Opinion 450
Question Presented
Under the Texas Code of Professional Responsibility, do the requirements of Disciplinary Rule ("DR") 2-107(A) apply to the payment by a law firm of a portion of legal fees received by the firm to a lawyer who is publicly represented to be "of counsel" to the firm and who has a regular, continuing and substantial relationship with the law firm?
DR 2-107(A) provides as follows: "(A) A lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of his law firm or law office, unless: (1) The client consents to employment of the other lawyer after a full disclosure that a division of fees will be made. (2) The division is made in proportion to the services performed and responsibility assumed by each, or is made with a forwarding lawyer. (3) The total fee of the lawyers does not clearly exceed reasonable compensation for all legal services they rendered the client." This provision applies only in the case of a lawyer's division of legal fees with another lawyer "who is not a partner in or associate of" the first lawyer's law firm or law office. The provision is intended to place special limitations on payments to outside lawyers by a lawyer or law firm to which the client makes payment for the provision of legal services.
Although a lawyer with an "of counsel" relationship to a law firm has a relationship that for some purposes may be distinguished from the relationship of "partner" or "associate," for other purposes of the Texas Code of Professional Responsibility a lawyer who is "of counsel" to a firm is appropriately treated as a member of the firm. See Texas Professional Ethics Committee Opinion No. 445 (Texas Bar Journal Sept. 1987). Where a lawyer has a regular, continuing and substantial relationship with a law firm and is publicly designated as "of counsel" to the law firm, the lawyer should be considered by the public as a part of the firm, like a partner or associate, who may work on firm matters and who may share in the fee income of the firm. Accordingly, the specific requirements of DR 2-107(A) should not apply to the "of counsel" lawyer's sharing in the law firm's legal fees. Of course, the requirements of DR 2-106 would apply as to legal fees charged by the firm regardless of whether or not the "of counsel" lawyer shared in a particular fee.
The requirements of DR 2-107(A) of the Texas Code of Professional Responsibility do not apply with respect to a law firm's sharing legal fees with a lawyer designated as "of counsel" to the firm and having a regular, continuing and substantial relationship with the law firm.
Bluebook Citation
Tex. Comm. On Professional Ethics, Op. 450 (1987)