1(a), Other Jurisdictions
Commentary: ABA/BNA § 91:201, ALI-LGL § 12, Wolfram § 16.2

[The discussion of this topic has not yet been written.]

5.1:300   Monitoring Duty of Supervising Lawyer

Primary Texas References: TX Rule 5.01
Background References: ABA Model Rule 5.1(b), Other Jurisdictions
Commentary: ABA/BNA § 91:201, ALI-LGL § 12, Wolfram § 16.2

[The discussion of this topic has not yet been written.]

5.1:400   Failing to Rectify the Misconduct of a Subordinate Lawyer

Primary Texas References: TX Rule 5.01
Background References: ABA Model Rule 5.1(c), Other Jurisdictions
Commentary: ABA/BNA § 91:201, ALI-LGL § 5, Wolfram § 16.2

[The discussion of this topic has not yet been written.]

5.1:500   Vicarious Liability of Partners

Primary Texas References: TX Rule 5.01
Background References: ABA Model Rule 5.1, Other Jurisdictions
Commentary: ABA/BNA § 91:201, ALI-LGL §§ 8, 10

[The discussion of this topic has not yet been written.]

5.2   Rule 5.2 Responsibilities of a Subordinate Lawyer

5.2:100   Comparative Analysis of Texas Rule

Primary Texas References: TX Rule 5.02
Background References: ABA Model Rule 5.2, Other Jurisdictions
Commentary:

5.2:101      Model Rule Comparison

The substance of Texas Rule 5.02, "Responsibilities of a Supervised Lawyer," is very similar to Model Rule 5.2, "Responsibilities of a Subordinate Lawyer." The Texas Rule essential merges the two paragraphs of the Model Rule into one sentence:

A lawyer is bound by these rules notwithstanding that the lawyer acted under the supervision of another person, except that a supervised lawyer does not violate these rules if that lawyer acts in accordance with a supervisory lawyer's reasonable resolution of an arguable question of professional conduct.

Texas Rules Rule 5.02.

5.2:102      Model Code Comparison

The Model Code does not appear to contain a directly parallel rule.

5.2:200   Independent Responsibility of a Subordinate Lawyer

Primary Texas References: TX Rule 5.02
Background References: ABA Model Rule 5.2(a), Other Jurisdictions
Commentary: ABA/BNA § 91:201, ALI-LGL § 5, Wolfram § 16.2

See section 5.2:101.

5.2:300   Reliance on a Supervisor's Resolution of Arguable Ethical Issues

Primary Texas References: TX Rule 5.02
Background References: ABA Model Rule 5.2(b), Other Jurisdictions
Commentary: ABA/BNA § 91:201, ALI-LGL § 5, Wolfram § 16.2

See section 5.2:101.

5.3   Rule 5.3 Responsibilities Regarding Nonlawyer Assistants

5.3:100   Comparative Analysis of Texas Rule

Primary Texas References: TX Rule 5.03
Background References: ABA Model Rule 5.3, Other Jurisdictions
Commentary:

5.3:101      Model Rule Comparison

Texas Rule 5.03, "Responsibilities Regarding Nonlawyer Assistants," is named and patterned after Model Rule 5.3, but is not identical to the Model Rule. Paragraph (a) of the Model Rule -- calling for a partner to make reasonable efforts to ensure that the law firm has procedures in place giving reasonable assurance that nonlawyer employees will adhere to proper standards -- is not paralleled in the Texas Rule.

Paragraph (a) of the Texas Rule is very similar to paragraph (b) of the Model Rule. Paragraph (b) of the Texas Rule in turn generally parallels paragraph (c) of Model Rule 5.3, but the respective language is not identical. For instance, paragraph (b)(1) of the Texas Rule uses the language "orders, encourages, or permits the conduct involved," while paragraph (c)(1) of the Model Rule uses the phraseology "orders or, with knowledge of the specific conduct, ratifies the conduct involved . . .." Likewise, paragraph (c)(2) of the Model Rule with certain changes in language. For instance, the Texas provision explicitly applies to certain government lawyers; other changes in language are present as well.

5.3:102      Model Code Comparison

The Model Code called for lawyers to exercise reasonable care to prevent the lawyer's employees and certain others from revealing confidential information (DR 4-101(D)) and from making extrajudicial statements that would violate the Code if made by the lawyer (DR 7-107(J)).

5.3:200   Duty to Establish Safeguards

Primary Texas References: TX Rule 5.03
Background References: ABA Model Rule 5.3(a), Other Jurisdictions
Commentary: ABA/BNA § 91:201, ALI-LGL §§ 4, 5, Wolfram § 16.3

Texas Rule 5.03, "Responsibilities Regarding Nonlawyer Assistants," provides in full:

(a)   a lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person's conduct is compatible with the professional obligations of the lawyer; and

(b)   a lawyer shall be subject to discipline for the conduct of such a person that would be a violation of these rules if engaged in by a lawyer if:

(1)   the lawyer orders, encourages, or permits the conduct involved; or

(2)   the lawyer:

   (i)   is a partner in the law firm in which the person is employed, retained by, or associated with; or is the general counsel of a government agency's legal department in which the person is employed, retained by or associated with; or has direct supervisory authority over such person; and

   (ii)   with knowledge of such misconduct by the nonlawyer knowingly fails to take reasonable remedial action to avoid or mitigate the consequences of that person's misconduct.

Texas Rules Rule 5.03.

5.3:300   Duty to Control Nonlawyer Assistants

Primary Texas References: TX Rule 5.03
Background References: ABA Model Rule 5.3(b), Other Jurisdictions
Commentary: ABA/BNA § 21:8601, ALI-LGL §§ 4, 5, Wolfram § 16.3

For treatment of this topic, see section 5.3:200.

5.3:400   Responsibility for Misconduct of Nonlawyer Assistants

Primary Texas References: TX Rule 5.03
Background References: ABA Model Rule 5.3(c), Other Jurisdictions
Commentary: ABA/BNA § 91:201, ALI-LGL §§ 4, 5, Wolfram § 16.3

For treatment of this topic, see section 5.3:200. Note as well that, in certain circumstances, a nonlawyer who changes employment can raise conflict of interest issues for his or her new employer. See, e.g. Phoenix Founders, Inc. v. Marshall, 887 S.W.2d 831 (Tex. 1994); Grant v. Thirteenth Court of Appeals, 888 S.W.2d 466 (Tex. 1994); In re American Home Products Corp., Nos. 970654 and 970655, 1998 Tex. LEXIS 75 (Tex. May 8, 1998).

5.4   Rule 5.4 Professional Independence of a Lawyer [Restrictions on Form of Practice]

5.4:100   Comparative Analysis of Texas Rule

Primary Texas References: TX Rule 5.04
Background References: ABA Model Rule 5.4, Other Jurisdictions
Commentary:

5.4:101      Model Rule Comparison

Texas Rule 5.04, "Professional Independence of a Lawyer," is named and generally patterned after Model Rule 5.4. Paragraphs (b) through (d) of the Texas Rule are essentially identical to paragraphs (b) through (d) of the Model Rule. Paragraph (a) of the Texas Rule roughly tracks paragraphs (a) of the Model Rule, but with some differences. Both rules provide that a lawyer shall not share legal fees with a non-lawyer (the Texas Rule adds that a lawyer also shall not "promise" to do so), except as permitted by the rule. The first exception to each rule permits certain payments to non-lawyers when the lawyer has died (e.g., to the lawyer's estate, etc.). The respective exceptions are phrased somewhat differently, however. The second exception under the Model Rule provides that a "lawyer who purchases the practice of a deceased, disabled, or disappeared lawyer may, pursuant to the provisions of Rule 1.17," the "Sale of Law Practice" Model Rule, "pay to the estate or other representative of that lawyer the agreed-upon purchase price." Model Rule 5.4(a)(2). The Texas Rule states that a lawyer "who undertakes to complete unfinished legal business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation which fairly represents the services rendered by the deceased lawyer." Texas Rules Rule 5.04(a)(2). The Texas Rules, unlike the Model Rules, do not contain a free-standing rule on sale of law practice.

The third exception permitting fee sharing with non-lawyers -- retirement plans for non-lawyer employees -- is set forth in Texas Rule 5.04(a)(3) with language essentially identical to Model Rule 5.4(a)(3).

5.4:102      Model Code Comparison

Paragraph (a) of Texas Rule 5.04 finds an antecedent in DR 3-102(A), paragraph (b) of the Texas Rule in DR 3-103(A), paragraph (c) in DR 5-107(B), and paragraph (d) in DR 5-107(C).

5.4:200   Sharing Fees with a Nonlawyer

Primary Texas References: TX Rule 5.04(a)
Background References: ABA Model Rule 5.4(a), Other Jurisdictions
Commentary: ABA/BNA § 41:801, ALI-LGL § 60, Wolfram §§ 16.4, 16.5

For a general discussion of this subject, see section 5.4:101.

Paragraph (a) of Texas Rule 5.04 provides in full:

(a)   A lawyer or law firm shall not share or promise to share legal fees with a non-lawyer, except that:

(1)   an agreement by a lawyer with the lawyer's firm, partner, or associate, or a lawful court order, may provide for the payment of money, over a reasonable period of time, to the lawyer's estate to or for the benefit of the lawyer's heirs or personal representatives, beneficiaries, or former spouse, after the lawyer's death or as otherwise provided by law or court order.

(2)   a lawyer who undertakes to complete unfinished legal business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation which fairly represents the services rendered by the deceased lawyer; and

(3)   a lawyer or law firm may include non-lawyer employees in a retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement.

Texas Rules Rule 5.04(a); see also State Bar of Texas v. Faubion, 821 S.W.2d 203 (Tex. App.—Houston [14th Dist.] 1991, writ denied); Texas Ethics Op. 467.

5.4:300   Forming a Partnership with Nonlawyers

Primary Texas References: TX Rule 5.04(b)
Background References: ABA Model Rule 5.4(b), Other Jurisdictions
Commentary: ABA/BNA § 91:401, ALI-LGL § 60, Wolfram §§ 16.4, 16.5

"A lawyer shall not form a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law." Texas Rules Rule 5.04(b).

5.4:400   Third Party Interference with a Lawyer's Professional Judgment

Primary Texas References: TX Rule 5.04(c)
Background References: ABA Model Rule 5.4(c), Other Jurisdictions
Commentary: ABA/BNA § 51:901, ALI-LGL § 60, Wolfram § 8.8

Paragraph (c) of Texas Rule 5.04 provides that a lawyer shall not "permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services."

5.4:500   Nonlawyer Ownership in or Control of Profit-Making Legal Service Organizations

Primary Texas References: TX Rule 5.04(d)
Background References: ABA Model Rule 5.4(d), Other Jurisdictions
Commentary: ABA/BNA § 91:401, ALI-LGL § 60, Wolfram § 16.4, 16.5

Paragraph (d) of Texas Rule 5.04 provides in full:

(d)   A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit, if:

(1)   a non-lawyer owns any interest therein, except that a fiduciary representative of the estate of a lawyer may hold the stock or interest of the lawyer for a reasonable time during administration;

(2)   a non-lawyer is a corporate director or officer thereof; or

(3)   a non-lawyer has the right to direct or control the professional judgment of a lawyer.

Texas Rule 5.04(d).

5.4:510      Group Legal Services

[The discussion of this topic has not yet been written.]

5.4:520      Nonprofit Organizations Delivering Legal Services

[The discussion of this topic has not yet been written.]

5.5   Rule 5.5 Unauthorized Practice of Law

5.5:100   Comparative Analysis of Texas Rule

Primary Texas References: TX Rule 5.05
Background References: ABA Model Rule 5.5, Other Jurisdictions
Commentary:

5.5:101      Model Rule Comparison

Texas Rule 5.05, "Unauthorized Practice of Law," is essentially identical to Model Rule 5.5 of the same name.

5.5:102      Model Code Comparison

The Texas and Model Rules on authorized practice find their Model Code antecedents in DR 3-101(A) & (B).

5.5:200   Engaging in Unauthorized Practice

Primary Texas References: TX Rule 5.05
Background References: ABA Model Rule 5.5(a), Other Jurisdictions
Commentary: ABA/BNA § 21:8001, ALI-LGL §§ 3, 4, Wolfram § 15.1

Texas Rule 5.05, "Unauthorized Practice of Law," provides in full:

A lawyer shall not:

(a)   practice law in a jurisdiction where doing so violates the regulation of the legal profession in that jurisdiction; or

(b)   assist a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law.

Texas Rules Rule 5.05.

Part of the policy behind this rule is summarized in comment 1 to the rule:

Courts generally have prohibited the unauthorized practice of law because of a perceived need to protect individuals and the public from the mistakes of the untrained and the schemes of the unscrupulous, who are not subject to the judicially imposed disciplinary standards of competence, responsibility and accountability.

Texas Rules Rule 5.05 cmt. 1.

Texas Rule 5.05 does not define "unauthorized practice of law," but comment 2 to the rule offers these observations:

Neither statutory nor judicial definitions offer clear guidelines as to what constitutes the practice of law or the unauthorized practice of law. All too frequently, the definitions are so broad as to be meaningless and amount to little more than the statement that "the practice of law" is merely whatever lawyers do or are traditionally understood to do. The definition of the practice of law is established by law and varies from one jurisdiction to another. Whatever the definition, limiting the practice of law to members of the bar protects the public against rendition of legal services by unqualified persons.

Texas Rules Rule 5.05 cmt. 2.

The Texas Penal Code also includes certain prohibitions against the unauthorized practice of law. See, e.g., Texas Penal Code § 38.123. Additionally, the Texas Government Code addresses unauthorized practice in Chapter 83, "Certain Unauthorized Practice of Law." In Texas, the Unauthorized Practice of Law Committee is empowered to investigate, and in appropriate cases seek legal action (e.g., to restrain such practice). For a general discussion of the authority of this committee, see the Texas Government Code, title 2 (Judicial Branch), subchapter G ("Unauthorized Practice of Law"), especially section 81.101 and following sections.

5.5:210      Practice of Law by Nonlawyers

Nonlawyers are forbidden from engaging in the practice of law in Texas. For further discussion, see section 5.5:200 of this narrative.

5.5:220      Admission and Residency Requirements for Out-of-State Lawyers

As a general proposition, a lawyer licensed in another jurisdiction is forbidden from engaging in the practice of law in Texas unless admitted in Texas specially (e.g., admission pro hac vice for a particular litigation matter) or generally, or unless otherwise authorized to do so by some governing provision of federal or Texas law. For further discussion, see sections 5.5:100 and 5.5:200, along with related subsections. See generally Rules Governing Admission to the Bar of Texas, including Rules I through XX.

5.5:230      Pro Hac Vice Admission [see also 8.1:240]

For discussion of this subject, see generally section 5.5:200 and immediately preceding sections. Pro hac vice admission requirements can vary to some degree across different courts.

5.5:240      Performing Legal Services in Another Jurisdiction

Paragraph (a) of the Texas Rule 5.05 provides that a lawyer licensed in Texas shall not "practice law in a jurisdiction where doing so violates the regulation of the legal profession in that jurisdiction . . . ." Texas Rules Rule 5.05(a).

Comment 5 elaborates:

Authority to engage in the practice of law conferred in any jurisdiction is not necessarily a grant of the right to practice elsewhere, and it is improper for a lawyer to engage in practice where doing so violates the regulation of the practice of law in that jurisdiction. However, the demands of business and the mobility of our society pose distinct problems in the regulation of the practice of law by individual states. In furtherance of the public interest, lawyers should discourage regulations that unreasonably impose territorial limitations upon the right of a lawyer to handle the legal affairs of a client or upon the opportunity of a client to obtain the services of a lawyer of his or her choice.

Texas Rules Rule 5.05 cmt. 5.

5.5:300   Assisting in the Unauthorized Practice of Law

Primary Texas References: TX Rule 5.05(b)
Background References: ABA Model Rule 5.5(b), Other Jurisdictions
Commentary: ABA/BNA § 21:8201, ALI-LGL § 4, Wolfram § 15.1

Paragraph (b) of Texas Rule 5.05 provides that a lawyer licensed in Texas shall not "assist a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law." Texas Rules Rule 5.05(b).

Comment 4 elaborates:

Paragraph (b) of Rule 5.05 does not prohibit a lawyer from employing the services of paraprofessionals and delegating functions to them. So long as the lawyer supervises the delegated work, and retains responsibility for the work, and maintains a direct relationship with the client, the paraprofessional cannot reasonably be said to have engaged in activity that constitutes the unauthorized practice of law. See Rule 5.03. Likewise, paragraph (b) does not prohibit lawyers from providing professional advice and instructions to nonlawyers whose employment requires knowledge of law. For example, claims adjusters, employees of financial institutions, social workers, abstracters, police officers, accountants, and persons employed in government agencies are engaged in occupations requiring knowledge of law; and a lawyer who assists them to carry out their proper functions is not assisting the unauthorized practice of law. In addition, a lawyer may counsel nonlawyers who wish to proceed pro se, since a nonlawyer who represents himself or herself is not engaged in the unauthorized practice of law.

Texas Rules Rule 5.05 cmt. 4.

5.6   Rule 5.6 Restrictions on Right to Practice

5.6:100   Comparative Analysis of Texas Rule

Primary Texas References: TX Rule 5.06
Background References: ABA Model Rule 5.6, Other Jurisdictions
Commentary:

5.6:101      Model Rule Comparison

Texas Rule 5.06, "Restrictions on Right to Practice," is essentially identical to Model Rule 5.6 of the same name, but the Texas Rule adds at the end of paragraph (b) the provision that an agreement restricting a lawyer's right to practice can be made "as part of the settlement of a disciplinary proceeding against a lawyer . . .." Texas Rules Rule 5.06(b).

Texas Rule 5.06 provides in full:

A lawyer shall not participate in offering or making:

(a)   a partnership or employment agreement that restricts the rights of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement; or

(b)   an agreement in which a restriction on the lawyer's right to practice is part of the settlement of a suit or controversy, except that as part of the settlement of a disciplinary proceedings against a lawyer an agreement may be made placing restrictions on the right of that lawyer to practice.

Texas Rules Rule 5.06; see also e.g., Texas Ethics Ops. 466, 459.

5.6:102      Model Code Comparison

The generally similar Model Code analogue is DR 2-108.

5.6:200   Restrictions on Lawyers Leaving a Firm

Primary Texas References: TX Rule 5.06(a)
Background References: ABA Model Rule 5.6(a), Other Jurisdictions
Commentary: ABA/BNA § 51:1201 ALI-LGL § 10

For a general discussion of this topic, see section 5.6:101.

5.6:300   Settlements Restricting a Lawyer's Future Practice

Primary Texas References: TX Rule 5.06(b)
Background References: ABA Model Rule 5.6(b), Other Jurisdictions
Commentary: ABA/BNA § 51:1201, ALI-LGL § 10, Wolfram § 16.2.3

For a general discussion of this topic, see section 5.6:101.

5.7   Rule 5.7 Responsibilities Regarding Law-Related Services

5.7:100   Comparative Analysis of Texas Rule

Primary Texas References:
Background References: ABA Model Rule 5.7, Other Jurisdictions
Commentary:

5.7:101      Model Rule Comparison

The Texas Rules do not contain a free-standing rule directly analogous to Model Rule 5.7, "Responsibilities Regarding Law-Related Services."

5.7:102      Model Code Comparison

The Texas Rules do not contain a free-standing rule directly analogous to Model Rule 5.7, "Responsibilities Regarding Law-Related Services." The Model Code does not appear to contain a direct analogue in Model Rule 5.7.

5.7:200   Applicability of Ethics Rules to Ancillary Business Activities

Primary Texas References:
Background References: ABA Model Rule 5.7, Other Jurisdictions
Commentary: ABA/BNA § 101:2103, ALI-LGL §, Wolfram §

For a general discussion of this subject, see section 5.7:101.

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