April 1959

FIXING THE AMOUNT OF FEES—RETAINER AGREEMENTS—DIVISION OF FEES—An attorney may properly agree to employment by a client whereby the client will furnish office space and certain other overhead expenses, and will pay the attorney a guaranteed annual retainer, as reduced by the net amount of fees received by the attorney from other clients.

INTERMEDIARIES—An attorney may accept employment by a client for an annual retainer, as reduced by the net amount of fees received by the attorney from other clients, and may maintain offices on premises of, and at the expense of, such client, provided the client does not improperly control or exploit the attorney or intervene between the attorney and his other clients.

Canon 11, 31, 32.


An attorney is offered employment by client A on a guaranteed annual retainer basis, with client A also furnishing requisite office space for the attorney and his staff upon client A’s premises, library, and operating overhead. Client A proposes that the attorney may represent other clients provided the net amount so earned by the attorney from other clients is to be credited against the guaranteed annual retainer. The attorney will not be required to reimburse client A in any manner for any of the costs incurred by client A in providing offices, library, and operating overhead. The attorney will be listed in the usual section of the telephone directory; only the separate telephone number of the attorney will be listed, and not the telephone number of client A. Client A will not exploit the services of the attorney and will not intervene in any way between the attorney and his other clients. Furthermore, client A will not in any way control the attorney in his handling of legal matters for his other clients.

Does such proposed arrangement violate any of the Canons of Ethics of the State Bar of Texas?


In effect client A has agreed to pay the attorney an annual fee equal to the difference between X dollars (guaranteed annual retainer) and the net amount received from other clients, and to pay for certain overhead expenses.

Canon 11, relating to fixing the amount of fees, is not violated; the things itemized in the inquiry are proper things to consider in fixing fees but are not controlling.

Canon 31 is not violated, because there is no division of fees. Client A will not under this arrangement receive any part of a legal fee paid the attorney.

Canon 32 is not violated. The inquiry expressly stipulated that client A is neither controlling the attorney in his relations with other clients, nor intervening therein in any way. (7-0.)