The members of the State Bar Committee on the Texas Disciplinary Rules of Professional Conduct Committee have written commentary about specific rules that have been discussed throughout the public comment period.
The proposed changes to Rule 1.04 change the prohibited fee standard from "unconscionable" to "clearly excessive," which is the standard Texas had before 1990. It is not so high a standard that it allows a lawyer to renege on the lawyer's fiduciary responsibilities, and it is not so low as to create a risk that lawyers will face specious grievance filings (which would be the result with "unreasonable").
Rejection of inclusion of "expenses" in Rule 1.04 — The "unreasonable" standard in a disciplinary rule is problematic for all the reasons discussed in considering whether to use the "unreasonable" standard in evaluating attorney's fees. The TDRPC Committee believed that inserting "expenses" into the Rule could cause each attempt of a lawyer to recover expenses to be subject to a grievance, regardless of the standard. In addition to fiduciary law being sufficient to protect the client, ethics opinions consistently say that a lawyer who charges inappropriate expenses essentially increases his/her fee, causing the total to be subject to the new "clearly excessive" standard.
The elimination of the "preferably in writing" statement in Rule 1.04(c), as it is a practice pointer and not an enforceable rule. This statement is placed in the interpretive comments as advice to lawyers.
Regarding contingent fee contracts in paragraph (d), the conversion from a narrative to a list helped to clarify the requirements.
Representation of Adverse Parties by Government Lawyers (Rules 1.06 & 1.07) and "Revolving Door" Conflicts Standards
During the comment period on the Rules, some government lawyers expressed concern that neither the current rules nor the proposed rules regarding conflicts of interest and multiple representations (Rules 1.06 and 1.07) adequately recognize the authority (or the duty) of government lawyers to represent adverse parties.
In response to these concerns, the State Bar Board of Directors' Discipline and Client Attorney Assistance Program (DCAAP) Committee recommended that the proposed comment to Rule 1.06 be amended to include the following:
22. To the extent a government lawyer is authorized by law to represent a client or the public interest in circumstances in which a private lawyer would not be authorized to do so, these Rules do not abrogate that authority. See Preamble, ¶ 11.
This comment cites a paragraph of the Preamble to the Rules that acknowledges that the prohibitions of the Rules may have to give way to legal requirements imposed upon government lawyers.
Government lawyers have accepted this comment as an interim remedy for their concerns, pending further consideration of the issues by the Court.
New "Revolving Door" Conflicts Standards
Rule 1.10, which governs the potential conflicts that may arise when a government lawyer moves to private practice, or vice versa, and Rule 1.11, which governs employment issues for current and former adjudicatory officials and staff, have been clarified as follows:
General Criticisms of 1.06, 1.07, and 1.09
Criticisms of 1.06
Criticisms of 1.07
The relationship between a lawyer and a client is a fiduciary relationship, one in which the lawyer occupies the highest position of trust and confidence. Often a client is emotionally and financially dependent on his or her lawyer. When a lawyer has both a lawyer-client relationship and a sexual relationship with a client, problems arise in a variety of ways. For example, if the client is emotionally dependent on the lawyer, the lawyer may exploit the client and use the client's trust to the disadvantage of the client. A client may not have the financial ability to discharge a lawyer who makes unwanted sexual advances and may be afraid to say no. The lawyer's sexual relationship with a client may impair the lawyer's professional judgment and ability to represent the client objectively and competently. The dual relationships may blur the line between what is and is not a confidential communication, to the detriment of the client.
Recognizing these very real concerns, ABA Model Rule 1.08(j) prohibits sexual relations between lawyers and client. A majority of the states have rules that address sex with clients. Many other professions prohibit sexual relations with clients or patients. Examples include physicians, psychologists, social workers, counselors, marriage and family therapists, speech therapists, and massage therapists. Many educational institutions have policies and procedures that address this issue as well.
The ABA and most states recognize the need to have rules that specifically address sexual relations with clients. Such rules protect (a) clients by prohibiting behavior that can exploit the client or interfere with the lawyer's exercise of independent judgment on behalf of the client, (b) lawyers by providing rules that clearly establish when a lawyer-client relationship is not acceptable, and (c) the public by discouraging conduct that interferes with the administration of justice.
While Texas is one of the few jurisdictions that does not have a rule that specifically addresses lawyer-client sexual relations, clients still file grievances complaining of lawyer misconduct that arises out of sexual relations with their lawyers. The Chief Disciplinary Counsel's office still prosecutes such complaints under the rules that address neglect, fees, and conflicts. Clients can and do file lawsuits alleging breaches of fiduciary duty by their lawyers in such circumstances. And, of course, parties file motions in situations in which a lawyer has engaged in sexual relations with a client, a client's relatives, or others.
Because Texas has no specific rule, well-intentioned lawyers who are contemplating a sexual relationship with a client may search the rules and find no clear guidance. Instead, they are left to grapple with conflicts Rule 1.06 and to try to decide whether they can competently represent the client without impairment of the lawyer's professional judgment. Similarly, lawyers who have sexual relations with a client may assume that they can defend their conduct in a grievance setting because there is no rule~even though the absence of a specific rule does not automatically make the lawyer's conduct proper. Lawyers, clients, and disciplinary authorities benefit by having a rule that clearly sets forth what conduct is prohibited.
Thus, it is time for Texas lawyers to join the ranks of lawyers in other states and professionals in all states to approve a rule that addresses the issue of prohibited sexual relations. The proposed Texas rule strikes an appropriate balance between the views of those who advocate a complete ban on sexual relations between lawyers and clients and those who believe that there should be no Rule at all.
The Proposed Rule
Proposed rule contains three subparts with three prohibitions. Subpart (c) has generated considerable discussion; subparts (a) and (b) have not.
Subparts (a) and (b)
This Rule is similar, but not identical to, ABA Model Rule 1.8(j),
which provides that a lawyer "shall not have sexual relations with
a client unless a consensual sexual relationship existed between them
when the client-lawyer relationship commenced."
Under the proposed Texas rule, a lawyer may not have sexual relations with a client except in limited circumstances. Those limited circumstances are as follows:
a. The lawyer is married to a client.
b. The lawyer and the client are engaged in an on-going consensual sexual relationship that began before the representation. Compare with ABA 1.8(j) (a consensual sexual relationship).
But, the proposed Texas rule does not prohibit:
a. A sexual relationship with a former client (Proposed Rule 1.13. comment 5.);
b. A sexual relationship with a former prospective client if the lawyer has declined the representation (Proposed Rule 1.13. comment 5.);
c. A sexual relationship with a client of the lawyer's firm if the lawyer is not personally representing the client (4 Proposed Rule 1.13. comment 6.); or
d. A sexual relationship with the employee of a corporate client in certain circumstances (Proposed Rule 1.13, comment 7).
While a lawyer is prohibited from having sexual relations with a client the lawyer is personally representing, the lawyer is not prohibited from having sexual relations with a client of an affiliated lawyer if the lawyer "has no involvement in the performance of legal services for the client" and, among other things, does not oversee the representation of the client, instruct other lawyers regarding the representation, or set the fees for the representation. Proposed Rule 1.13, comment 6.
In the case of an organization, a client is deemed to be any individual who "oversees the representation or gives instructions to the lawyer on behalf of the organization." Rule 1.13, comment 7. Thus, Texas' proposed rule prohibits a lawyer from having sexual relations with a client representative who oversees or directs the representation but not with other persons associated with the organization.
Thus, if a lawyer wishes to commence a sexual relationship with a client, he or she can do so by terminating the lawyer-client relationship altogether or by referring the client to an affiliated lawyer provided the lawyer has no involvement in the provision or legal services to the client. Rule 1.13, comment 6.
Responses to Opponents of the Proposed Rule
The proposed rule has opponents who feel that the rule should prohibit sexual relations between lawyers and clients altogether and those who feel that there should be no rule at all.
Opponents who say that the Rule should prohibit any and
all sexual relations between lawyers and clients
These opponents of the proposed Rule apparently misunderstand the ABA rule. While it is true that ABA Rule 1.08(j), unlike the proposed Texas rule, does not explicitly state that the provision only applies to lawyers who personally represent a client, the imputation provision contained in ABA Rule 1.08(k) makes it clear that the ABA prohibited sexual relations rule only applies to a lawyer who personally represents the client, as opposed to affiliated lawyers. The imputation provision states: "While lawyers are associated in a firm, a prohibition in the foregoing paragraphs (a) through (i) that applies to anyone of them shall apply to all of them." Model Rule 1.08(k). Since the imputation provision does not apply to Rule 1.08(j), which is the ABA's prohibited sexual relations rule, the imputation provision does not apply to the ABA's prohibited sexual relations rule. In fact, comment 20 makes this clear: "The prohibition set forth in paragraph (j) is personal and is not applied to associated lawyers."
Moreover, every single state that flat out prohibits lawyer-client sex follows the ABA's lead. Those states do not impute the sexual relationship to an affiliated lawyer. If Texas imputed the sexual relationship of a lawyer to an affiliated lawyer, it would be the only state in the union to do so.
The client is not at risk if an affiliated lawyer handles the matter, even if the affiliated lawyer is taking over representation of a client with whom a member of the firm is having a sexual relationship. The affiliated lawyer is still subject to proposed rule 1.06(a)(2). If the affiliated lawyer's loyalty in the matter is to the other lawyer, rather than the client, then the affiliated lawyer cannot take on the representation either.
Just imagine the ramifications of having a rule that imputes a lawyer's sexual relationship to affiliated lawyers. When a prospective client comes to the firm, the conflicts check would have to include a request for information about whether any lawyer is in a sexual relationship with the prospective client. Whenever a lawyer wanted to commence a sexual relationship, he or she would have to run a conflicts check to see if the person was a client. At some point, reason must prevail.
Second, opponents complain that the proposed rule permits a lawyer to circumvent the rule by suggesting to a prospective client that they "date first" before the lawyer decides whether to represent the client. This is a somewhat far-fetched complaint. It seems unlikely that most lawyers would defer a decision on whether to represent the client until after a date or sexual encounter and, in fact, such conduct would probably violate subpart (a) of the proposed rule. Besides, the proposed rule does not imply that a lawyer may represent a client after one or more dates or sexual encounters. Instead, the rule provides that the exception applies when the lawyer and client have "engaged in an ongoing consensual sexual relationship," That suggests something more than a date or a short-term relationship. Indeed, the ABA uses the phrase "consensual sexual relationship" to include marriage, which supports the assumption that a consensual relationship is more than a casual, short-term fling. Any lawyer who is likely to go to such extremes to avoid the requirements of the rule is unlikely to worry about the rule at all.
Under their "date first" argument, opponents argue that the exception for an "ongoing consensual sexual relationship" ignores the concerns expressed in the comments such as concerns about exploitation of the client. Interestingly, they do not raise those concerns about the exception for lawyers and clients who are married-even though many "ongoing consensual sexual relationships" share much more in common with a marriage than with a date. Moreover, the Texas rule is arguably more restrictive than the ABA in that the ABA exception applies to "consensual sexual relationship" without any guidance as to how long the relationship had lasted as compared to the Texas rule, which does state that it has to be "on-going."
Third, the opponents contend that the exception for a lawyer and client engaged in an ongoing consensual relationship exposes the client to the potential problems that the rule was intended to address. While that may be true, both the proposed Texas comments and the ABA comments state that issues related to exploitation and client dependency are lessened when the consensual sexual relationship predated the lawyer-client relationship. Additionally, comment 3 of the proposed Texas rule cautions that, even when the lawyer-client relationship is not prohibited by the rule, "the lawyer should consider whether the lawyer's representation will violate or potentially lead to a violation of any other Rule." Proposed Texas Rule 1. 13, comment 3. See also ABA 1.8, comment 18.
Fourth, the persons who argue that sexual relations between a client and lawyer should be prohibited altogether also argue that the rule fails to prohibit sex in the corporate-client setting. Their argument goes something like this: since the corporate client is only addressed specifically in comment 7 and since comments are not rules, there is no enforceable rule prohibiting sexual relations with clients. That is simply not correct. Proposed rule 1, 13(c) expressly prohibits sexual relations between a lawyer and a client. An organization can be a client. Proposed Texas Rule 1.12. Comment 7 simply provides guidance as to who is deemed to be the client in the corporate setting. For purposes Rule 1.13, a client is any person who oversees the matter on behalf of the client or gives instructions to the lawyer on behalf of the organization. Proposed Rule 1.13, comment 7. The ABA comment contains similar, but not identical, guidance: " ... this Rule prohibits a lawyer for the organization ... from having a sexual relationship with a constituent of the organization who supervises, directs or regularly consults with that lawyer concerning the organization's legal matters." ABA Rule 1.08, comment 19.
In an organizational setting, any number of people could be deemed to be a client for purposes of proposed rule 1.13, but not every single person in an organization is deemed to be the lawyer's client. And, really, why should everyone in the organization be deemed to be the client, especially when rule 1.12 makes it clear that the organization (and not everyone in the organization) is the client? Do the opponents of the rule really contend that a lawyer who reports to the claims department cannot represent a client if he or she is married to a person in a completely different department who has nothing whatsoever to do with the matter at hand?
While some people claim that the rule should contain an outright prohibition of sexual relations or that the rule fails to adequately address all the issues, as far as the Committee knows, those persons have not offered alternative language. Those who oppose the rule because it is supposedly not strict enough should consider that at present Texas has NO rule that expressly prohibits sexual relations between a lawyer and a client. While those persons might not feel that this rule goes far enough, surely they recognize that this rule is an improvement over the current Texas rules, which have no specific provision at all.
Opponents who argue there should be no Rule at
First, some have argued that a Rule that explicitly prohibits sexual relations could lead to an increase in unfounded grievances against lawyers, particularly lawyers in certain specialties. Certainly no empirical evidence has been cited in support of that argument. Committee member Fred Moss recently polled many jurisdictions that enacted a prohibited sexual relations rule and asked whether those states experienced a spike in complaints following the adoption of the rule. They answered unanimously and emphatically that they did not experience a spike in such complaints.
Indeed, even without a rule that specifically prohibits sexual relations between lawyers and clients, there are grievances, lawsuits, disqualification motions and other motions filed that have, at their root, an allegation of sexual misconduct.
Second, opponents argue that this rule will be used by non-clients to gain a tactical advantage. Of course, such conduct is prohibited by many different rules including the Texas Rules of Civil Procedure and the disciplinary rules. See, for example, Rules 3.01-3.03 of the current and proposed rules relating to meritorious claims and contentions, minimizing the burdens and delays of litigation" and candor toward the tribunal. And the CDC and the courts are accustomed to dealing with grievances and motions that arc filed by opposing counsel and opposing party for improper reasons.
Third, some have argued that many wonderful relationships between lawyers and clients develop during lawyer-client relationship. A related argument is that lawyers work hard and that they are likely to meet friends and future spouses during the course of their work. These arguments are factually correct in some circumstances. But, the rule does not prohibit those relationships. A lawyer may be able to have such relationships as long as the lawyer is not personally representing the client and the relationship is not with a corporate representative who oversees the representation or gives instructions to the lawyer. Even then, a lawyer is not prohibited from having a sexual relationship with the person; the lawyer can simply withdraw from the representation of the client or wait until the representation is over.
Fourth, some have argued that it is simply not the Bar's business to promulgate rules pertaining to sexual relationships between lawyers and clients. Many professions prohibit sexual relations with clients or patients. A majority of states address sexual relations between lawyers and clients. The reasons are clear. Even well-intentioned lawyers may exercise unsound judgment when representing a client in such circumstances. Lawyers have a position of power over many clients that can lead to exploitation of the client's emotional and financial dependence on the lawyer. The lawyers who say that lawyers should be exempt from the type of rules that regulate other professions or lawyers in other jurisdictions fail to acknowledge the importance of lawyers in the lives of desperate clients. And, they do not explain why different rules should govern Texas lawyers.
Fifth, opponents argue that the rule should only apply to cases in
which the client is harmed. The primary purpose of the rules is to
promulgate rules that keep clients from being harmed in the first
place, not to allow lawyers to engage in misconduct and then deal with
the problem after the fact. Once the harm has occurred, the lawyer can
be disciplined, but it may not be possible to undo the harm or
compensate the client for it.
Those who oppose the rule should consider that the proposed rule is a compromise. There are many others who believe that a much more severe rule should be imposed. Some draft language included discipline for sexual harassment, for example.
While this rule may be unpalatable to some, it does represent the mainstream in American law.
Opponents of the proposed rule should consider the possibility that this rule is the product of careful deliberation and compromise and that it is intended to and does provide much needed protection to both clients and lawyers in a very workable fashion.
This Rule was revised, primarily for clarity. Many concerns were expressed about the proposed Rule during the public comment period. Following that, the proposed Rule was substantially revised to address issues raised in the comment period. The revised proposed Rule seems to have resolved the concerns expressed in the comment period. Here are the main issues addressed by the Rule:
1. Rule 1.15 (a): Duty to Hold in Trust
A lawyer must safeguard and hold separately and in trust property that belongs to a client or third person. The lawyer complies with this duty by:
Depositing funds into a trust account;
Identifying and safeguarding other property; and
Creating and maintaining records of property held in trust for five years after representation ends.
2. Rule 1.15 (b): Other Duties to Clients
Upon receipt and with reasonable promptness, a lawyer shall:
Notify client of receipt and proposed distribution;
Distribute to client the property client is entitled to receive; and
Render a full accounting to client of property held in trust:
--upon the client's request; or
--when otherwise required by the Rules.
Rule 1.15(b): Other Duties to Third Persons
Upon receipt and with reasonable promptness, a lawyer shall:
Notify the third person of receipt of such property the lawyer "knows"1 belongs to the third person;
Distribute to the third person such property the third person is entitled to receive; and
Upon request, render an accounting to the third person as to such property the lawyer knows belongs to the third person.
3. Rule 1.15 (c): Claims and Disputes
The lawyer complies with the duty to retain and safeguard the disputed property by:
Placing it in a trust account or the registry of the court; or
By safeguarding the property in a manner agreeable to parties claiming a right.
Upon resolution of dispute, the lawyer must distribute the property "with reasonable promptness."
4. Rule 1.15(d): Unearned Fees and Advanced Expenses
A lawyer shall deposit unearned fees and advanced expenses into a client trust account, to be withdrawn by the lawyer only as fees are earned or expenses incurred.
5. Rule 1.15(e): Trust Account Fees
A lawyer may deposit the lawyer's own funds into a client trust account for the purpose of paying service charges on that account.
There were many public comments concerning the elimination of 3.05(c), which contained definitions of "matter" and "pending." The main criticism was that by eliminating "matter" and "pending" from the existing rule, it would essentially make it permissible for attorneys to have ex parte communications with state agency directors even though it is reasonably foreseeable that the matter will ultimately be decided by those agency officials.
In response to those public comments, the State Bar Board recommended that Rule 3.05(c) be added back to the Rules. The Supreme Court agreed, and added 3.05(c) back into the Rules. With the addition of Rule 3.05(c), this rule is now unchanged from the current Rule except for minor changes made for clarification.