Attorney-Client Relations in the Foreclosure Process
The Texas Disciplinary Rules of Professional Conduct set the standard of conduct for Texas attorneys and are found in the Texas Government Code in title 2, subtitle G, appendix A, following section 84.004 of the Government Code. The rules are also available online at https://legalethicstexas.com/Ethics-Resources/Rules/Texas-Disciplinary-Rules-of-Professional-Conduct.aspx.
This chapter follows the attorney-client relationship from the initial client interview to the termination of the relationship, with examples of what an attorney might do to document compliance with the rules during the foreclosure process. This chapter is very general and is not intended to be a substitute for a complete study of the rules.
§ 1.1:1The Texas Lawyer’s Creed
On November 7, 1989, the Supreme Court of Texas and the Texas Court of Criminal Appeals adopted “The Texas Lawyer’s Creed—A Mandate for Professionalism.” An attorney adhering to the Creed agrees to advise a client of the contents of the Creed when undertaking a representation (article II, paragraph 1).
The Creed requires an attorney to advise clients of its contents when undertaking representation. See form 1-2 in this manual for the full text of the Texas Lawyer’s Creed as appended to the attorney’s engagement letter.
§ 1.1:2Duty to Report Ethical Violation; Peer Assistance Program Alternative
The Texas Lawyer’s Creed states that a lawyer must “abide by the Texas Disciplinary Rules of Professional Conduct” and that “professionalism requires more than merely avoiding the violation of laws and rules.” The Texas Lawyer’s Creed—A Mandate for Professionalism, reprinted in Texas Rules of Court—State 735 (West 2018).
Rule 8.03 of the Texas Disciplinary Rules of Professional Conduct requires attorneys to make a report when a substantial question arises about another lawyer’s “honesty, trustworthiness or fitness”:
8.03—Reporting Professional Misconduct
(a)Except as permitted in paragraphs (c) or (d), a lawyer having knowledge that another lawyer has committed a violation of applicable rules of professional conduct that raises a substantial question as to that lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate disciplinary authority.
(b)Except as permitted in paragraphs (c) or (d), a lawyer having knowledge that a judge has committed a violation of applicable rules of judicial conduct that raises a substantial question as to the judge’s fitness for office shall inform the appropriate authority.
(c)A lawyer having knowledge or suspecting that another lawyer or judge whose conduct the lawyer is required to report pursuant to paragraphs (a) or (b) of this Rule is impaired by chemical dependency on alcohol or drugs or by mental illness may report that person to an approved peer assistance program rather than to an appropriate disciplinary authority. If a lawyer elects that option, the lawyer’s report to the approved peer assistance program shall disclose any disciplinary violations that the reporting lawyer would otherwise have to disclose to the authorities referred to in paragraphs (a) and (b).
(d)This rule does not require disclosure of knowledge or information otherwise protected as confidential information:
(1) by Rule 1.05 or
(2) by any statutory or regulatory provisions applicable to the counseling activities of the approved peer assistance program.
Tex. Disciplinary Rules Prof’l Conduct R. 8.03 (emphasis added). The rule and the alternative method of reporting under rule 8.03(c) reflect the values of the Texas Lawyer’s Creed; rule 8.03(c) allows attorneys to help each other without involving the disciplinary process.
§ 1.1:3Texas Lawyers’ Assistance Program
The only approved peer assistance program to which lawyers may make reports under rule 8.03(c) is the Texas Lawyers’ Assistance Program (TLAP). See Tex. Health & Safety Code § 467.001(1)(A); Board of Directors Meeting Minutes, Jan. 20–21, 1989, State Bar of Texas. TLAP is available to lawyers, judges, and law students twenty-four hours a day, seven days a week, at 1-800-343-TLAP (8527). Information about attorney wellness and other related information is also available on TLAP’s website, www.tlaphelps.org. If a lawyer is required to report under rule 8.03(a), that is, if he has knowledge “or suspects” another lawyer is “impaired by chemical dependency on alcohol or drugs or by mental illness,” the report may instead be made to TLAP and discharges the reporting lawyer’s duty to report. See Tex. Health & Safety Code § 467.005(b); Tex. Disciplinary Rules Prof’l Conduct R. 8.03(c). “Mental illness” encompasses Alzheimer’s disease, dementia, and other cognitive disorders. American Psychiatric Association, Diagnostic and Statistical Manual of Mental Disorders 591 (5th ed. 2013).
Calling TLAP about a fellow lawyer in need is a way to help an attorney with a problem without getting that attorney into disciplinary trouble. The confidentiality of TLAP participants’ information is ensured under Tex. Health & Safety Code § 467.007 and by TLAP policy. All communications by any person with the program (including staff, committee members, and volunteers) and all records received or maintained by the program are strictly protected from disclosure. TLAP does not report lawyers to disciplinary authorities. While the majority of calls to TLAP are self-referrals, referrals may also come from partners, associates, office staff, judges, court personnel, clients, family members, and friends. TLAP is respectful and discreet in its efforts to help impaired lawyers who are referred, and TLAP never discloses the identity of a caller trying to get help for another attorney. Furthermore, the Health and Safety Code provides that any person who “in good faith reports information or takes action in connection with a peer assistance program is immune from civil liability for reporting the information or taking the action.” Tex. Health & Safety Code § 467.008.
Approximately half of all assistance provided by TLAP is given to attorneys suffering from anxiety, depression, or burnout. Additionally, TLAP helps lawyers, law students, and judges suffering problems with prescription and other drug use, eating disorders, gambling addictions, cognitive impairment, codependency, and many other serious issues.
Once a lawyer, law student, or judge is connected to TLAP, the resources that can be provided directly to that person include—
1.direct peer support from TLAP staff attorneys;
2.self-help information;
3.connection to a trained peer support attorney who has overcome the particular problem at hand and who has signed a confidentiality agreement;
4.information about attorney-only support groups such as Lawyers Concerned for Lawyers (weekly meetings for alcohol, drug, depression, and other issues) and monthly wellness groups (professional speakers on various wellness topics in a lecture format), which take place in major cities across the state;
5.referrals to lawyer-friendly and experienced therapists, medical professionals, and treatment centers; and
6.assistance with financial resources needed to get help, such as the Sheeran-Crowley Memorial Trust, which is available to help attorneys in financial need with the costs of mental-health or substance abuse care.
§ 1.1:4Notice of Grievance Process
Section 81.079 of the Texas Government Code requires attorneys to notify clients of the grievance process. Notice must be provided by making available in the attorney’s office grievance brochures prepared by the State Bar, by prominently posting a sign in the attorney’s office describing the process, by including the information in a written contract for services, or by providing the information in a bill for services. Tex. Gov’t Code § 81.079(b).
§ 1.2Sources of Interpretation of Rules
Judicial decisions in Texas regarding ethical violations are referenced in the annotations to the Texas Disciplinary Rules of Professional Conduct.
The Committee on Professional Ethics of the Supreme Court of Texas issues opinions on the rules and the Texas Code of Professional Responsibility (the predecessor to the rules). These opinions are published in the Texas Bar Journal.
An attorney may obtain informal explanations of the rules from the State Bar. A consultation with the disciplinary counsel’s office may be not only informative but also probative of good faith should a question later arise. The telephone number of the attorney ethics line is 800-532-3947.
The Texas Center for Legal Ethics also maintains an online library, index, and text of all published Texas Supreme Court Professional Ethics Committee opinions; Texas cases dealing with ethics and professionalism; and a bibliography. The Center’s website is at https://www.legalethicstexas.com, and its phone number is 800-204-2222, ext. 1477.
Article VIII of the Texas Disciplinary Rules of Professional Conduct (Maintaining the Integrity of the Profession) generally governs an attorney’s conduct. Rule 8.04 sets out a comprehensive restatement of all forms of conduct that will subject an attorney to disciplinary action. Tex. Disciplinary Rules Prof’l Conduct R. 8.04, reprinted in Tex. Gov’t Code, tit. 2, subtit. G, app. A (Tex. State Bar R. art. X, § 9). It includes conduct controlled by the State Bar Act and the State Bar Rules. The rules govern attorneys who are admitted to practice in Texas or specially admitted for a particular proceeding. A licensed Texas attorney’s conduct in another state may also be the subject of a Texas grievance procedure. Tex. Disciplinary Rules Prof’l Conduct R. 8.05.
The rules do not prescribe either disciplinary procedures or penalties for a violation. Tex. Disciplinary Rules Prof’l Conduct preamble para. 14. Possible sanctions are found instead in the Texas Rules of Disciplinary Procedure. These rules are reproduced in the Texas Government Code in title 2, subtitle G, appendix A-1, following section 84.004 of the Government Code. The rules are also available online at https://legalethicstexas.com/Ethics-Resources/Rules/Texas-Rules-of-Disciplinary-Procedure.aspx.
§ 1.4Consulting Potential Client
§ 1.4:1Attorney-Client Relationship
The relationship of attorney and client is one of principal-agent. Duval County Ranch Co. v. Alamo Lumber Co., 663 S.W.2d 627, 633 (Tex. App.—Amarillo 1983, writ ref’d n.r.e.). It is created by consent and governed by the general rules covering agency. Bar Ass’n of Dallas v. Hexter Title & Abstract Co., 179 S.W.2d 108, 115 (Tex. Civ. App.—Fort Worth 1943), aff’d, 179 S.W.2d 946 (Tex. 1944). The fiduciary obligations and responsibilities imposed on the attorney are predicated on the existence of the attorney-client relationship. Shropshire v. Freeman, 510 S.W.2d 405 (Tex. Civ. App.—Austin 1974, writ ref’d n.r.e.).
The attorney-client relationship can be implied from the conduct of the parties. Duval County Ranch Co., 663 S.W.2d at 633. A written contract or payment of a retainer is not necessary. For example, gratuitous services can establish an attorney-client relationship. Prigmore v. Hardware Mutual Insurance Co. of Minnesota, 225 S.W.2d 897, 899 (Tex. Civ. App.—Amarillo 1949, no writ). But the fact that an attorney had business dealings with someone does not establish an attorney-client relationship. McGary v. Campbell, 245 S.W. 106, 116 (Tex. Civ. App.—Beaumont 1922, writ dism’d w.o.j.). The existence of an attorney-client relationship is a question of fact. Jinks v. Moppin, 80 S.W. 390 (Tex. Civ. App. 1904, no writ).
§ 1.4:2Areas of Concern When Consulting Potential Client
Consultation alone does not create an attorney-client relationship. Nevertheless, some duties attach during a consultation. See Tex. Disciplinary Rules Prof’l Conduct preamble para. 12.
During a consultation, an attorney must maintain the requirements of confidentiality and must be wary to avoid current and future conflicts. A consultation and certainly an investigation may impose additional duties such as advising the potential client of the statute of limitations. See Villarreal v. Cooper, 673 S.W.2d 631 (Tex. App.—San Antonio 1984, no writ). At least one state has held an attorney liable for negligently investigating a claim, even though the attorney refused to take the case. See Togstad v. Vesely, Otto, Miller & Keefe, 291 N.W.2d 686 (Minn. 1980). Further confusion may result if an attorney has a continuing or gratuitous relationship with a client. Bresette v. Knapp, 159 A.2d 329 (Vt. 1960).
§ 1.4:3Refusing Representation
A potential client may believe that an attorney-client relationship is created by the initial interview. If the attorney decides not to represent a person, this should be made clear. The attorney should consider sending a letter to confirm that the proposed representation will not be undertaken. Form 1-1 in this manual is an example of a nonrepresentation letter. Tex. Disciplinary Rules Prof’l Conduct R. 1.15(d) requires the potential client’s documents to be returned if the attorney’s retaining them will prejudice the potential client. See Tex. Comm. on Prof’l Ethics, Op. 395 (1979). If the documents are particularly valuable, the attorney should consider having their receipt acknowledged.
§ 1.4:4Advising Potential Client
If the attorney declines the representation, there is a question whether the attorney should advise the nonclient of any rights or statutes of limitation. Some attorneys, as a matter of policy, will advise nonclients of such matters if aware of them. Other attorneys believe that advice implies some representation of nonclients and therefore, as a matter of policy, do not offer any advice in nonrepresentation letters.
§ 1.5Establishing Attorney-Client Relationship
§ 1.5:1Disclosure of Conflicts
The attorney is assumed to have an adequate system to identify his clients, such as a list of all clients’ names cross-indexed by case or transaction and naming all principals in each transaction. Typical fact situations raising conflict-of-interest concerns are (1) foreclosures in which the attorney represented multiple parties, typically the lender and the borrower at the time of the loan; (2) cases in which the attorney represented the lender but the borrower paid the attorney’s legal fee; (3) cases in which the attorney is the trustee under the deed of trust and either (1) or (2) occurred; and (4) cases in which the attorney represented the borrower in the past and is now being asked to represent the foreclosing lender.
An attorney must disclose all potential conflicts before accepting employment and those that arise during the course of employment. Nonlitigation conflicts are addressed specifically in comments 13–16 to rule 1.06 of the Disciplinary Rules of Professional Conduct. Unfortunately, these comments merely provide examples and conclude that the question is “often one of proximity and degree.” Tex. Disciplinary Rules Prof’l Conduct R. 1.06 cmt. 13. Relevant factors include the duration of the relationship and intimacy that an attorney has with a client, the duties performed, the likelihood a conflict will arise, and the likelihood of resulting prejudice.
The disclosure requirement includes all personal conflicts, conflicts with current clients, and conflicts with past clients.
§ 1.5:2Prior Representation of Borrower and Lender
Informed Consent Necessary: A common conflict occurs when an attorney is asked by a lender to foreclose on a borrower’s property after the attorney had represented both the lender and the borrower in the loan transaction. Comment 9 to rule 1.06 states:
In certain situations, such as in the preparation of loan papers . . . a lawyer might have properly undertaken multiple representation and be confronted subsequently by a dispute among those clients in regard to that matter. [Rule 1.06] forbids the representation of any of those parties in regard to that dispute unless informed consent is obtained from all of the parties to the dispute who had been represented by the lawyer in that matter.
Tex. Disciplinary Rules Prof’l Conduct R. 1.06 cmt. 9. The comments offer guidance for interpreting the rules; they do not add obligations to the rules and may not be the basis for disciplinary action.
Rule 1.07 prohibits a lawyer from acting as an intermediary unless each client consents in writing and the lawyer reasonably believes the clients can be adequately represented. Rule 1.09 states in part:
(a)Without prior consent, a lawyer who personally has formerly represented a client in a matter shall not thereafter represent another person in a matter adverse to the former client:
(1)in which such other person questions the validity of the lawyer’s services or work product for the former client;
(2)if the representation in reasonable probability will involve a violation of Rule 1.05; or
(3)if it is the same or a substantially related matter.
Tex. Disciplinary Rules Prof’l Conduct R. 1.09(a). This rule applies to all members of the firm, even if the attorney who originally worked with the client is no longer with the firm.
In Dillard v. Broyles, 633 S.W.2d 636 (Tex. App.—Corpus Christi 1982, writ ref’d n.r.e.), the same attorney represented both the buyer and the seller in a residential real estate transaction and was named the trustee in the deed of trust securing the buyer’s note. The attorney, as the seller’s representative, sent the notice of acceleration and notice of foreclosure sale to the buyer when the buyer defaulted. The attorney acted as the trustee and conducted the foreclosure sale. In a suit to set aside the trustee’s deed, the buyer argued that the attorney was guilty of fraud by virtue of his dual representation in connection with the sale and loan closing. The court of appeals found, however, that the buyer had consented to the attorney’s dual representation at the initial closing and the attorney-client relationship had terminated at the closing of the sale. See Dillard, 633 S.W.2d at 642–43; see also Donaldson v. Mansel, 615 S.W.2d 799 (Tex. Civ. App.—Houston [1st Dist.] 1980, writ ref’d n.r.e.) (upholding attorney’s right to serve as trustee under deed of trust and as attorney for mortgagee in collecting deficiency on secured debt).
These issues will be avoided if the attorney does not represent both the lender and the borrower at the time the loan originates. If the attorney represented the borrower before the lender requested representation, the attorney should obtain the borrower’s written consent to represent only the lender in the loan transaction. This consent should specify that the attorney is authorized to foreclose on the deed of trust as the trustee and to represent the lender in collecting on the debt from the borrower. The attorney who continues to represent the borrower in other matters after the loan transaction, however, risks becoming aware of confidential information, creating further ethical problems. The attorney would be well advised not to represent the lender while continuing to represent the borrower.
Mortgage Loan Broker Licensing: A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client is excluded from Finance Code chapter 156’s licensing and regulation requirements, unless the attorney (1) takes a residential mortgage loan application and (2) offers or negotiates the terms of a residential mortgage loan. See Tex. Fin. Code § 156.202(a–1)(3). However, if the attorney is both taking the mortgage loan application on behalf of the prospective lender and negotiating the loan terms on behalf of the potential borrower, as discussed above, there is a significant potential conflict of interest between the two clients that must first be resolved by the attorney before he commences representation, separate and apart from the mortgage loan broker licensing requirement.
If there is a chance that the mortgagor will contest the foreclosure sale, the mortgagee’s attorney who is the trustee in the deed of trust should consider having a substitute trustee (other than a member of the attorney’s firm) appointed. Rule 3.08 prohibits the attorney and the attorney’s firm from representing a party to the suit, if the attorney will be a material witness in the case. The attorney will not be permitted to be both a witness and an advocate in the same suit unless the testimony relates to an uncontested matter or the testimony is a matter of mere formality and there is no reason to believe substantial opposing testimony will be offered. Tex. Disciplinary Rules Prof’l Conduct R. 3.08.
Unconscionability: An attorney may not enter into an agreement for, charge, or collect an illegal or unconscionable fee. Tex. Disciplinary Rules Prof’l Conduct R. 1.04(a). A fee is unconscionable if a competent attorney could not form a reasonable belief that the fee is reasonable. Tex. Disciplinary Rules Prof’l Conduct R. 1.04(a). In borderline cases, the comments specify two indications of unconscionability: the attorney’s overreaching with a client, especially one susceptible to such a practice, and the attorney’s failing to give the client at the outset of the representation a clear explanation of how the fee will be calculated. Tex. Disciplinary Rules Prof’l Conduct R. 1.04 cmt. 8. Rule 1.04(b) lists a number of factors that may be considered in determining the reasonableness of a fee.
Division of Fees: An attorney may not divide a fee with another attorney who is not a member or employee of the firm unless (1) the client knows of and does not object to the participation of the other attorney; (2) the division is made in proportion to services rendered, with a forwarding attorney, or by written agreement with the client, with an attorney who assumes joint responsibility for the representation; and (3) the aggregate fee is not unconscionable. Tex. Disciplinary Rules Prof’l Conduct R. 1.04(f). An attorney may share fees with an “of counsel” attorney (Tex. Comm. on Prof’l Ethics, Op. 450 (1988)) or with a former partner or associate (Tex. Disciplinary Rules Prof’l Conduct R. 1.04(g)).
Trust Accounts: Fees paid in advance of the performance of work, as well as any of the client’s other property that comes into the attorney’s possession, must be held in trust by the attorney. Tex. Disciplinary Rules Prof’l Conduct R. 1.14. Attorneys must keep complete records of client account funds for at least five years after the conclusion of the representation. Tex. Disciplinary Rules Prof’l Conduct R. 1.14(a). If a client’s funds either are of an amount or are held for a long enough time that the interest generated is likely to exceed the costs of setting up and maintaining an account, an individual account must be set up for the client. For a client’s funds that are of a small amount or are likely to be held only for a short time, attorneys are required to maintain an interest-bearing account in which to pool the funds. Under the Interest on Lawyers’ Trust Accounts (IOLTA) program, interest from these pooled accounts is paid to the Texas Access to Justice Foundation, which awards grants to organizations in Texas that serve the poor in civil legal matters. Attorneys must submit an annual IOLTA compliance statement to the foundation. Tex. State Bar R. art. XI, reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G, app. A. See also the Rules Governing the Operation of the Texas Access to Justice Program (reproduced in Texas Rules of Court—State).
§ 1.5:5Engagement Agreements Detailing Fee Arrangements
The use of an engagement letter is encouraged. The engagement letter requires the attorney and the client to focus early in the process on the cost of foreclosure, the multiple deadlines involved in successfully getting to and through the “first Tuesday,” and the background documentation and data required. All too often the attorney is hired on the twenty-fifth day before foreclosure without having been involved in the extensive workout or collection efforts attempted by the lender or even by other members of the attorney’s firm. Typically, many of these matters are not discussed at the beginning of the foreclosure process because of the haste to “go post.” Caution is merited, however, before exercising the remedies of acceleration without advance notification and nonjudicial foreclosure, both described by courts as the “harshest known to the law.”
An engagement letter covers in general (1) a description of the scope of services; (2) a request for all loan documents, memoranda regarding the credit, and prior correspondence; (3) the basis for charging for services, including a range of fees for the initial scope of services; (4) a brief discussion of the need for a current appraisal of the mortgaged property and collateral; and (5) the transmittal of a checklist, foreclosure calendar, foreclosure questionnaire, and terms of engagement for legal services. See forms 1-2, 1-3, and 2-2 through 2-4 in this manual for examples. See also section 11.3 for a discussion of the appointment of substitute trustees. The foreclosure checklist should be established at the outset. The subject of fees should also be covered at that time. Rule 1.04(c) states, “When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation.” Tex. Disciplinary Rules Prof’l Conduct R. 1.04(c).
§ 1.5:6Charging for Time and Expenses
As implied in Tex. Disciplinary Rules Prof’l Conduct R. 1.04(c), the attorney’s fee basis is established by an agreement between the attorney and the client. The attorney should, however, carefully outline the fee basis to avoid a client’s misunderstanding later. For example, the attorney might advise the client that there will be a fee to recover time previously spent to develop a limited partnership form or to recover unbilled or unpaid time for research incurred on another matter.
§ 1.5:7Record Retention and Destruction
Neither the rules nor Texas case law specify if, or for how long, an attorney must retain client records. To resolve the ambiguity, some attorneys adopt a record retention and destruction policy. If the existence of a policy is disclosed to the client in either the engagement letter or the closing letter, the client has the opportunity to obtain the records, and the attorney has some authority to dispose of the documents.
§ 1.6:1Duty to Keep Client Informed
Rule 1.03(a) requires an attorney to keep the client reasonably informed. In addition, the attorney has the duty to inform the client of relevant considerations and explain their legal significance to permit the client to make informed decisions. Tex. Disciplinary Rules Prof’l Conduct R. 1.03(b).
One way to meet these obligations is to routinely provide the client with copies of all pertinent correspondence, documents, and file memoranda; to advise the client in writing of risks involved with the transaction, including the obvious; and to document the business decisions made by the client.
An attorney may not knowingly reveal a confidence or secret of a client or use such a confidence or secret to the attorney’s advantage or for the advantage of a third person. Tex. Disciplinary Rules Prof’l Conduct R. 1.05(b). The ethical duty to preserve a client’s confidence is much broader than the attorney-client evidentiary privilege. This duty applies even if there is not yet an established attorney-client relationship—for instance, when a client comes in for an initial interview. The obligation of confidentiality also continues after the termination of employment. Tex. Disciplinary Rules Prof’l Conduct R. 1.09(a)(2).
§ 1.6:3Duty to Clarify Nonrepresentation
An attorney dealing on behalf of a client with a person not represented by an attorney may not imply that the attorney has no interest in the outcome of the matter. If the attorney believes an unrepresented person misunderstands the attorney’s role, the attorney must correct this misunderstanding. Tex. Disciplinary Rules Prof’l Conduct R. 4.03.
§ 1.6:4Contact with Opposing Counsel’s Client
An attorney may not contact the client of opposing counsel. Tex. Disciplinary Rules Prof’l Conduct R. 4.02. The rules also prohibit an attorney from encouraging a client to talk to the opposing counsel’s client, without opposing counsel’s consent. See Tex. Disciplinary Rules Prof’l Conduct R. 4.02 cmt. 2.
There are legally required exceptions to rule 4.02, such as the sending of a foreclosure notice. Tex. Prop. Code § 51.002.
§ 1.7Terminating Attorney-Client Relationship
A client may always terminate the attorney-client relationship. An attorney must return any unearned portion of the fee and all pertinent papers and property. Tex. Disciplinary Rules Prof’l Conduct R. 1.15(d) & cmt. 4; Tex. Comm. on Prof’l Ethics, Op. 395 (1979). However, rule 1.15(d) specifically provides that an attorney may retain papers relating to the client to the extent permitted by law, but only if such retention will not prejudice the client in the subject matter of the representation. See Tex. Comm. on Prof’l Ethics, Op. 411 (1984).
An attorney also may terminate the relationship; however, the attorney has a duty to minimize any adverse effects to the client. Tex. Disciplinary Rules Prof’l Conduct R. 1.15(b), (d). It is good practice for an attorney to send a disengagement letter to record the date of the termination of the attorney-client relationship. See form 1-4 in this manual for an example of a disengagement letter.
Mandatory Termination: Tex. Disciplinary Rules Prof’l Conduct R. 1.15(a) sets out the circumstances under which the attorney must terminate the relationship with the client. An attorney must withdraw if continued representation will result in a violation of one of the Texas Disciplinary Rules of Professional Conduct or another law or if the attorney’s physical, mental, or psychological condition materially impairs the attorney’s fitness to represent the client. The attorney must also withdraw when discharged. When terminating the attorney-client relationship before completing the work for which the client contracted, the attorney should review rule 1.15 to be sure that good cause for withdrawal exists.
Permissive Termination: Withdrawal is permissible under the circumstances listed in rule 1.15(b). The rule provides that an attorney may withdraw if the client fails substantially to fulfill an obligation to the attorney, including the obligation to pay the attorney’s fee as agreed, and a reasonable warning has been given that the attorney will withdraw unless the obligation is fulfilled. Tex. Disciplinary Rules Prof’l Conduct R. 1.15(b)(5). See form 1-4 for an example of a letter terminating the attorney-client relationship because of nonpayment of fees. By accepting employment an attorney implicitly represents that the attorney will see the task through to conclusion. Staples v. McKnight, 763 S.W.2d 914 (Tex. App.—Dallas 1988, writ denied). By conditioning the commencement of work and continued performance on the payment of a fee, the attorney may avoid problems later.
§ 1.7:2Termination Due to Other Considerations
The attorney-client relationship does not continue automatically once the purpose of the employment is completed. However, it is often difficult to determine when a matter is completed. Again, it is good practice to send a disengagement letter to record the date of the completion of employment. See form 1-5 in this manual for an example of a completion letter.
The Board of Disciplinary Appeals, www.txboda.org.
Center for Professional Responsibility, American Bar Association, “Resources,” https://www.americanbar.org/groups/professional_responsibility/resources/.
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———. “Shoes for the Shoemaker’s Children: Practical Forms and Suggestions for Ethical Compliance and Malpractice Prevention.” In Advanced Real Estate Strategies Course, 2013. Austin: State Bar of Texas, 2013.
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Soltero, Carlos R., April E. Lucas, and Stephanie N. Duff-O’Bryan. “Fee Agreements and Engagement Letters.” In Opening (or Running) Your First General Practice Office Course, 2016. Austin: State Bar of Texas, 2016.
State Bar of Texas, “Grievance and Ethics Information,” https://www.texasbar.com/AM/Template.cfm?Section=Disciplinary_Process_Overview&Template=/CM/HTMLDisplay.cfm&ContentID=45904.
Texas Center for Legal Ethics, “Resources,” https://www.legalethicstexas.com/Ethics-Resources.aspx.
University of Houston Law Center O’Quinn Law Library, Texas Ethics Reporter, www.law.uh.edu/Libraries/ethics/.
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