July 1961

FORWARDING FEES - A forwarding fee may ethically be paid to an attorney not licensed to practice law in Texas, providing such attorney is authorized to perform the function of a "forwarding attorney" at the place where he is acting.

Canon 3143.


A, who is resident in Texas but not licensed to practice law in the State of Texas but who has been licensed to practice law in another State but who has no office in that State and is not actively practicing there, is requested by a friend in a third State to obtain representation for a resident from a third State with respect to a non-collection matter requiring litigation in Texas realty and a Texas decedent's estate.  A then takes the matter to a Texas attorney and attempts to obtain for himself a forwarder's fee of a percentage of any recovery obtained in the matter.  In this situation, would it be a violation of any one or more of the Texas Canons of Ethics for a Texas attorney to agree to divide with A on a percentage basis any fee resulting from such matter?


This inquiry relates to the propriety of the Texas attorney dividing a fee with A, rather than to the propriety of A obtaining a forwarding fee in such situation.

Canon 31 provides, as to non-collection matters (or, as to matters other than collections of liquidated commercial claims) that fees may be divided only with a lawyer based upon division of service or responsibility or with a forwarding lawyer.  The inquiry indicates that A is seeking a fee as the forwarding lawyer rather than as an attorney sharing the work and responsibility.  It would seem that Canon 31 contemplates the "forwarding attorney" shall be one authorized to act as an attorney at the place where he is acting.  In other words, if the attorney is performing the function in Texas; if he is performing this function in another state, he should be authorized to so act in that state but it would be necessary for him to be licensed or authorized to perform such function within the State of Texas.

This committee has no authority to consider whether A would be engaged in the unauthorized practice of law, for such matter much be answered by the Unauthorized Practice Committee.  A is stated not to be licensed in Texas, but this is not necessarily controlling since out-of-state attorneys are in some instances permitted to perform what amounts to the practice of law within the state without being licensed, and whether the activity in question by A falls within such exception or not is a question for the Unauthorized Practice Committee.

To the extent that A is authorized to perform the activity in question in Texas and is doing so, a forwarding fee may ethically be paid to him under Texas Canon 31; and to the extent that A is performing a legal function in Texas which he is unauthorized to do, a forwarding fee may not ethically be paid to him in a matter which is not within the scope of the second sentence of Canon 31.

If it is determined by the Unauthorized Practice Committee that the conduct in question by A constitutes the unauthorized practice of law, Canon 43 may be involved where a lawyer aids such person to practice law without authority, for such aid could be in the form of dividing legal fees with one not authorized to practice law.(9-0.)