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TEXAS ETHICS COMMITTEE REVISES OPINION ON NON-LAWYER TITLES

The Texas Professional Ethics Committee has issued Revised Ethics Opinion 642 regarding acceptable titles for non-lawyer professionals. In the face of pressure from many Texas law firms, the Committee stepped back from its opinion last year that giving titles including the words “director,” “principal,” or “officer” to non-lawyer employees violated the disciplinary rules.

In the revised opinion, the Committee re-iterated that the titled assigned to a non-lawyer employee must not “indicate authority for the employee to exercise control over the law practice of firm lawyers.”

The Committee then concluded, however, that certain titles such as Chief Information Officer, Chief Financial Officer, and Human Resources Director are not reasonably understood to confer such authority. The title of Chief Operations Officer presents a closer call, but because of the limited authority traditionally conferred on law firm COOs, the Committee could not “conclude that the assignment of this title to a non-lawyer indicates control over the firm’s provision of legal services.” The Committee cautioned, however, that if for any reason the scope of the COO’s authority is unclear, the law firm should take steps to make clear that the COO does not exercise control over the provision of legal services.

The Committee also considered whether law firms can ethically base the bonuses of non-lawyer employees on the firm meeting certain specified revenue or profit goals and concluded that such compensation plans violate Rule 5.04(a). The Committee acknowledged other jurisdictions have reached a different conclusion, but pointed out that those jurisdictions were relying on the Model Rules, which provide broader exceptions to the general prohibition against sharing fees with non-lawyers. The Committee could not square the proposed compensation plans with the more narrow Texas Rule. The Committee did note, however, that firms can award non-lawyers discretionary bonuses and may take such things as the firm’s revenue and profit into account in determining such a bonus.

This revised opinion should be a welcome development for Texas firms that were struggling with how to appropriately title and compensate their valued non-lawyer professionals.

View full opinion.

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