Limitation on titles and compensation for non-lawyer employees in Texas

images (32)Texas Ethics Opinion 642 (Revised)

Professional Ethics Committee for the State Bar of Texas

In September 2015, the Professional Ethics Committee for the State Bar of Texas revised Opinion 642. The Opinion confirmed that non-lawyers employees cannot use “officer” or “principal” in job title because it is generally understood that officers and principals exercise control over the firm’s legal practice, which a non-lawyer cannot.  The law firm must take all additional steps to clarify that the “employee’s authority does not in fact extend to the exercise of control over the law practice of firm lawyers”.

Conclusion of the Committee:

“Under the Texas Disciplinary Rules of Professional Conduct, a for-profit Texas law firm may not assign to a non-lawyer employee a job title that, because of the title’s generally accepted meaning, indicates that the employee’s authority includes exercise of control over the firm’s legal practice. If a title is assigned to a non-lawyer employee that is unclear as to whether the employee is authorized to exercise control over the for-profit Texas law firm’s practice of law, the firm must take such additional steps as are necessary in the circumstances to make clear to all concerned that the scope of the employee’s authority does not in fact extend to the exercise of control over the practice of law by lawyers in the firm.

The Texas Disciplinary Rules of Professional Conduct prohibit a for-profit Texas law firm from paying or agreeing to pay specified bonuses to non-lawyer employees contingent upon the firm’s achieving a specified level of revenue or profit. A for-profit Texas law firm may, however, consider its revenue, expenses, and profit in determining whether to pay bonuses to non-lawyer employees and the amount of such bonuses”.

Rules: Texas Rules of Professional Conduct 5.04(a), 5.04(d)(2), and 5.04(d)(3)

The full text of the opinion can be found at  http://www.legalethicstexas.com…

 

For more information contact Nathan M. Crystal

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