Opinion 493
Question Presented
[PEC No. 93-3]
Do the Texas Disciplinary Rules of Professional Conduct permit a Texas attorney to establish a Texas Registered Limited Liability Partnership ("LLP") with persons who are not licensed attorneys but who are licensed professionals in their fields under which the attorney and the other licensed professionals would share contiguous office space and share expenses, overhead and revenue from common clients?
A licensed Texas attorney with a private practice focusing on business related areas (transactional mattersΧcontracts, property, oil and gas) wishes to expand the range of services offered to clients. The attorney proposes to establish an LLP with professional engineers, accountants/bookkeepers and persons providing land related services who would be expected to complement the attorney's practice. It is proposed that the attorney and these professionals, as partners in the LLP, would share contiguous office space and share expenses, overhead and revenue from common clients.
The Texas Disciplinary Rules of Professional Conduct (the "Disciplinary Rules") do not prohibit an attorney from sharing office space and expenses with non-attorneys. An attorney in such arrangement is required to comply with all requirements of the Disciplinary Rules, including but not limited to the rules requiring preservation of clients' confidential information (Rule 1.05 [FN1]), rules prohibiting conflicts of interest (Rules 1.06, 1.07 and 1.08), and rules restricting communications concerning a lawyer's practice (Rules 7.01, 7.02, 7.03, and 7.04).
However, Rule 5.04(b) provides that "[a] lawyer shall not form a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law." This rule was not modified by the enactment of legislation authorizing the establishment of LLPs. Since the proposed LLP would be a type of partnership and one of the activities of the partnership would be the performance of legal services, a lawyer would violate Rule 5.04(b) by entering into an LLP arrangement with non-lawyers.
Moreover, any arrangement that involved sharing legal services income with non-attorneys would violate Rule 5.04(a), which provides, with exceptions not here relevant, that "[a] lawyer or law firm shall not share or promise to share legal fees with a non-lawyer. . . ." Since the proposed arrangement would involve the sharing of fees for legal services with non-lawyers, the lawyer would violate Rule 5.04(a) by entering into such an arrangement. The fact that the non-lawyers in the arrangement are professionals subject to the licensing requirements of their professions would not make the arrangement permissible for the lawyer.
Under the Disciplinary Rules, a lawyer may not establish an LLP or other partnership with one or more non-lawyer professionals if one of the activities of the LLP or other partnership would be to provide legal services. In addition, a lawyer may not enter into an arrangement under which fees for the lawyer's legal services would be shared with non-lawyer professionals with whom the lawyer shares office space and expenses.
FN1 All citations to Rules are to the provisions of the Texas Disciplinary Rules of Professional Conduct as currently in effect.
Bluebook Citation
Tex. Comm. On Professional Ethics, Op. 493 (1994)