It’s on the In-House

TDRPC Rule 5.05(a)(2) provides that a lawyer shall not “assist a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law.” So, does this provision prohibit ABC’s in-house attorneys from providing legal services to customers of ABC under the plan described above?

Opinion 707 (May 2025) of the Professional Ethics Committee for the State Bar of Texas (PEC) concludes that a “for-profit company owned in part by nonlawyers engages in the unauthorized practice of law if it provides its customers the option of retaining the company’s full-time lawyer-employees at ‘actual cost’ on matters unrelated to the company’s interests.” Based on the opinion, ABC’s in-house attorneys would violate Rule 5.05(a)(2) by assisting ABC in the unauthorized practice of law under the proposed plan, regardless of the amount of compensation received by ABC for the legal services. The correct answer is D.

Opinion 707 is careful to point out that the “opinion is limited to the scenario described in the assumed facts, whereby the [c]ompany proposes to offer its own customers the option of retaining the [c]ompany’s lawyer-employees regarding legal matters unconnected to the [c]ompany’s interests.” The opinion concludes, for example, that “a nonprofit corporation does not engage in the unauthorized practice of law by allowing its attorney-employees to provide legal services to third parties when doing so serves the mission of the nonprofit.”

Opinion 707 also addresses TDRPC Rule 5.04(a), which, with limited exceptions not applicable here, provides that a “lawyer or law firm shall not share or promise to share legal fees with a non-lawyer.” On that topic, the opinion finds that a “lawyer-employee of a for-profit company violates the prohibition against sharing fees with nonlawyers if the corporate employer receives fees or other economic benefit more than the actual cost of offering customers the option of retaining the lawyer-employee.”

For a more thorough discussion of these issues, readers are encouraged to review PEC Opinion 707, which is available at legalethicstexas.com/resources/opinions/opinion-707. And for more Ethics Question of the Month columns, go to legalethicstexas.com/ethics-question-of-the-month.