THE GRIEVANCE SYSTEM

Document Sample
THE GRIEVANCE SYSTEM Powered By Docstoc
					           THE GRIEVANCE SYSTEM
   AND THE BOARD OF DISCIPLINARY APPEALS
UNDER THE REVISED TEXAS RULES OF DISCIPLINARY
                PROCEEDURE


                          By

                  S. Jack Balagia, Jr.
         Assistant General Counsel, Litigation
         Exxon Mobile Corp., Houston, Texas

                    Paul D. Clote
           Attorney at Law, Houston, Texas

                William D. Greenhill
               Haynes and Boone, LLP
                 Fort Worth, Texas




                     30th Annual
        Page Keeton Civil Litigation Conference
                    Austin, Texas
                    October 26-27




                           i
                                                                             Table of Contents

i.          OVERVIEW OF THE GRIEVANCE SYSTEM ................................................................................................... 1

       A.        Self-Regulatory System. .................................................................................................................................... 1

       B. New Procedure for Investigating Complaints, Grievance Committees, and Appeals of Findings of Misconduct.1

       C.        Commission for Lawyer Discipline. .................................................................................................................. 2

       D.        Professional Enhancement Program and Client Attorney Assistance Program ................................................. 3

       E. The Grievance Oversight Committee..................................................................................................................... 3

II.         BOARD OF DISCIPLINARY APPEALS............................................................................................................. 3

       A.        Creation.............................................................................................................................................................. 3

       B.        Appellate Jurisdiction. ...................................................................................................................................... 4

            Classification Appeals............................................................................................................................................................4
            Evidentiary Appeals...............................................................................................................................................................4
       C. Original Jurisdiction............................................................................................................................................... 4

            Disabilities...............................................................................................................................................................................5
iii.        FREQUENT ISSUES IN DISCIPLINE MATTERS ................................................................................................... 5

       A.        Neglecting the Client or the Matter.................................................................................................................... 5

            B.       Fee Agreements and Engagement Letters. .................................................................................................................6
       C. Solicitation Letters. ................................................................................................................................................ 6

       D. Division of Fees and Retaining an Interest. ........................................................................................................... 7

            Pending Referral Fee Changes..............................................................................................................................................7
            Current Rule 1.04...................................................................................................................................................................8
       E. Supervising Non-lawyer Staff................................................................................................................................ 8

       F. Letters of Protection. .............................................................................................................................................. 9

       G.        Terminating the Attorney-Client Relationship................................................................................................. 10

       H.        Other Common Issues...................................................................................................................................... 10




                                                                                                    ii
                                                                 B. New Procedure for Investigating Complaints,
    THE GRIEVANCE SYSTEM &                                       Grievance Committees, and Appeals of Findings of
         THE BOARD OF                                            Misconduct.

     DISCIPLINARY APPEALS1                                            The State Bar has established 48 district grievance
                                                                 committees, which include 100 panels that preside
I.   OVERVIEW OF THE GRIEVANCE SYSTEM
                                                                 over both summary disposition dockets and
A. Self-Regulatory System.                                       evidentiary hearings. More than 800 individuals, a
                                                                 third of whom are non-lawyers, serve pro bono on the
                                                                 48 district grievance committees.
    The Texas Supreme Court has constitutional and
                                                                      On January 1, 2004, new procedural rules for
statutory responsibility within the State for the lawyer
                                                                 processing and hearing grievances became effective.
discipline and disability system. The Court has
                                                                 The new rules resulted from the Sunset Review of the
inherent power to maintain appropriate standards of
                                                                 State Bar conducted by the Texas legislature during its
professional conduct, and to dispose of individual
                                                                 2003 session and subsequent changes to the State Bar
cases of lawyer discipline and disability. To carry out
                                                                 Act. TEX. GOV’T CODE Section 81.001 et seq. The
its duties, the Texas Supreme Court has delegated
                                                                 Sunset Review Committee advised the legislature that
responsibility for administering and supervising
                                                                 the Texas attorney disciplinary system was too
lawyer discipline and disability to the Board of
                                                                 complicated and the time required to resolve
Directors of the State Bar of Texas. The Texas
                                                                 grievances was too lengthy.
Supreme Court promulgated the Texas Rules of the
                                                                      The most significant changes contained in the new
Disciplinary Procedure (“Rules of Disciplinary
                                                                 procedure are the elimination of investigatory
Procedure”) to establish the procedures used in the
                                                                 committee hearings and creation of a summary
professional disciplinary and disability system for
                                                                 disposition procedure, elimination of the attorney’s
Texas attorneys. TEX. R. DISCIPLINARY P. 1.02. The
                                                                 right to appeal to the Board of Disciplinary Appeals a
Rules of Disciplinary Procedure do not amend or
                                                                 screening decision that a grievance alleges
repeal, in any way, the Texas Disciplinary Rules of
                                                                 misconduct, and the referral of all dismissed matters
Professional Conduct (“Rules of Professional
                                                                 to a voluntary mediation and dispute resolution
Conduct”).
                                                                 process. The rules are available at www.texasbar.com.
    The Rules of Professional Conduct define proper
                                                                      On average, around 9,000 grievances are filed
conduct for purposes of professional discipline. TEX.
                                                                 with the State Bar each year. Of those, approximately
DISCIPLINARY R. PROF’L CONDUCT preamble ¶ 10.
                                                                 35 percent are classified as complaints, with 65
The Rules of Professional Conduct are imperatives,
                                                                 percent dismissed as inquiries. 2 The overwhelming
cast in the terms of “shall” or “shall not.” However,
                                                                 majority of grievances allege attorney neglect. Failure
the rules do not exhaust the moral and ethical
                                                                 to advise clients that representation is declined and
considerations that govern lawyers, because legal
                                                                 failure to properly terminate representation are
rules can neither anticipate nor define proper conduct
                                                                 sources of numerous complaints. Failure to safeguard
in all circumstances. TEX. DISCIPLINARY R. PROF’L
                                                                 client property, and failure to communicate with
CONDUCT preamble ¶ 10.
                                                                 clients also form the basis for a significant number of
                                                                 complaints. The failure to respond to a grievance is
                                                                 itself grievable, TEX. DISCIPLINARY R. PROF’L
                                                                 CONDUCT 8.04(a)(8), and frequently will turn a
                                                                 reprimand case into a suspension or disbarment. Many
                                                                 attorneys simply do not appreciate the seriousness of
                                                                 failing to respond to a grievance.
                                                                      When the State Bar receives a grievance against
1
  Special thanks to Dawn Miller, Chief Disciplinary              an attorney, it promptly forwards the grievance to the
Counsel for the Commission for Lawyer Discipline, State          Office of Chief Disciplinary Counsel. The Chief
Bar of Texas, for permission to use her article “Volunteer       Disciplinary Counsel (“CDC”) examines each written
and Fiscal Commitment to Self-Regulation,” published in          statement to determine whether it constitutes an
February 2003, 66 TEX. B.J. 984. Thanks also to Ben              “Inquiry” or a “Complaint.” If, on its face, or upon
Selman, former Chairman of BODA, and Christine
                                                                 screening or preliminary investigation, the written
McKeeman, General Counsel and Executive Director of
BODA, for permission to use their excellent article              statement constitutes professional misconduct or
“Compulsory Discipline Under the Texas Rules of
                                                                 2
Disciplinary Procedure” presented by the Texas Center for          Based on statistics compiled by the State Bar of Texas
Legal Ethics and Professionalism October 22, 1999.               Chief Disciplinary Counsel’s office for matters filed before
                                                                 the new procedural rules took effect January 1, 2004.
                                                             1
attorney disability cognizable under the Rules of               Committee. 3 The election must be in writing, and
Professional Conduct or the Rules of Disciplinary               served upon the CDC no later than 20 days after the
Procedure, the grievance is classified as a complaint           respondent’s receipt of written notice of the finding of
and scheduled for further investigation to determine            just cause. If no timely election is made, respondent is
whether there is just cause to believe that misconduct          deemed to have elected to proceed with an evidentiary
has occurred. TEX. R. DISCIPLINARY P. 2.10.                     hearing, is deemed to have waived the trial de novo in
     Before January 1, 2004, all grievances resulting in        State District Court, and is required to proceed with
a determination of just cause required two hearings             the evidentiary hearing. TEX. R. DISCIPLINARY P.
unless the attorney agreed to the sanction offered by           2.15.
the investigatory committee. A decision that a                       The purpose of the evidentiary hearing is to
grievance alleged misconduct had to be based solely             receive the evidence, make findings of fact and
on the face of the complaint without the benefit of any         conclusions of law, and either dismiss the complaint
response or rebuttal from the attorney charged. Once            or impose sanctions. In the evidentiary hearing, the
classified as a complaint, the matter proceeded to a            burden of proof is upon the CDC to prove material
hearing before an investigatory committee; however,             allegations by a preponderance of the evidence. TEX.
over 70 percent of all grievances heard were                    R. DISCIPLINARY P. 2.17 The evidentiary panel serves
dismissed at the investigatory hearing stage. If an             an adjudicatory or judicial function. The chair of the
attorney did not agree to accept a sanction offered by          evidentiary panel often rules on points of procedure
the committee, the complaint continued to a second              and evidence, much in the same way as judges. It is
hearing, either before another grievance committee              challenging and significant work, often undertaken in
panel or in district court. The legislature agreed with         an emotionally charged setting.
the Sunset Review Committee that the two-tier                        The respondent and CDC are notified in writing of
hearing system was unnecessarily complex and slow,              the decision of the evidentiary panel. The respondent
despite the fact that the process resolved all but a            or CDC may appeal to the Board of Disciplinary
small number of grievances within approximately                 Appeals (“BODA”) any findings, conclusions, or
three months of being filed.                                    sanctions imposed by the evidentiary panel. Such
     The new procedure for cases filed after January 1,         appeals are based upon the record and are determined
2004, eliminates the investigatory hearing in favor of          pursuant to the substantial evidence rule. TEX. R.
investigation conducted by the State Bar CDC’s                  DISCIPLINARY P. 2.24.
office. The disciplinary staff can consider the                      An evidentiary panel order of disbarment cannot
attorney’s response to the allegations made in the              be superseded or stayed. The respondent may, within
grievance before deciding whether just cause exists. If         30 days of the entry of judgment, petition the
the CDC determines that there is no basis to the                evidentiary panel to stay a judgment of suspension
allegations of misconduct, they docket the matter for           during an appeal. An order of suspension must be
summary disposition before a grievance committee                stayed during the pendancy of any appeal if the
panel composed for that purpose. Neither the                    evidentiary panel finds by a preponderance of the
complainant nor the attorney appears at this                    evidence, that the attorney’s continued practice of law
disposition.                                                    does not pose a continuing threat to the welfare of the
     If, after additional investigation, the CDC believes       attorney’s clients or to the public. TEX. R.
that the complaint alleges just cause, or the summary           DISCIPLINARY P. 2.25.
disposition panel disagrees that the matter warrants
dismissal, the CDC notifies the respondent that further         C. Commission for Lawyer Discipline.
proceedings shall be conducted before an evidentiary
panel, consistent with the Rules of Disciplinary                    The Commission for Lawyer Discipline is a
Procedure, unless the respondent elects, in a timely            permanent committee of the State Bar of Texas,
manner, and pursuant to TEX. R. DISCIPLINARY P.                 composed of 12 members. Half the committee
2.15 2.14, to have his/her grievance heard in the               members are attorneys appointed by the State Bar of
district court of proper venue in lieu of the evidentiary       Texas, and half are public members appointed by the
panel. The administrative option has the benefit of             Texas Supreme Court. The Commission for Lawyer
being confidential unless and until the panel finds             Discipline is the State Bar entity that self-regulates
misconduct and imposes a public sanction.                       Texas attorneys. The Commission for Lawyer
     Respondents may elect to have grievances heard             Discipline is represented by the CDC’s office. The
in the district court of proper venue, with or without a
jury, instead of having the grievance heard by an               3
                                                                  The Sunset Review recommendations originally deleted
evidentiary panel of the District Grievance                     the option to try disciplinary cases in district court, but the
                                                                State Bar and lawyers of Texas convinced the legislature to
                                                                retain that alternative.
                                                            2
Commission for Lawyer Discipline has oversight                  effectiveness of the grievance system, while
responsibility for the CDC’s administration of the              serving the objective of public protection.
Texas Bar disciplinary system. Accordingly, the CDC
acts as the legal counsel for the Commission for
Lawyer Discipline (its client), in the appeals to BODA          II.   BOARD OF DISCIPLINARY APPEALS
from the evidentiary panel judgments.
                                                                A. Creation.
D. Professional Enhancement Program and Client                       In 2004, the Board of Disciplinary Appeals
Attorney Assistance Program
                                                                (“BODA”) observed its twelfth year of deciding
                                                                attorney discipline matters, as the cumulative number
     In addition to the Commission for Lawyer                   of cases heard surpassed 33,000. On average, BODA
Discipline (an arm of the State Bar), and the Board of          disposes of approximately 2,900 matters per year.
Disciplinary Appeals (an independent judicatory                 While most Texas attorneys may not even be aware
body), there are additional disciplinary and self-              that BODA exists, much less be familiar with its
regulatory committees. Professional enhancement                 jurisdiction, BODA is regularly deciding 50 or more
committees (“PEP committees”), which exist as sub-              cases every week. Appointed by the Supreme Court of
committees to grievance committees in most bar                  Texas, BODA serves as an independent statewide
districts, meet with the attorneys when it is believed,         judicial body with original and appellate jurisdiction
as a result of a grievance, that the attorney can benefit       over seven types of attorney discipline cases
from consultation in such areas as attorney-client              prosecuted by the State Bar’s CDC. BODA matters
relations and law office management. Often, a                   include complainant appeals from grievance screening
grievance will not rise to the level of a complaint             decisions; transfers of grievances from one committee
under the Rules of Professional Conduct, although the           to another; appeals from disciplinary judgments
attorney may benefit from professional enhancement              signed by evidentiary panels of district grievance
programs. PEP committee meetings are confidential.              committees; petitions to revoke probated disciplinary
The PEP committee works with an attorney to identify            suspensions; compulsory discipline cases; and
potential problems and develop a plan to address                reciprocal discipline cases. In addition, BODA
issues in a non-confrontational setting.                        appoints specially-constituted disability committees to
     The new disciplinary rules effective January 1,            determine whether an attorney is unable to practice
2004, require that all dismissed grievances, whether            law because of any physical or mental condition that
dismissed at screening, the summary disposition                 prevents him or her from being able to carry out
docket, or after hearing, be referred to a voluntary            professional responsibilities to clients.
mediation and dispute resolution procedure. The State                The State Bar Act, Texas Government Code,
Bar Client-Attorney Assistance Program (“CAAP”),                Section 81.072, amended September 1, 1991, made all
designed to assist persons in resolving minor disputes          Texas attorneys subject to the Texas Disciplinary
that do not rise to the level of professional                   Rules of Professional Conduct and the Texas Rules of
misconduct, was selected to serve this function.                Disciplinary Procedure. BODA was created on May 1,
Services that CAAP provides include suggesting ways             1992, when the Texas Rules of Disciplinary Procedure
for a client to deal with communication problems,               became effective. At the time, BODA had only nine
answering questions about the disciplinary system,              members. As part of the 1994 State Bar referendum to
and referring callers to other State Bar programs.              amend the Texas Rules of Disciplinary Procedure,
                                                                BODA asked for three additional members and the
E. The Grievance Oversight Committee.
                                                                ability to have members serve consecutive terms.
                                                                BODA’s hearings are open to the public and have
    The     Grievance     Oversight    Committee                been held in the Texas Supreme Court courtroom
(“GOC”), a nine-member committee appointed                      since 1994.
by the Supreme Court of Texas, also influences                       BODA functions as a judicial body, interpreting
the grievance and disciplinary process in Texas.                and applying not only the disciplinary rules, but also
The GOC reviews the grievance system and                        civil procedural rules, evidentiary rules, and case law.
disciplinary procedures and provides annual                     All BODA members are attorneys, and many have
reports to the Supreme Court. Most recently, the                experience serving on grievance committees. The
GOC made specific recommendations to revise                     BODA members’ backgrounds reflect the wide
                                                                diversity of practice areas required to evaluate the
the procedure for disciplining attorneys convicted
                                                                many different kinds of complaints and cases before
of crimes. The GOC has also suggested changes                   the Board. Members include litigators, transactional
that it believes will improve the efficiency and                attorneys, appellate lawyers, in-house counsel, family
                                                            3
law practitioners, and state and federal prosecutors           then assigned randomly to panels of three BODA
and public defenders.                                          members. According to State Bar statistics, about one-
     During 2001, BODA initiated several projects to           third of all grievances filed are appealed to BODA.
make its policies, procedures and decisions more               No filing fee is required. A complainant desiring a
accessible to the Bar and to the public. The Board             review of the decision simply mails or faxes to BODA
launched its Web site at www.txboda.org in April               the appeal notice form provided by the State Bar.
2001, providing information about members,                     Historically, the Board reversed about nine percent of
jurisdiction, procedures, the current docket, and              those appeals. 4 A large number of the complaints arise
decisions. During 2002 and 2003, the Board hosted              from the three practice areas most vulnerable to
open forums in San Antonio, Dallas and Houston,                grievances generally: personal injury, family law, and
designed to encourage dialogue between those who               criminal defense. Many complaints involve non-
appear before BODA, or other members of                        grievable situations such as fee disputes, rude
disciplinary system, and the Bar generally. BODA               behavior, and private conduct.
members discussed policies, procedures, and recent                 All the information that BODA reviews
decisions and answered questions from the audience.            concerning classification appeals is strictly
These open forums, sponsored by the Texas Center for           confidential under the Rules of Disciplinary
Legal Ethics and Professionalism and the State Bar of          Procedure.
Texas, provided convenient opportunities for
attorneys who wished to obtain current, specific and           Evidentiary Appeals.
reliable information about the grievance system.                    Either the CDC or the respondent attorney may
                                                               appeal the judgment of an evidentiary panel to BODA.
B.   Appellate Jurisdiction.                                   These appeals proceed similar to civil appeals.
                                                               Dispositions are based on the record, briefs, and oral
     There are two principal categories of BODA’s              argument. Factual issues are reviewed under a
appellate jurisdiction: (1) review of determinations by        substantial evidence rule, and legal issues are
the Chief Disciplinary Counsel that a grievance                reviewed de novo. Due to time allowed for filing the
alleges a violation of the Texas Disciplinary Rules of         record and briefs, evidentiary appeals typically require
Professional Conduct and therefore states a complaint;         at least three to four months to decide. Extensions of
and (2) appeals of evidentiary panel judgments. The            time for filing briefs may be granted for good cause. If
initial screening or classification of the inquiries and       neither party requests oral argument, the matter is set
complaints is undertaken by the State Bar’s office of          for disposition at the next BODA en banc meeting
the Chief Disciplinary Counsel. Reviewing the                  after the appellee’s brief is filed.
screening decisions constitutes the bulk of BODA’s
large caseload. It is this work that that most directly        C. Original Jurisdiction.
impacts the Bar as a whole.
                                                               Hearings Docket.
Classification Appeals.                                            The BODA hearings docket involves public
    Every grievance filed with the State Bar CDC’s             matters, including compulsory cases, reciprocal
office is reviewed by a staff person to determine              matters, disability reinstatements, and revocations of
whether the complaint alleges a violation of the Rules         probation. Typically, these cases require a hearing
of Professional Conduct. If the complaint is dismissed         unless resolved by agreement or nonsuit. BODA
after screening, the complainant may appeal that               considers these matters en banc in Austin
decision to BODA within 30 days of receiving the               approximately every other month. BODA may refer
dismissal notice from the State Bar.                           any matter to a panel of three members for a hearing.
    To handle classification appeals as expeditiously          A party may request that a particular case be set
as possible, BODA reviews these matters by panel               before a panel at a time other than the regular en banc
telephone conferences twice a week. Since its                  hearing date for good cause. The current docket can
inception, BODA has been able to dispose of                    be found on BODA’s Web site at www.txboda.org.
classification appeals within two weeks of receipt of              BODA hearings are conducted as in district court
the complaint from the State Bar. BODA staff                   for civil matters following the Texas Rules of
members request the file on each grievance from the            Disciplinary Procedures, BODA’s Internal Procedural
State Bar the day the appeal notice is filed. BODA can         Rules, Texas Rules of Civil Procedure and Texas
review only the same information screened by the               Rules of Evidence. A record is made by a court
State Bar. Accordingly, any additional information
submitted after the screening, including the attorney’s
                                                               4
response (if any) is not considered. Complaints are             Based on statistics for cases filed under the procedural
                                                               rules in effect before January 1, 2004.
                                                           4
reporter and BODA staff who act as the court clerk in            BODA or the district court for reinstatement. There is
these matters. Appeals from compulsory, reciprocal,              no minimum time before an attorney may petition to
and revocation cases are made directly to the Supreme            terminate the disability suspension; however, if the
Court.                                                           first petition is denied, he may not again petition for
                                                                 termination for one year. TEX. R. DISCIPLINARY P.
Disabilities.                                                    12.08. Any attorney who has been on active disability
     BODA also is charged with the duty of appointing            suspension for more than two years may be required
a District Disability Committee to determine if an               to pass the multistate Professional Responsibility
attorney is suffering from a disability as defined in the        section of the State Bar exam or complete continuing
Texas Rules of Disciplinary Procedure, which would               legal educations courses before being reinstated, or
result in an indefinite suspension from the practice of          both TEX. R. DISCIPLINARY P.12.09.
law. A disability is any “physical, mental, or
emotional condition that, with or without a substantive
rule violation, results in the attorney’s inability to           III.   FREQUENT ISSUES IN DISCIPLINE MATTERS
practice law, provide client services, complete
contracts of employment, or otherwise carry out his or               The CDC’s office and BODA confront a wide
her professional responsibilities to clients, courts, the        variety of issues in reviewing and investigating
profession or the public. TEX. R. DISCIPLINARY P.                complaints against lawyers. Some of the more
1.06F.                                                           frequent issues are discussed below.
     If an evidentiary panel or the CDC believes that
an attorney may be suffering from a disability, the              A. Neglecting the Client or the Matter.
committee must certify the finding and send it to
BODA along with a statement of the basis for the                     Perhaps no issue receives more attention in the
belief that the attorney is disabled. BODA appoints a            grievance process than complaints regarding alleged
District Disability Committee (“DDC”) composed of                neglect by the lawyer of the client or failing to
an attorney, a doctor of medicine or a Ph.D. trained in          properly communicate with the client. Not returning
the area of the disability, and a layperson. The DDC             phone calls, missing hearings or court appearances,
conducts a hearing to determine if the attorney is               procrastinating, and ignoring requests for information
presently disabled. If the DDC finds that the attorney           are all grounds for upgrading a complaint to a
is disabled, a finding is sent to BODA, and the                  grievance. Rules 1.01 and 1.03 of the Texas
attorney will be indefinitely suspended from the                 Disciplinary Rules of Professional Conduct govern
practice of law. If the committee finds that the                 such issues. Rule 1.01 provides: “In representing a
attorney is not disabled, the discipline case returns to         client, a lawyer shall not (1) neglect a legal matter
the grievance system for further proceedings.                    entrusted to the lawyer; or (2) frequently fail to carry
     The DDC may also find that the attorney, while              out completely the obligations that the lawyer owes to
not presently suffering from a disability, is at high risk       a client or clients.” TEX. DISCIPLINARY R. PROF’L
for relapsing without continued monitoring and                   CONDUCT 1.01(b). The Rule defines “neglect” as
treatment. In that event, the committee may                      “inattentiveness involving a conscious disregard for
recommend that the attorney be allowed to continue to            the responsibilities owed to a client or clients.” TEX.
practice under certain terms and conditions of                   DISCIPLINARY R. PROF’L CONDUCT 1.01(C).
probation. The DDC fashions terms and a monitoring                   Comment 7 to the Rule sums up the obligation
plan specifically to address the individual situation.           well. “[A] lawyer is subject to professional discipline
Typically, a volunteer attorney will be appointed to             for neglecting a particular legal matter as well as for
monitor the attorney and assist with reporting                   frequent failures to carry out fully the obligations
compliance to the CDC. If the attorney fails to comply           owed to one or more clients. A lawyer who acts in
with the required conditions of probation, the CDC               good faith is not subject to discipline under those
may move to revoke the probation and place the                   provisions for an isolated inadvertent or unskilled act
attorney on indefinite active suspension.                        or omission, tactical error, or error of judgment.” TEX.
     On occasion, lawyers are unwilling to admit when            DISCIPLINARY R. PROF’L CONDUCT 1.01 cmt. 7.
disease or age has impaired their ability to practice                Although failure to communicate may constitute
law. The DDC is a means to evaluate whether the                  neglect, there is a separate rule governing the
grievance problems facing the lawyer are caused by               obligation to communicate with the client. Under Rule
physical and/or mental illness. If the cause of the              1.03, a lawyer must keep the client “reasonably
problems is a disability, suspension allows the lawyer           informed” about the status of the matter and promptly
to take care of these problems. When the attorney has            comply with requests from the client for information.
recovered or controlled the condition, he can petition           TEX. DISCIPLINARY R. PROF’L CONDUCT 1.03(a) The

                                                             5
communication also must be sufficient to permit the             Considerations in the Attorney-Client Relationship, 4
client “to make informed decisions regarding the                GEO. J. LEGAL ETHICS 791, 809-12 (1991).
representation.” TEX. DISCIPLINARY R. PROF’L                        The fee agreement should be clear and fully
CONDUCT 1.03(b). The comments state that because                inform the client of the terms of the engagement. If
“delay can cause a client needless anxiety and                  the engagement appears to be a lengthy one or may
undermine confidence in the lawyer’s trustworthiness,           involve matters not yet contemplated by the parties,
there is a duty to communicate reasonably with                  the agreement should state that the parties recognize
clients.” TEX. DISCIPLINARY R. PROF’L CONDUCT                   that there may be fee increases as part of the initial
1.01 cmt. 7.                                                    contract consideration.
                                                                    The use of non-refundable retainers, while not
B. Fee Agreements and Engagement Letters.                       prohibited, is discouraged because they may be
                                                                unconscionable or result in a claim of an unearned fee.
     Disputes often arise between the lawyer and the            A fee paid merely to retain the lawyer, with no
client regarding the fees charged by the lawyer. The            services required and non-refundable under any
most effective way to avoid such disputes is to have            circumstance, is probably not reasonable.
an engagement letter and/or fee agreement that sets                 The fee agreement should not contain provisions
out the scope of the representation and the fees to be          that would allow the lawyer to violate the Rules of
charged. Even though only contingent fee agreements             Professional Conduct or any other law. See TEX.
must be in writing, see TEX. DISCIPLINARY R. PROF’L             DISCIPLINARY R. PROF’L CONDUCT 1.02 cmt. 5. For
CONDUCT 1.04(d), the better practice is to put all fee          example, the file may not be held hostage for the
agreements in writing, especially those with new                payment of fees; that would constitute a violation of
clients. See TEX. DISCIPLINARY R. PROF’L CONDUCT                Rule 1.15(d) of the Rules of Professional Conduct.
1.04 cmt. 2. Many complaints reviewed by the BODA               The agreement cannot limit the client’s right to accept
involve a complaint about the lawyer’s fee. Prevention          or reject settlement offers, a violation of Rule
of misunderstandings about the fee can frequently be            1.02(a)(2). The agreement cannot waive the client’s
accomplished with a written fee agreement.                      right to terminate the lawyer’s services, a violation of
     The fee must not be unconscionable. TEX.                   Rule 1.15(a)(3). See Tex. Comm. on Prof’l Ethics, Op.
DISCIPLINARY R. PROF’L CONDUCT 1.04(a). An                      395, 42 Tex. B.J. 436 (1979) (as corrected). The
unconscionable fee is one that no competent lawyer              agreement cannot prospectively limit the attorney’s
could find reasonable. Lucas v. Nesbitt, 653 S.W.2d             liability to a client for malpractice unless permitted by
883 (Tex. App.–Corpus Christi 1983, writ ref’d n.r.e).          other law. TEX. DISCIPLINARY R. PROF’L CONDUCT
Rule of Professional Conduct 1.04(b) outlines eight             1.08(g).
factors, among others, to be considered when
determining if a fee is reasonable.                             C. Solicitation Letters.
     Contingent fee agreements are required to be in
writing and to clearly define the agreement. They                   Advertising and solicitation of clients by Texas
must state the method by which the fee is to be                 lawyers is regulated by Section VII of the Rules of
determined. For example, are the litigation expenses            Professional Conduct. All written solicitation letters
to be deducted from the recovery first, or after the            are required to be filed with the State Bar of Texas
lawyer has taken his or her percentage? Are the                 Lawyer Advertising and Solicitation Review
percentages different if the matter is settled or goes to       Committee, even if exempt. The fee associated with
trial? These matters should be clearly stated. TEX.             the filing is currently $75.
DISCIPLINARY R. PROF’L CONDUCT 1.04(d).                             The solicitation letter must be filed at the same
Contingent fees are never allowed when representing             time the letter is disseminated. However, if the
a defendant in a criminal matter, and “rarely justified”        Advertising Review Committee finds a violation, it
in domestic relations cases.                                    may either ask for a correction or forward the
     Once the fee is set and the relationship has               violation to the State Bar CDC as a violation of the
formed, an increase in the fee is presumed to be unfair         Rules of Professional Conduct. Consequently, the
to the client. Archer v. Griffith, 390 S.W.2d 735 (Tex.         better practice is to take advantage of the pre-approval
1964). A higher fee may be justified in some                    process offered by the Advertising Review Committee
circumstances. These reasons may include rising                 and submit the proposed letter at least 30 days prior to
costs, unforeseen circumstances, unforeseen demands             dissemination. For more information about the
of the representation, or specific circumstances not            submission and review process, follow the
initially contemplated by the parties. Anderson and             “Maintaining Your License” link on the State Bar
Steele, Ethics and the Law of Contract Juxtaposed: A            Web site (www.texasbar.com) to the Advertising
Jaundiced View of Professional Responsibility                   Review section. This area contains much helpful

                                                            6
information, including an application form as well as              prejudice the client. Additionally, the court may
interpretive comments to the advertising rules and                 permit the party to void the employment agreement,
examples.                                                          order the forfeiture of all fees for the attorney, and
    In addition to the requirements of Section VII of              impose other appropriate sanctions.
the Rules of Professional Conduct, attorneys sending                   After receiving voluminous comments as well as a
solicitation materials must be familiar with the                   special request from State Bar leadership for further
barratry statute. Texas Penal Code § 38.12(d)(2)                   study before implementing the new Rule 8a, the Court
prohibits a written solicitation for a personal injury or          accepted the State Bar’s proposal to delay
wrongful death claim sent before the 31st day after the            implementing Rule 8a and allow the Bar to appoint a
accident or disaster that is the impetus for the                   special task force to conduct public hearings on
solicitation. It also prohibits a written solicitation sent        referral fee issues and the related advertising rules and
before the 31st day after an arrest and prohibits a letter         report its recommendations to the Court in the
sent to the defendant in any lawsuit, including a                  summer of 2004. 7 The Court stated that if the
divorce, until after the lawsuit has been on file 31               recommendations adequately addressed the issues it
days.                                                              had identified, the Court would approve submitting a
                                                                   proposed Rule 1.04 (with any of its own revisions) for
D. Division of Fees and Retaining an Interest.                     referendum in fall 2004.
                                                                       The State Bar task force submitted its findings in
Pending Referral Fee Changes.                                      a final report with a proposed revision to TDRPC
     Texas is in a small minority of states that allow             1.04. 8 The State Bar draft TDRPC 1.04 differs from
payment of a referral fee even when the referring                  Rule 8a significantly in that it permits fee-sharing
attorney performs no actual services. TEX.                         only if the division is in proportion to the services
DISCIPLINARY R. PROF’L CONDUCT 1.04(f)(1)(ii);                     performed by each lawyer or the lawyers assume joint
Chachere v. Drake, 941 S.W.2d 193, 197-98 (Tex.                    responsibility for the representation. The client must
App.—Corpus Christi 1996, writ denied). The                        consent in writing to the terms of the referral
permissibility of “pure” referral fees is one of the most          arrangement, which must include certain disclosures,
controversial issues in legal ethics. On October 9,                prior to or at the time of the referral. In addition, each
2003, the Supreme Court of Texas proposed to amend                 employment agreement allowing association or
the Texas Rules of Civil Procedure by adding Rule 8a,              referral and that results in such an association or
“Referral Fees,” (to become effective January 1, 2004)             referral must also contain the disclosures required to
which, among other changes, caps the amount payable                be made to the client.
as a referral fee. 5 (Note: all draft referral fee proposals           The State Bar proposal also revises certain rules in
and advertising rules discussed below are available on             TDRPC Part VII controlling lawyer advertising.
the Supreme Court of Texas Web site. 6 )                           Actors may not portray clients, and all required
     Proposed Rule 8a defines referral fee as any thing            disclaimers and disclosures must be presented in the
of value paid for the referral of a client or case to a            same manner as the communication itself and with
lawyer who does not provide substantial professional               equal prominence. References to past results obtained
services in the case. Rule 8a requires that: (1) the               are deemed false and misleading unless the
attorney in charge file with the appropriate court a               communicating lawyer was the lead counsel in the
disclosure of every referral fee paid or agreed to be              matter giving rise to the recovery, settlement or
paid within 30 days of entering an appearance; and                 verdict, the amount involved was actually received by
that (2) any referral fee exceeding $50,000 or 15% of              the client, and adequate information is provided about
the attorneys fees for the party in the case, whichever            the nature of the case and the damages or injuries
is less, is unconscionable under TDRPC 1.04                        sustained by the client. If the amount awarded or
(although a lesser fee may still be unconscionable                 received is the gross recovery, the fees and expenses
depending on the circumstances). If the court finds                withheld must be stated at well.
that the attorney intentionally failed to make the                     In addition to requesting comment and
required disclosure or divided or agreed to divide a fee           recommendations from the State Bar referral fee task
in violation of TDRPC 1.04, then the court must                    force, the Supreme Court of Texas task force
disqualify the attorney unless doing so would unfairly             appointed to review all the Texas Disciplinary Rules
                                                                   of Professional Conduct 9 submitted its own proposed
5
  Misc. Docket No. 03-9160 (October 9, 2003). Two                  version of Rule 1.04 to the Court in May 2004. The
Justices, O’Neill and Schneider, dissented from regulating         Supreme Court task force rule also permits fee-sharing
attorney referral fees via the TRCP rather than in the Texas
                                                                   7
Disciplinary Rules of Professional Conduct through                   Misc. Docket No. 03-9207 (December 23, 2003).
                                                                   8
referendum.                                                          Also available at www.texasbar.com.
6                                                                  9
  www.supreme.courts.state.tx.us/                                    Misc. Docket No. 03-9147 (August 29, 2003).
                                                               7
only in proportion to the services provided by each              retirement agreement, Rule of Professional Conduct
lawyer or when each lawyer assumes joint                         1.04(g), or fees paid to an attorney who has been
responsibility for the representation. 10 The client must        disbarred or had his license suspended, so long as the
consent to the association or referral prior to or at the        attorney receiving the fee completed the legal work on
time of the arrangement, including the share each                the case prior to losing the license. Wright & Assoc. v.
lawyer will receive, and the arrangement must be                 Weiss, 993 S.W.2d 466, 468 (Tex. App.—Houston
confirmed in writing within a reasonable time.                   [14th Dist.] 1999, pet. denied) citing Lee v. Cherry,
     The Supreme Court asked for comments on the                 812 S.W.2d 361, 364 (Tex. App.—Houston [14th
draft Rule 1.04 proposals and (at the date of this               Dist.] 1991, writ denied).
writing) intends to submit some version (which may                    Rule of Professional Conduct 1.04(f) does not
still be modified by the Court) to the bar for a                 require that the referring attorney first be employed by
referendum this fall.                                            the client in order to receive a referral fee. Nor does it
                                                                 require that the client first consent to the referral,
Current Rule 1.04.                                               although the client must be advised of and not object
     If a client is represented by successive lawyers in         to the participation of all the lawyers involved. TEX.
a contingent fee matter, complaints about the sharing            DISCIPLINARY R. PROF’L CONDUCT 1.04(f)(2); Bond,
or allocation of fees will often arise. A division of fees       906 S.W. 2d at 106. If, however, the association of a
is a sharing of a single billing to a client between two         second lawyer will not result in the disclosure of any
or more lawyers who are not in the same firm. TEX.               client confidences, as where a specialist is consulted
DISCIPLINARY R. PROF’L CONDUCT 1.04 cmt. 10.                     on a particular aspect of a matter, and the hiring
Rule 1.04(f) allows a lawyer to divide a fee on one of           lawyer absorbs the entire cost of the second lawyer’s
three bases: (1) in proportion to the work performed             fees, disclosure to the client is not mandated. TEX.
by each, (2) with a forwarding or referring lawyer, or           DISCIPLINARY R. PROF’L CONDUCT 1.04, cmt 10.
(3) upon written agreement with the client, with a                   A related matter arises when a client
lawyer who assumes joint responsibility for the                  discharges an attorney without good cause before
representation. The second and third options allow the           he has completed the work. In that case, the
fees to be divided in any mutually agreeable                     attorney may recover on the fee contract for the
proportion without disclosure to the client of the share         agreed amount of his compensation. Mandell &
that each is to receive. TEX. DISCIPLINARY R. PROF’L             Wright v. Thomas, 441 S.W.2d 841 (Tex. 1969). In
CONDUCT 1.04(f) cmt. 11.
                                                                 order to be entitled to recover, however, there
     A forwarding attorney may receive a fee even
though a conflict of interest prevents him from                  must be a valid contract. Tillery & Tillery v.
representing the client directly. Polland & Cook v.              Zurich Ins. Co., 54 S.W.3d 356 (Tex. App.–Dallas
Lehmann, 832 S.W.2d 729, 737 (Tex. App.—Houston                  2001, pet. denied). Contingent fee contracts for
[1st Dist.] 1992, writ denied) (fee allowed where the            legal services must be in writing, be signed by the
forwarding attorney did not undertake to provide legal           attorney and client, and state the method by which
services and the only contemplated act under the                 the fee is to be determined. TEX. GOV’T CODE §
agreement was forwarding the names of the clients in             82.065(a); TEX. DISCIPLINARY R. PROF’L
exchange for a referral fee).                                    CONDUCT 1.04(d). A contingent fee agreement that
     However, if a referral fee contract does not                does not meet the requirements of § 82.065 is
comply with the disciplinary rules, performance may              voidable by the client. Tillery, 54 S.W.3d at 359.
be excused as against public policy. Bond v. Crill, 906
S.W.2d 103, 106 (Tex. App.—Dallas 1995, no writ);                E. Supervising Non-lawyer Staff.
Polland, 832 S.W.2nd at 736. Texas lawyers may not
split fees with non-lawyers, Rule of Professional
                                                                     Many complaints filed against lawyers indicate
Conduct 5.04(a), for representations obtained in
                                                                 some confusion on the part of the client as to the
violation of the disciplinary rules, Rule of
                                                                 status of employees of the firm. Many times legal
Professional Conduct 7.03(d), or where the total fee is
                                                                 assistants and administrative assistants are mistaken
unconscionable, Rule of Professional Conduct
                                                                 for lawyers. Rule of Professional Conduct 5.03
1.04(f)(3). This does not include, however, fees paid
                                                                 requires that lawyers take reasonable measures to
to statutory lawyer referral services, Rule of
                                                                 insure that the non-lawyer staff’s conduct is consistent
Professional Conduct 7.03(b), fees paid to former
                                                                 with the lawyer’s own obligations under the
partners or associates pursuant to a separation or
                                                                 disciplinary rules. The lawyer violates the rule if he
                                                                 orders, encourages, or permits the prohibited conduct
10
  The Supreme Court Task Force proposed Rule 1.04 is
                                                                 or fails to take reasonable remedial efforts when he
available at http://www.supreme.courts.state.tx.us/ .            learns of the conduct. Occidental Chem. Corp. v.
                                                             8
Brown, 877 S.W.2d 27, 30 (Tex. App.—Corpus                     property, keep the funds segregated from personal or
Christi 1994, orig. proceeding), rev’d on other                operating accounts, notify those persons entitled when
grounds, 888 S.W.2d 466 (Tex. 1994). This provision            funds are received, deliver funds to those entitled,
confirms that, while a lawyer may delegate certain             retain disputed funds, and maintain certain records for
duties to non-lawyer assistants, he has the ultimate           five years. Rule of Professional Conduct 1.14 does not
responsibility for maintaining a direct relationship           create the required interest; rather, the rule looks to
with the client and for compliance by the non-lawyer           applicable law to determine when the client or third
with the applicable ethical rules.                             person owns an interest in the funds. TEX.
     Rule of Professional Conduct 5.03(a) requires             DISCIPLINARY R. PROF’L CONDUCT 1.14(c)
supervising lawyers to establish procedures to ensure          (providing for “persons entitled to receive them by
that non-lawyer subordinates understand how to                 virtue of the representation or by law”); TEX.
perform their duties properly–including screening,             DISCIPLINARY R. PROF’L CONDUCT 1.14 cmt. 3
instruction, and supervision–taking into consideration         (stating that “a lawyer may have a duty under
that they do not have legal training and are not subject       applicable law”); RESTATEMENT (THIRD) OF THE
to professional discipline. However, the mere fact of          LAW GOVERNING LAWYERS § 44 cmt. g (2000)
improper employee conduct, absent evidence that the            (stating “this Section requires the lawyer to safeguard
lawyer encouraged or permitted the conduct, will not           the contested property until the dispute has been
necessarily result in discipline. In a recent appeal to        resolved . . . but does not prescribe the rules for
BODA, an attorney was not disciplined for the act of           resolving it. Those rules are to be found in other
his legal assistant where the legal assistant signed an        law”).
affidavit on behalf of a third party without the                    The Texas cases on letters of protection, the law
knowledge of the attorney, and the attorney withdrew           of assignments generally, and the bankruptcy cases
the affidavit immediately upon learning of the                 that have addressed letters of protection are consistent
misconduct.                                                    in requiring the client’s signature for an enforceable
     Examples of situations in which attorneys violate         assignment. If some other document is relied upon to
these rules include attorneys allowing assistants to           create an assignment (e.g., the doctor’s letter or
sign documents for the lawyer, to explain the legal            assignment), it must also be signed by the client, and
effects of the employment contract to the client, to           the attorney must have actual knowledge of its
disclose confidential client information and to provide        existence.
other legal advice to the client generally. If the                  Even with a signed letter or other enforceable
assistant has been giving the client legal advice, the         assignment, if the client disputes the disbursement to
lawyer may also be subject to discipline under Rule of         the third party after the attorney receives settlement
Professional Conduct 5.05(b), which prohibits an               funds, the attorney should hold the disputed portion of
attorney from assisting a non-lawyer with the                  the funds in trust or interplead them into the registry
unauthorized practice of law.                                  of the court until the dispute is resolved. Comment 3
                                                               to Rule 1.14 states that the “lawyer should not
F. Letters of Protection.                                      unilaterally assume to arbitrate a dispute between the
                                                               client and the third party.” Any undisputed funds may
     Another frequent issue arises when third parties          be disbursed.
seek to enforce “agreements” with lawyers regarding                 Disputes frequently arise when, having issued
the provision of services under “letters of protection.”       letters of protection, the attorney negotiates a
Resolution of the issue often turns on whether a letter        settlement amount insufficient to pay the providers in
of protection creates a third-party interest under Rule        full, or when the client directs the attorney after
of Professional Conduct 1.14 so as to trigger the              receipt of funds to release them to the client directly.
lawyer’s duties to segregate property, notify the third        These situations result in a significant number of
party, and retain disputed funds. Absent an                    grievances filed by the provider/creditor urging that
enforceable contractual agreement between the client           the attorney has violated Rule 1.14.
and third party (e.g., a letter signed by the client), a            For further discussion of letters of protection, see
letter of protection, in which the attorney only               Chu v. Chew, 2002 Tex. App. LEXIS 376 (Tex. App.–
promises to withhold funds, does not create a third            Dallas 2002, no pet. h.), Brown v. Commission for
party interest under Rule of Professional Conduct              Lawyer Discipline, 980 S.W.2d 675 (Tex. App.–San
1.14.                                                          Antonio 1998, no pet.), and Butler v. Commission for
     Rule of Professional Conduct 1.14 sets forth the          Lawyer Discipline, 928 S.W.2d 659 (Tex. App.–
lawyer’s fiduciary duties relating to the possession of        Corpus Christi 1996, no writ).
funds or other property in which a client or third party
has an “interest.” The lawyer must identify that

                                                           9
G. Terminating the Attorney-Client Relationship.                 DISCIPLINARY R. PROF’L CONDUCT 1.14 (emphasis
                                                                 added).
    Rule of Professional Conduct 1.15 generally
governs the grounds for and obligations arising as a             H. Other Common Issues.
result of termination of the attorney-client
relationship. The rules relating to the termination of               While not covered by this article, other matters
the attorney-client relationship by withdrawal or                that are often the subject of filed grievances or
otherwise may be summarized as follows:                          inquiries include the following:
    1. If a matter is before a tribunal, the rules of the            • Whether a lawyer can be disciplined for
tribunal will control withdrawal by the attorney. If the                 private or non-representation conduct. See Big
court orders the attorney to continue the                                Brother Bar, Jury is out on Disciplining
representation, he or she must do so even though the                     Lawyers’ Private Conduct, A.B.A. J., Nov.
attorney may have grounds for termination. If                            2000, p 14.
withdrawal is permitted, the attorney generally has a                • Using or threatening to use the grievance
duty to mitigate adverse effects on the client.                          process “solely to gain an advantage in a civil
    2. The client may discharge the attorney at any                      matter.” TEX. DISCIPLINARY R. PROF’L
time, with or without cause, and the attorney must                       CONDUCT 4.04(b).
withdraw, subject to any orders of the tribunal. The                 • What obligations are owed by the lawyer to a
client may, however, be liable for all or part of the                    non-client who pays the lawyer’s fee on
attorneys’ fees if the discharge is without cause. See                   behalf of the client friend or relative.
supra Part III. D.
    3. An attorney may withdraw at any time, with or
without cause, if doing so will not adversely affect the
client. TEX. DISCIPLINARY R. PROF’L CONDUCT
1.15(b)(1) & cmt. 7.
    4. Under certain circumstances set out in Rule of
Professional Conduct 1.15(b), the attorney may
terminate the representation even when withdrawal
will adversely affect the client. These circumstances
include when the attorney reasonably believes that the
client is using the attorney’s services to commit a
fraud or crime, when the client insists on pursuing an
objective the attorney finds repugnant or imprudent or
with which the attorney fundamentally disagrees, and
where the client fails to fulfill an obligation to the
attorney, including the payment of fees.
    Regardless of the circumstances surrounding the
termination of representation, the lawyer must always
give reasonable notice of any withdrawal, see Vander
Voot v. State Bar of Texas, 802 S.W.2d 332, 334
(Tex.App.–Houston [1st Dist.] 1990, writ denied), and
take all “reasonably practicable” steps to protect the
client’s interests and to mitigate any adverse
consequences to the client even if the client unfairly
discharges the attorney.
    One of the most frequent complaints in the
termination situation is that the lawyer failed to return
to the client any files or other materials provided to
the lawyer by the client or otherwise belonging to the
client. Rule of Professional Conduct 1.14 provides
that “a lawyer shall promptly deliver to the client or
third person any funds or other property that the client
or third person is entitled to receive and, upon request
by the client or third person, shall promptly render a
full accounting regarding such property.” TEX.


                                                            10

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:9
posted:11/4/2011
language:English
pages:12