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Opinion #: 484
Cite: Tex. Comm. on Professional Ethics, Op. 484, V. 57 Tex. B.J. 202 (1994)
Date: February 1994
A retail credit card company has referred debtors = account files and/or information regarding each debtor, to an attorney for a collection letter. A duplicate of each file and/or the information has been retained by either an outside collection agency or by the retail credit card company's in-house collection department but each has been instructed not to actively work on the files unless (a) the debtor contacts in response to the attorney's letter; or (b) over 45 days expires from the date of the attorney's letter to the individual debtor.
The attorney's letter does not appear to violate the state or federal "Fair Debt Collection Act" but does advise the debtor that the attorney has recommended to his client to "pursue any and all legal proceedings available to it in order to collect this debt" as well as to seek to recover "reasonable attorney's fees and court costs."
This letter will be the attorney's only contact with debtor's accounts.
1. Since the attorney is not truly collecting the account, is use of the attorney's letterhead a potential for the unauthorized practice of law?
2. Does the attorney's letterhead appear "deceptive" since some debtors may believe the attorney is actually handling the account?
3. If the attorney is an in-house attorney for the creditor, will such a relationship satisfy the State Bar rules?
Opinion #: 483
Cite: Tex. Comm. on Professional Ethics, Op. 483, V. 57 Tex. B.J. 200 (1994)
Date: February 1994
A professional corporation has one shareholder, attorney X. The law practice is almost exclusively personal injury and worker's compensation practice. The professional corporation enters into contingent fee contracts with the clients, which contracts comply with Rule 1.04. This professional corporation makes loans to clients, although not currently to workers compensation clients, for reasonably necessary medical and living expenses. Many of the attorney's clients are referred to medical doctors for examination and diagnostic work. Attorney X also owns a regulated loan company which makes loans to the general public.
A doctor approaches attorney X about jointly purchasing medical equipment and facilities. The equipment and facilities would be used in providing medical services to some of attorney X's law practice clients. Attorney X would receive a share of the profits earned by the use of the medical equipment and facilities.
1. Whether the professional corporation may charge interest on loans extended to client?
2. Whether the professional corporation may refer clients to the regulated loan company owned by attorney X to obtain loans; and, if so, is disclosure by the professional corporation or attorney X required?
3. Whether ownership of the medical equipment and facilities is a conflict of interest for attorney X?
4. If such ownership is a conflict of interest, is disclosure by the professional corporation or attorney X required?
Opinion #: 482
Cite: Tex. Comm. on Professional Ethics, Op. 482, V. 57 Tex. B.J. 200 (1994)
Date: February 1994
An insurance company retained a law firm to defend a civil suit brought against an insured and two of the insured's former employees. The law firm solicited discovery from each of the three defendants. As part of the discovery process, the firm tape-recorded various conversations between the firm and the two former employees. Tape-recording such conversations is a standard operating procedure for the firm.
During the telephone conversations, one of the former employees indicated hostility toward his former employer and expressed dissatisfaction with the manner in which the former employer had treated him. The ex-employee stated his refusal to sign his completed discovery. He indicated that he was arranging for his own defense counsel and instructed the firm to withdraw immediately from his defense. The ex-employee also suggested that his recollection of facts might change in the absence of some type of "financial reward" from his former employer.
The firm immediately forwarded a Motion for Withdrawal to the ex-employee, a transcript of the telephone conversation in which the former employee discussed his desire for a financial reward, and a reminder that perjury charges might possibly arise from his failure to tell the truth during sworn testimony. The firm tells the ex-employee that his transcript would remain confidential "at that point in time."
1. May the law firm release the contents of the transcript to either the insurer, the insured, or the other employee? If so, under what circumstances?
2. Has a conflict of interest arisen sufficient to require the firm to withdraw from its defense of the employer?
Opinion #: 481
Cite: Tex. Comm. on Professional Ethics, Op. 481, V. 57 Tex. B.J. 87 (1994)
Date: January 1994
Under the Texas Disciplinary Rules of Professional Conduct, may a law firm participate in an arrangement under which clients are offered the opportunity to pay for part or all of legal services by borrowing from a for-profit finance corporation, not owned by any participating lawyer, which pays the lawyer at least 90% of the amount borrowed by the client?
Opinion #: 480
Cite: Tex. Comm. on Professional Ethics, Op. 480, V. 56 Tex. B.J. 705 (1993)
Date: June 1991
Attorney A was retained by Defendant, a corporation, to defend it against Involuntary Chapter 7 Bankruptcy Petition filed by Plaintiff, a corporation.
Plaintiff alleged Defendant was not paying its debts as they came due. Plaintiff also claimed that pursuant to a pre-litigation contract, it was entitled to funds received by Defendant in settlement of a state court suit filed by Defendant against a third party. Plaintiff further alleged that the transfer of such funds by Defendant to one of Defendant's other creditors was a preferential transfer which could be recovered in bankruptcy pursuant to 11 U.S.C. Section 547.
Plaintiff was the sole petitioning creditor. Ordinarily three creditors are required to join in filing an involuntary petition. Plaintiff alleged that Defendant's conduct amounted to trick, artifice, or scam and that therefore Plaintiff could, as a sole petitioning creditor, place Defendant into an involuntary bankruptcy.
At the conclusion of trial, the Court denied the involuntary Petition finding, inter alia, that the transfer of funds by Defendant to the third party did not constitute trick, artifice, or scam and that Plaintiff had an adequate state court remedy it could pursue. Plaintiff did not appeal the bankruptcy court's decision.
Plaintiff then filed a state court lawsuit against the party who had received the settlement funds and a separate suit against Defendant. Depositions were taken by Plaintiff in those suits, which are still pending. Also, Attorney A is not representing and has not represented Defendant in state court suit.
Six months after the bankruptcy court's ruling, Plaintiff filed a Motion for Relief from Order Denying Involuntary Petition on grounds other than those for which this opinion is sought.
Defendant consulted Attorney A regarding the filing of a response to Plaintiff's Motion from Order Denying Involuntary Petition. Defendant-Client revealed at this time that the settlement funds paid to the third party had been returned to Defendant's president and placed in a "Trust." The "Trust" is drafted so that the president and sole shareholder of Defendant corporation is the grantor, trustee and beneficiary along with such other parties, individuals, companies, charities, or organizations as the trustee may choose.
At the time of the bankruptcy suit trial Attorney A had no knowledge that the funds had been returned to the Defendant's president for placement on this "Trust." There was, therefore, no evidence presented regarding the "Trust" at the time of the trial. Attorney A is of the opinion that if the bankruptcy court had known of this transaction, then its decision might have been different.
Attorney A is not representing the Defendant in the Motion for Relief from the Order Denying Involuntary Petition. Defendant-Client has invoked and has not released the Attorney from the attorney-client privilege.
1. Does Attorney A have an obligation to reveal to the bankruptcy court the fact that the settlement funds were returned by the third party to the Defendant to be placed in what purports to be a Trust?
2. Is Attorney A prevented by the attorney-client privilege from revealing the transaction to the bankruptcy court?
Opinion #: 479
Cite: Tex. Comm. on Professional Ethics, Op. 479, V. 56 Tex. B.J. 293 (1993)
Date: August 1991
A law firm has obtained a loan from a bank. The firm has secured the loan by providing a security interest in the firm's accounts receivable. The bank has subsequently requested that the law firm provide the names of the firm's clients as well as the amounts which those clients owe.
Whether the Texas Disciplinary Rules of Professional Conduct prohibit the disclosure of: (I) the names of the firm's clients, and (ii) the amounts owed by each client.
Opinion #: 478
Cite: Tex. Comm. on Professional Ethics, Op. 478, V. 56 Tex. B.J. 292 (1993)
Date: June 1991
Lawyers A, B, C, and D agree to practice law together within a single, contiguous office space as "Law Offices of A and B." The organization and practice of the "Law Offices of A and B" is set up as follows:
1. Each attorney represents to his clients and the public that the attorney is a member of the firm of A and B through the use of pleadings, business cards, letterheads and the like.
2. Each attorney recognizes that because of such representation as opposed to merely sharing an office space as independent practitioners, each attorney is vicariously liable for the other attorneys' professional acts and/or omission and has consented to disclosing potential difficulties concerning representation of a client to all participating attorneys.
3. All participating attorneys are insured for legal negligence through a common insurance policy in the name of "Law Offices of A and B" identifying each participating attorney as a member of the firm, and with each attorney paying a pro-rata share of the premiums.
4. Each attorney maintains an autonomous practice with independent bank accounts, trust accounts, and books and records.
5. Each attorney has his own clientele from whom he is, in most circumstances, solely responsible, but there is frequent cooperation or participation between two or more attorneys on cases warranting or requiring such involvement. All attorneys regularly seek and receive informal advice from the other members of the firm regarding the handling of current client matters.
6. There is no pooling of the income generated by the several attorneys from their individual rendition of legal services, nor is there a sharing of the net profits.
7. Each attorney separately bills for legal services rendered although each attorney may pay a fee to another attorney within the firm for referral or for hourly work on behalf of the attorney's client. Each attorney filed his own tax return reflecting such attorney's operations.
8. The attorney-client contracts usually refer to the retention of "attorney C of the Law Firm of A and B" or the "Law Offices of A and B" or merely "attorney C."
9. Common assets are leased from a non-professional corporation the shares of which are exclusively owned by the participating attorneys and the common liabilities such as office rent are incurred by the non-professional corporation, which has two common employees leased to each attorney member and their staff and all other staff personnel are employed directly by the attorney for whom they work. The variable expenses such as long distance, copying expense, incurred by the non-professional corporation is paid for by each participating attorney on the basis of personal usage while fixed expenses incurred by the non-professional corporation such as rent and equipment leases are paid by the participating attorney on a per capita basis. Shareholders make majority rule decisions regarding the purchase of new assets and services and the "Law Office of A and B" has substantial library and computer research facilities.
10. The participating attorneys of "A and B" do not have any written agreement concerning the relationship other than the By-Laws of the non-professional corporation.
11. Except for the addition of new attorneys, the relationship of the participating attorneys "A and B" has remained static for several years with no deviation from the purposeful holding out as a firm of attorneys associated in the practice of law.
1. Is the relationship of lawyers A, B, C, and D and their collective continuing holding out as attorneys associated in the practice of law consistent with Rule 7.04(d), Texas Disciplinary Rules of Professional Conduct?
Opinion #: 477
Cite: Tex. Comm. on Professional Ethics, Op. 477, V. 56 Tex. B.J. 292 (1993)
Date: June 1991
Attorney A is a licensed Texas attorney residing in Big Oil County. Although he has maintained his law license in active status, he is not presently engaged in the practice of law, being employed as a loan officer for a local bank. As a condition of his employment, Attorney A executed a standard conflicts of interest policy which prohibits him from accepting employment outside of his duties with the bank. In the ten years that he has been a licensed Texas attorney, he has never handled a criminal matter.
Attorney A is not a member of the Local Bar Association ("Association"). He received notice from the Association that his name had been placed on the list of attorneys to receive court appointments under a mandatory program of providing legal representation for indigent persons in criminal cases. The program, referred to as "the Plan" is administered by the Association and provides that "all attorneys licensed to practice law who reside in Big Oil County, Texas are required to defend indigent persons in criminal cases."
Five categories of exemptions are set out under the Plan. The exemptions are as follows: a) Attorneys who are over the age of fifty years as of October 1 of each year. b) Attorneys who have paid $400 for each year exemption is sought; a year is from October 1 through September 30. c) Attorneys who are exempt by law. d) Attorneys who are not required to pay the Texas Occupational Tax. e) Attorneys who establish that appointment would be hardship.
1. Would Attorney A be subject to disciplinary sanctions for refusing to accept the criminal appointment on competency grounds?
2. Does the Association have a duty to be fair to all attorneys by providing an exemption on competency grounds, or is it sufficient that attorneys in the county may be exempted from the Plan by paying a nominal fee?
Opinion #: 476
Cite: Tex. Comm. on Professional Ethics, Op. 476, V. 55 Tex. B.J. (1992)
Date: June 1991
An attorney is employed by a membership organization as a member of the organization's staff. The attorney is employed primarily to assist members of the organization in legal matters, but also is called on from time to time to provide counseling for the organization. The attorney does not provide counseling for the Board of Directors.
One of the options the attorney has in assisting organization members is to refer them to outside counsel, who are paid under a legal insurance policy that each member is insured under as a part of their dues payment. While the member's interest is to be provided access to the best legal counsel available, whenever necessary, the interest of the organization is to keep insurance claims down in order to ensure low premiums and thus low dues payment for its members. The organization does not instruct the attorney to limit the referrals nor does it interfere in any way with the judgment of the attorney in handling of member problems.
1. Does the attorney have a conflict of interest between the organization's interest and the interest of the individual members?
2. Does Rule 1.12 (organization as a client) supersede any arrangement the attorney may have had with the organization as to whose interest the attorney represents?
3. Is Comment 12 to Rule 1.06 affected when the payment by a third party consists of a salaried position with the third party?
Opinion #: 475
Cite: Tex. Comm. on Professional Ethics, Op. 475, V. 55 Tex. B.J. 882 (1992)
Date: June 1991
Under the following facts does an attorney who is representing a plaintiff in a case have to withdraw from the case when he learns that he may be called as a witness by the defendant?