FIXING FEES¾ MINIMUM FEE SCHEDULES¾ SOLICITATION. Habitual charging of fees less than those established in a recommended minimum fee schedule does not violate the Canon regarding fixing fees but might be evidence of unethical solicitation.
Canons 11, 24, 25; A.B.A. Canon 12.
Is it a violation of ethics to habitually undercharge below the county or state minimum fee schedule?
Canon 12 of the American Bar Association, adopted in 1908, provides that "in fixing sees, lawyers should avoid charges which overestimate their advice and services, as well as those which undervalue them," but recognizes that a client's "poverty may require a less charge, or even none at all." One guide or factor that may properly be considered under this Canon is "the customary charges of the Bar for similar services." The following paragraph was added to Canon 12 in 1937:
"In determining the customary charges of the Bar for similar services, it is proper for a lawyer to consider a schedule of minimum fees adopted by a Bar Association, but no lawyer should permit himself to be controlled thereby or to follow it as his sole guide in determining the amount of his fee."
A.B.A Opinion 190 (February 17, 1939) held that it is only when the fees fixed by a lawyer are clearly excessive that the profession has a right to discipline him, and that, although voluntary minimum fee schedules are desirable, "a lawyer has the right to contract for any fee he chooses so long as it is not clearly excessive."
Section 4 of the State Bar Act of Texas, Article 320a-1, which was adopted in 1939, and which directed the Supreme Court of Texas to propose rules for the State Bar and to promulgate those rules approved by majority vote of the Bar, specifically provides:
"Nothing herein shall be construed as authorizing the Court to prescribe fees to be charged for legal services by any attorney."
Pursuant to such Act, the State Bar Rules, including the Canons of Ethics, were approved in 1940 by the Supreme Court, submitted to and approved by the Bar, and duly promulgated by the Supreme Court. Canon 11 of the Canons of Ethics so adopted appears to have been copied almost verbatim from A.B.A Canon 12, but modified to conform to A.B.A Opinion 190 and to the above quoted provision of the State Bar Act in that it omits the A.B.A. provision regarding charges which "undervalue" a lawyer's services and omits the A.B.A. paragraph pertaining to minimum fee schedules.
In 1961, A.B.A. Opinion 190 was partially overruled and modified by A.B.A. Opinion 302 (November 27, 1961), reading as follows:
"The establishment of suggested or recommended minimum fee schedules by bar associations is a thoroughly laudable activity. The evils of fee cutting ought to be apparent to all members of the Bar. Ordinarily fees should be arrived at by consideration of the factors enumerated in Canon 12, which, among other things, admonishes lawyers not to overestimate or to undervalue their services. When members of the Bar are induced to render legal services for inadequate compensation, as a consequence the quality of the service rendered may be lowered, the welfare of the profession injured and the administration of justice made less efficient. For example. no lawyer should be put in the position of bidding competitively for clients. It is proper for the profession to combat such evils by suggested or recommended minimum fee schedules and other practices which have a tendency to discourage the rendering of services for inadequate compensation. Such schedules represent the judgment of the local or state bar association as to what constitutes the minima for reasonable charges for legal services, and should be so regarded by lawyers and the public in the community. Direct or indirect advertising by whatever means that a lawyer habitually charges less than reasonable or minimum fees would, of course, be objectionable.
Canon 12 provides that in fixing his fees, it is proper for a lawyer to consider a schedule of minimum fees adopted by a bar association, not alone but along with other considerations; however, it also provides that "no lawyer should permit himself to be controlled thereby or to follow it as his sole guide in determining the amount of the fee." While under the latter clause this Committee has consistently held that minimum fee schedules can only be suggested or recommended and cannot be made obligatory (Opinion 28), it is equally true that the habitual charging of fees less than those established in suggested or recommended minimum fee schedules, or the charging of such fees without proper justification, may be evidence of unethical conduct, and the Committee accordingly so holds, anything to the contrary in Opinion 190 being hereby overruled.
The State Bar of Texas has never adopted a mandatory minimum fee schedule. However, it published and distributed to members of the Bar a Recommended Minimum Fee Schedule in the early part of 1961, prior to release of A.B.A. Opinion 302. The introduction to such schedule was later revised to include the following:
"If any lawyer in other than charity cases habitually charges less than the applicable minimum fee (of the local or district bar association) he may be guilty of solicitation of business on the basis of price. This is a violation of the canons of ethics."
This committee has not previously rendered an opinion on the question here presented. We believe that, insofar as it pertains to the American Bar Canons, the inquiry is answered by A.B.A. Opinion 302 quoted above. However, we cannot adopt that opinion as our interpretation of the Texas Canons in view of the obvious, and apparently intentional, omission from Texas Canon 11 of the provision against "underevaluation" of lawyer's services found in A.B.A. Canon 12 and the lack of any reference in Texas Canon 11 to minimum fee schedules.
In the first place, A.B.A. Opinion 302 holds that "minimum fee schedules can only be suggested or recommended and cannot be made obligatory." Although this committee's duties include interpretation of the Canons and rendering opinions concerning proper professional conduct, any quest on as to the validity of an obligatory minimum fee schedule "can" or "cannot" be made obligatory would be beyond the scope of our proper functions. It is clear to us, however, that the State Bar of Texas has not purported to promulgate an obligatory, minimum fee schedule; it has published a Recommended Minimum Fee Schedule, stating in the Foreword that it is "advisory" only. We believe that the various minimum fee schedules adopted by local and district bar associations in this State are also advisory only; but if there are some which appear to be obligatory, we do not pass upon their validity.
A.B.A. Opinion 302 holds further that "the habitual charging of fees less than those established in suggested or recommended minimum fee schedules may be evidence of unethical conduct." But, we must ask, evidence of violation of which Canon? The Canon pertaining to fixing fees, or some other Canon? We do not find in Texas Canon 11 any prohibited conduct which would be evidenced by habitual undercharging. In our opinion, the habitual charging of fees less than those established in suggested or recommended minimum fee schedules would not violate Texas Canon 11 and would not be evidence of violation of any provision of Texas Canon 11. It simply does not make habitual undercharging unethical.
Turning, then, to the other Texas Canons for possible prohibitions of habitual undercharging, we find none except Canons 24 and 25 which prohibit solicitation of professional employment and seeking out clients. Conceivably, the habitual charging of fees less than the customary charges could be used as a method of soliciting and seeking out clients. It is also conceivable, however, that the habitual charging of fees less than those set forth in a recommended minimum fee schedule would not constitute, or even be evidence of, solicitation, as, for example, in a community where all or most lawyers customarily charge less than the scheduled fees.
Perhaps some lawyers will feel that, if the above is a correct interpretation, revision of our Texas Canons is in order. Others may be opposed to revision in general, or to minimum fee schedules in particular. As for this committee, we must interpret the language we find in the present Canons, and refrain from attempting to legislate. (9-0.)