Innovation of Note
Texas exempts self-help books and software from Unauthorized Practice of Law.
On October 24, 2022 the Texas Supreme Court requested the Texas Access to Justice Commission examine and propose modifications to existing rules to allow paraprofessionals to provide limited direct legal services.
Change Log
Differences from ABA Model Rules
| Rule 1.2(c) Limited Scope | Significant Changes |
| Rule 5.4(a) Fee-Sharing | Significant Changes |
| Rules 5.4(b)-(d) Non-Lawyer Ownership | Significant Changes |
| Rule 5.5. Unauthorized Practice of Law | Significant Changes |
| Rule 5.7 Law Related Services | Does Not Have |
| Rule 6.5 Limited Scope | Does Not Have |
| Rule 7.2(b) Lawyer Referral | Does Not Have |
| Cloud Computing Advisory | Yes |
| Technology Competency Rules | Yes |
ABA Rule 1.2(c) (Limited Scope)
Rule 1.02.
Scope and Objectives of Representation
(b) A lawyer may limit the scope, objectives and general methods of the representation if the client consents after consultation.
Relevant Comments:
4. The scope of representation provided by a lawyer may be limited by agreement with the client or by the terms under which the lawyer’s services are made available to the client. For example, a retainer may be for a specifically defined objective. Likewise, representation provided through a legal aid agency may be subject to limitations on the types of cases the agency handles. Similarly, when a lawyer has been retained by an insurer to represent an insured, the representation may be limited to matters related to the insurance coverage. The scope within which the representation is undertaken also may exclude specific objectives or means, such as those that the lawyer or client regards as repugnant or imprudent.
5. An agreement concerning the scope of representation must accord with the Disciplinary Rules of Professional Conduct and other law. Thus, the client may not be asked to agree to representation so limited in scope as to violate Rule 1.01, or to surrender the right to terminate the lawyer’s services or the right to settle or continue litigation that the lawyer might wish to handle differently.
6. Unless the representation isterminated as provided in Rule 1.15, a lawyer should carry through to conclusion all matters undertaken for a client. If a lawyer’s representation is limited to a specific matter or matters, the relationship terminates when the matter has been resolved. If a lawyer has represented a client over a substantial period in a variety of matters, the client may sometimes assume that the lawyer will continue to serve on a continuing basis unless the lawyer gives notice to the contrary. Doubt about whether a client-lawyer relationship still exists should be clarified by the lawyer, preferably in writing, so that the client will not mistakenly suppose the lawyer is looking after the client’s affairs when the lawyer has ceased to do so. For example, if a lawyer has handled a judicial or administrative proceeding that produced a result adverse to the client but has not been specifically instructed concerning pursuit of an appeal, the lawyer should advise the client of the possibility of appeal before relinquishing responsibility for the matter.
Modified By:
In re Mabray, 355 S.W.2d 16 (Tex. App. 2010) (state collaborative law statute did not invalidate “cooperative law” agreement permitting lawyers for divorcing spouses to continue representing them if proceedings became contested).
ABA Rule 5.4(a) (Fee-sharing)
Rule 5.04. Professional Independence of a Lawyer
(a) A lawyer or law firm shall not share or promise to share legal fees with a non-
lawyer, except that:
(1) an agreement by a lawyer with the lawyer’s firm, partner, or associate, or a lawful court order,may provide for the payment of money, over a reasonable period of time, to the
Lawyer’s estate to or for the benefit of the
Lawyer’s heirs or personal representatives, beneficiaries, or former
spouse, after the lawyer’s death or as otherwise provided by law or
court order.
(2) a lawyer who undertakes to complete unfinished legal business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation which fairly
represents the services rendered by the deceased
lawyer; and
(3) a lawyer or law firm may include non-lawyer employees in a retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement
Relevant Comments:
1. The provisions of Rule 5.04(a) express traditional limitations on sharing legal fees with nonlawyers. The principal reasons for these limitations are to prevent solicitation by lay persons of clients for lawyers and to avoid encouraging or assisting nonlawyers in the practice of law. See Rules 5.04(d), 5.05 and 7.03. The same reasons support Rule 5.04(b).
2. The exceptions stated in Rule 5.04(a) involve situations where the sharing of legal fees with a nonlawyer is not likely to encourage improper solicitation or unauthorized practice of law. For example, it is appropriate for a law firm agreement to provide for the payment of money after the death of a lawyer, or after the establishment of a guardianship for an incapacitated lawyer, to the estate of or to a trust created by the lawyer. A court order, such as a divorce decree, may provide, when appropriate, for the division of legal fees with a nonlawyer. Likewise, the inclusion of a secretary or nonlawyer office administrator in a retirement plan to which the law firm contributes a portion of its profits or legal fees is proper because this division of legal fees is unlikely to encourage improper solicitation or unauthorized practice of law.
3. Rule 5.04(a) forbids only the sharing of legal fees with a nonlawyer and does not necessarily mandate that employees be paid only on the basis of a fixed salary. Thus, the payment of an annual or other bonus does not constitute the sharing of legal fees if the bonus is neither based on a percentage of the law firm’s profits or on a percentage of particular legal fees nor is given as a reward for conduct forbidden to lawyers. Similarly, the division between lawyer and client of the proceeds of a settlement judgment or other award in which both damages and attorney fees have been included does not constitute an improper sharing of legal fees with a nonlawyer. Reimbursement by a lawyer made to a bona fide or pro bono legal services entity for its reasonable expenses in connection with the matter referred to or being handled by the lawyer does not constitute a division of legal fees within the meaning of Rule 5.04.
Modified By:
Tex. Ethics Op. 592 (2010) (may not share fees with suspended lawyer who refers client).
Texas Ethics Op. 568 (2006) (“a lawyer may share a contingent fee with a suspended or disbarred lawyer if the fee-sharing agreement existed before the suspension or disbarment and [the] lawyer fully performed all work in the matter before the suspension or disbarment”).
ABA Rule 5.4(b- d) Non-lawyer ownership
Rule 5.04. Professional Independence of a Lawyer
…
(d) A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit, if:
(1) a nonlawyer owns any interest therein, except that a fiduciary representative of the estate of
A lawyer may hold the stock or interest of the lawyer for a reasonable time during administration;
(2) a nonlawyer is a corporate director or officer thereof; or
(3) a nonlawyer has the right to direct or control the professional judgment of a lawyer.
Relevant Comments:
4. Because the lawyer-client relationship is a personal relationship in which the client generally must trust the lawyer to exercise appropriate professional judgment on the client’s behalf, Rule 5.04(c) provides that a lawyer shall not permit improper interference with the exercise of the lawyer’s professional judgment solely on behalf of the client. The lawyer’s professional judgment should be exercised only for the benefit of the client,free of compromising influences and loyalties. Therefore, under Rule 5.04(c) a person who recommends, employs, or pays the lawyer to render legal services for another cannot be permitted to interfere with the lawyer’s professional relationship with that client. Similarly, neither the lawyer’s personal interests, the interests of other clients, nor the desires of third persons should be permitted to dilute the lawyer’s loyalty to the client.
5. Because a lawyer must always be free to exercise professional judgment without regard to the interests or motives of a third person, the lawyer who is employed or paid by one to represent another should guard constantly against erosion of the lawyer’s professional judgment. The lawyer should recognize that a person or organization that pays or furnishes lawyers to represent others possesses a potential power to exert strong pressures against the independent judgment of the lawyer. The lawyer should be watchful that such persons or organizations are not seeking to further their own economic, political, or social goals without regard to the lawyer’s responsibility to the client. Moreover, a lawyer employed by an organization is required by Rule 5.04(c) to decline to accept direction of the lawyer’s professional judgment from any nonlawyer in the organization.
6. Rule 5.04(d) forbids a lawyer to practice with or in the form of a professional corporation or association in certain specific situations where erosion of the lawyer’s professional independence may be threatened. The danger of erosion of the lawyer’s professional independence sometimes may exist when a lawyer practices with associations or organizations not covered by Rule 5.04(d). For example, various types of legal aid offices are administered by boards of directors composed of lawyers and nonlawyers, and a lawyer should not accept or continue employment with such an organization unless the board sets only broad policies and does not interfere in the relationship of the lawyer and the individual client that the lawyer serves. See Rule 1.13. Whenever a lawyer is employed by an organization, a written agreement that defines the relationship between the lawyer and the organization and that provides for the lawyer’s professional independence is desirable since it may serve to prevent misunderstanding as to their respective roles.
ABA Rule 5.5 (UPL)
Rule 5.05.
Unauthorized Practice of Law
A lawyer shall not:
(a) practice law in a jurisdiction where doing so violates the regulation of the legal
profession in that jurisdiction; or
(b) assist a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law.
Relevant Comments:
1. Courts generally have prohibited the unauthorized practice of law because of a perceived need to protect individuals and the public from the mistakes of the untrained and the schemes of the unscrupulous, who are not subject to the judicially imposed disciplinary standards of competence, responsibility and accountability.
2. Neither statutory nor judicial definitions offer clear guidelines as to what constitutes the practice of law or the unauthorized practice of law. All too frequently, the definitions are so broad as to be meaningless and amount to little more than the statement that “the practice of law”is merely whatever lawyers do or are traditionally understood to do. The definition of the practice of law is established by law and varies from one jurisdiction to another. Whatever the definition, limiting the practice of law to members of the bar protects the public against rendition of legal services by unqualified persons.
3. Rule 5.05 does not attempt to define what constitutes the “unauthorized practice of law”but leaves the definition to judicial development. Judicial development of the concept of “law practice”should emphasize that the concept is broad enough–but only broad enough–to cover all situations where there is rendition of services for others that call for the professional judgment of a lawyer and where the one receiving the services generally will be unable to judge whether adequate services are being rendered and is, therefore, in need of the protection afforded by the regulation of the legal profession.Competent professional judgment is the product of a trained familiarity with law and legal processes, a disciplined, analytical approach to legal problems,and a firm ethical commitment; and the essence of the professional judgment of the lawyer is the lawyer’s educated ability to relate the general body and philosophy of law to a specific legal problem of a client.
4. Paragraph (b) of Rule 5.05 does not prohibit a lawyer from employing the services of paraprofessionals and delegating functions to them. So long as the lawyer supervises the delegated work, and retains responsibility for the work, and maintains a direct relationship with the client, the paraprofessional cannot reasonably be said to have engaged in activity that constitutes the unauthorized practice of law. See Rule 5.03. Likewise, paragraph (b) does not prohibit lawyers from providing professional advice and instructions to nonlawyers whose employment requires knowledge of law. For example, claims adjusters, employees of financial institutions, social workers, abstracters, police officers, accountants, and persons employed in government agencies are engaged in occupations requiring knowledge of law; and a lawyer who assists them to carry out their proper functions is not assisting the unauthorized practice of law. In addition, a lawyer may counsel nonlawyers who wish to proceed pro se, since a nonlawyer who represents himself or herself is not engaged in the unauthorized practice of law.
5. Authority to engage in the practice of law conferred in any jurisdiction is not necessarily a grant of the right to practice elsewhere, and it is improper for a lawyer to engage in practice where doing so violates the regulation of the practice of law in that jurisdiction. However, the demands of business and the mobility of our society pose distinct problems in the regulation of the practice of law by individual states. In furtherance of the public interest, lawyers should discourage regulations that unreasonably impose territorial limitations upon the right of a lawyer to handle the legal affairs ofa client or upon the opportunity of a client to obtain the services of a lawyer of his or her choice.
Modified By:
Tex. Ethics Op. 597 (2010) (under Texas rule similar to pre-2002 version of Model Rule 5.5, lawyer does not assist in unauthorized practice of law by permitting out-of-state partners to do legal work intermittently in firm’s Texas office if partners do not establish continuous and systematic presence in state).
Brown v. Unauthorized Practice of Law Comm., 742 S.W.2d 34 (Tex. Ct. App. 1987) (contracting with others to represent them regarding claims for property damage or personal injury constitutes practice of law)
Green v. Unauthorized Practice of Law Comm., 883 S.W.2d 293 (Tex. Ct. App. 1994) (relying on statutory definition of “unauthorized practice” that includes “rendering of any service requiring the use of legal skill or knowledge”)
In re McDaniel, 232 B.R. 674 (Bankr. N.D. Tex. 1999) (nonlawyer petition preparer gave legal advice, applied statutes, rules, and information from publications to clients’ situations, selected how creditors would be treated in each case, gave advice regarding reaffirmations, and contacted bankruptcy clerks’ offices on clients’ behalf)
Unauthorized Practice of Law Comm. v. Jansen, 816 S.W.2d 813 (Tex. Ct. App. 1991) (public insurance adjusters not engaged in unauthorized practice of law by measuring and documenting first-party claims under property policies, presenting claims to insurers, discussing claims with insurer’s representatives, and advising clients as to whether insurer’s valuations of claims were accurate; adjusters’ activities did not involve negotiating with insurers about coverage or settlement)
Unauthorized Practice of Law Comm. v. Parsons Tech. Inc., 1999 WL 47235 (N.D. Tex.) (software package that purported to select and customize legal documents for users based on their responses to specific questions constituted unauthorized practice of law under Texas law), vacated, 179 F.3d 956, 15 Law. Man. Prof. Conduct 314 (5th Cir. 1999) (lifting injunction against sale of legal software after Texas legislature changed unauthorized practice statute to permit self-help legal materials and software that carry disclaimer).
Other Definitions:
Texas
TEXAS STATUTES AND CODES. GOVERNMENT CODE. TITLE 2. JUDICIAL BRANCH.
SUBTITLE G. ATTORNEYS. CHAPTER 81. STATE BAR. SUBCHAPTER G. UNAUTHORIZED
PRACTICE OF LAW
§81.101. Definition.
(a) In this chapter the “practice of law” means the preparation of a pleading or other document
incident to an action or special proceeding or the management of the action or proceeding on behalf of a client before a judge in court as well as service rendered out of court, including the giving of advice or the rendering of any service requiring the use of legal skill or knowledge, such as preparing a will, contract, or other instrument, the legal effect of which under the facts and conclusions involved must be carefully determined.
(b) The definition in this section is not exclusive and does not deprive the judicial branch of the power and authority under both this chapter and the adjudicated cases to determine whether other services and acts not enumerated may constitute the practice of law.
(c) In this chapter, the “practice of law” does not include the design, creation, publication, distribution, display, or sale, including publication, distribution, display, or sale by means of an Internet web site, of written materials, books, forms, computer software, or similar products if the products clearly and conspicuously state that the products are not a substitute for the advice of an attorney. This subsection does not authorize the use of the products or similar media in violation of Chapter 83 and does not affect the applicability or enforceability of that chapter.
§83.001. Prohibited Acts.
(Current)
(a) A person, other than a person described in Subsection (b), may not charge or receive, either directly or indirectly, any compensation for all or any part of the preparation of a legal instrument affecting title to real property, including a deed, deed of trust, note, mortgage, and transfer or release of lien.
(b) This section does not apply to:
(1) an attorney licensed in this state;
(2) a licensed real estate broker or salesman performing the acts of a real estate broker pursuant to The Real Estate License Act (Article 6573a, Vernon’s Texas Civil Statutes); or
(3) a person performing acts relating to a transaction for the lease, sale, or transfer of any mineral or mining interest in real property
.
ABA Rule 5.7 (Law Related Services)
Does not have
ABA Rule 6.5 (Court annexed/Non-profit limited scope)
Does not have.
Note: Texas is in the process of reviewing this.
ABA Rule 7.2 (Lawyer referral)
Rule 7.03. Prohibited Solicitations and Payments
(b) A lawyer shall not pay, give, or offer to pay or give anything of value to a person not licensed to practice law for soliciting prospective clients for, or referring clients or prospective clients to, any lawyer or firm, except that a lawyer may pay reasonable fees for advertising and public relations services rendered in accordance with this Rule and may pay the usual charges of a lawyer referral service that meets the requirements of Occupational Code Title 5, Subtitle B, Chapter 952.
…
(e) A lawyer shall not participate with or accept referrals from a lawyer referral service unless the lawyer knows or reasonably believes that the lawyer referral service meets the requirements of Occupational Code Title 5, Subtitle B, Chapter 952
Relevant Comments:
4. Rule 7.03(b) does not prohibit a lawyer from paying standard commercial fees for advertising or public relations services rendered in accordance with these Rules. In addition, a lawyer may pay the fees required by a lawyer referral service that meet the requirements of Occupational Code Title 5, Subtitle B, Chapter 952. However, paying, giving, or offering to pay or give anything of value to persons not licensed to practice law who solicit prospective clients for lawyers has always been considered to be against the best interest of both the public and the legal profession. Such actions circumvent these Rules by having a non-lawyer do what a lawyer is ethically proscribed from doing. Accordingly, the practice is forbidden by Rule 7.03(b). As to payments or gifts of value to licensed lawyers for soliciting prospective clients, see Rule 1.04(f).
…
7. References to “a lawyer” in this and other Rules include lawyers who practice in law firms. A lawyer associated with a firm cannot circumvent these Rules by soliciting or advertising in the name of that firm in a way that violates these Rules. See Rule 7.04(e).
Cloud Computing
Texas Ethics Opinion 680 https://www.legalethicstexas.com/Ethics-Resources/Opinions/Opinion-680
Technology Competency
Maintaining Competence
8. Because of the vital role of lawyers in the legal process, each lawyer should strive to become and remain proficient and competent in the practice of law, including the benefits and risks associated with relevant technology. To maintain the requisite knowledge and skill of a competent practitioner, a lawyer should engage in continuing study and education. If a system of peer review has been established, the lawyer should consider making use of it in appropriate circumstances. Isolated instances of faultyconduct or decision should be identified for purposes of additional study or instruction.