OPINION 498
March 1994

Questions Presented

  1. May an attorney, who is employed on a straight salary basis by a corporation that is not owned solely by licensed attorneys, prepare estate planning documents for customers of the corporation?
  2. May an attorney rely on nonattorneys to collect information used to prepare legal documents?

Statement of Facts

An attorney is employed on a straight salary basis by a corporation that is not a professional corporation owned solely by licensed attorneys. The corporation and affiliates provide estate and financial planning services to their customers. The attorney's salary does not fluctuate based upon the number of customers or the size of their estates. If estate planning documents are necessary, in the attorney's sole judgment, he prepares them as part of his employment with the corporation. The corporation also employs certain independent contractors who collect information used in evaluating whether or not a particular customer needs any estate planning services. A customer of the corporation is advised that an attorney will be contacting him and preparing any documents necessary. The attorney exercises his unfettered professional judgment in deciding what, if any, estate planning services are needed by the customer. The attorney has personal contact with each customer by telephone and/or correspondence and makes himself available to answer any questions regarding the services he and the corporation and affiliates provide. Finally, the attorney remains responsible for the content and effectiveness of the documents he drafts as well as the actions of any lay people with whom the customer may have contact.

Discussion

The Texas Disciplinary Rules of Professional Conduct do not prohibit an attorney from accepting employment on a salary basis to provide legal services to a corporation that is not a professional corporation owned solely by licensed attorneys. Professional Ethics Committee Opinion 417, Texas Bar Journal, June 1984, and Opinion 446, Texas Bar Journal, September 1987, interpreting the former Texas Code of Professional Responsibility, dealt with similar situations and approved of such arrangements provided certain requirements are met.

In situations where a lawyer is employed by a corporation that is not a professional corporation and provides legal services to customers of the corporation, a major constraint imposed on the lawyer by the Texas Disciplinary Rules of Professional Conduct is that the corporation must not receive payment for the lawyer's services. If payment were received by the corporation, the arrangement would amount to an agreement by the lawyer to share legal fees with a nonlawyer (the corporation) in violation of Rule 5.04(a).[FN1] Rule 5.04(a) provides, with exceptions not here relevant, that "[a] lawyer or law firm shall not share or promise to share legal fees with a nonlawyer . . ."

In the circumstances here presented, this Rule would be violated if the corporation required a customer to pay a fee for services that included the lawyer's services or if the economic arrangements between the corporation and the customer were such that the corporation received income in the form of a markup or commission on products sold that was in effect compensation to the corporation for the provision of legal services by the employee/lawyer. In fact, it would seem unlikely that a corporation would allow a salaried employee in the regular course of his or her employment to provide legal services to the corporation's customers without the receipt by the corporation of some form of compensation for the services provided. An attorney's participation in any such arrangement where the corporation received compensation for the attorney's legal services would violate Rule 5.04(a).[FN2]

With respect to the second question presented, an attorney is not restricted from relying on nonlawyers to gather information or to perform other functions so long as the lawyer remains responsible for the legal services provided. Comment one to DR 5.03 recognizes that lawyers frequently employ assistants in their practice who act for the lawyer in rendition of the lawyer's professional services. In order for such nonlawyers to act in this capacity, DR 5.03 requires that "With respect to a nonlawyer employed or retained by or associated with a lawyer:

  1. 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
  2. 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.

In the situation presented, the attorney may have the independent contractors collect information from customers of the corporation as long as the attorney retains direct supervisory authority and makes reasonable efforts to ensure that the conduct of the independent contractors is compatible with the professional obligations of the lawyer.

Conclusion

An attorney may not enter into an arrangement with a corporation that is not a professional corporation owned solely by licensed attorneys under which the attorney is employed on a salaried basis and regularly provides legal services to customers of the corporation if the corporation receives fees, commissions, or profits that are to any extent compensation to the corporation for the attorney's legal services to the customers.

The attorney may rely on nonlawyers to collect information from customers provided the attorney retains direct supervisory authority, makes reasonable efforts to ensure their conduct is compatible with the professional obligations of the lawyer, and retains responsibility for the delegated work.

FN1. All citations to Rules are to the provisions of the Texas Disciplinary Rules of Professional Conduct as currently in effect.

FN2. Rule 5.04(c) would also require that the lawyer's loyalties be to the customer as his client and that the lawyer not permit his professional judgment to be influenced by anyone else including the corporation by whom the lawyer is employed.