Ethics and Malpractice Considerations
This chapter addresses the regulation of attorneys and law practice, accountability for professional responsibility, and liability for professional malpractice in Texas, with emphasis on family law practice.
Family law attorneys practice in environments filled with hostility, bitterness, and demands. Their clients frequently are frustrated with the system, angry at the opposing party and attorney, and ready to blame anyone, including their own attorneys, if they are dissatisfied with the outcome of litigation.
Family law practitioners tend to have a higher frequency of malpractice claims than practitioners in all other areas of practice except personal injury lawyers. Any attorney with doubts about family law practitioners’ exposure to grievance complaints should read the section on disciplinary actions in the Texas Bar Journal each month for examples of disbarments, resignations, suspensions, and public and private reprimands of attorneys in family law matters.
By studying the ethical standards to which all family law attorneys must adhere, any attorney will quickly understand why grievance complaints and malpractice claims are increasing in family law. To counter this trend, the best available tool is a full understanding of accountability for professional responsibility and liability for professional malpractice.
II. The Profession and Its Regulation
The State Bar of Texas is an administrative agency of the judicial department. Tex. Gov’t Code § 81.011(a). The Supreme Court of Texas exercises administrative control over the bar. Tex. Gov’t Code § 81.011(c). The supreme court promulgates the rules governing the bar and may adopt rules for the administration of the bar and for the discipline of the bar’s members. Tex. Gov’t Code § 81.024. Disciplinary jurisdiction is divided into grievance districts. Tex. Rules Disciplinary P. R. 2.01, reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G , app. A-1. Grievance committees in each district investigate any alleged ground for discipline of an attorney and take action appropriate under the disciplinary rules. See Tex. Gov’t Code § 81.072.
Rules governing the State Bar were initially adopted by the members of the State Bar of Texas and thereafter promulgated by the Supreme Court of Texas on February 22, 1940, and subsequently amended several times. The portions of the rules dealing with discipline and suspension of attorneys are entitled the “Texas Disciplinary Rules of Professional Conduct” and the “Texas Rules of Disciplinary Procedure.” A copy of the rules can be found in the Texas Government Code, in the Texas Rules of Court—State (West 2022), and at www.legalethicstexas.com/Ethics-Resources/Rules.aspx. A copy can also be obtained without charge at the Office of the Chief Disciplinary Counsel for the State Bar of Texas in the following cities:
Austin Office, 1414 Colorado, Austin, TX 78701, 512-427-1350
Dallas Regional Office, 14651 Dallas Parkway, Suite 925, Dallas, TX 75254, 972-383-2900
Houston Regional Office, 4801 Woodway Drive, Suite 315-W, Houston, TX 77056, 713-758-8200
San Antonio Regional Office, 711 Navarro, Suite 750, San Antonio, TX 78205, 210-208-6600
§ 1.4Texas Rules of Disciplinary Procedure
The Texas Rules of Disciplinary Procedure provide these sanctions for professional misconduct: disbarment; resignation in lieu of disbarment; indefinite disability suspension; suspension for a term certain; probation of suspension, which may be concurrent with the period of suspension, on reasonable terms appropriate under the circumstances; interim suspension; public reprimand; and private reprimand. See Tex. Rules Disciplinary P. R. 1.06FF.
The term sanction may also include a requirement of restitution and the payment of reasonable attorney’s fees and direct expenses. Tex. Rules Disciplinary P. R. 1.06FF.
§ 1.5Texas Disciplinary Rules of Professional Conduct
The Texas Disciplinary Rules of Professional Conduct are mandatory. The aspirational goals are grouped in the preamble rather than intermingled with rules within the body. Substantial commentary after each rule provides historical background and interpretational guidance.
The ethics opinions issued by the Professional Ethics Committee of the Supreme Court of Texas provide interpretations of the rules and the Texas Code of Professional Responsibility (the predecessor to the rules). These ethics opinions are published in the Texas Bar Journal and are available on the Internet at www.legalethicstexas.com/Ethics-Resources/Opinions.aspx.
Informal explanations of the rules may be obtained by calling the Attorney Ethics Help-line within the Office of the Chief Disciplinary Counsel at 800-532-3947. A consultation may be not only informative but also probative of good faith should a question later arise.
§ 1.6American Bar Association’s Model Rules of Professional Conduct
The text of the Model Rules, approved by the American Bar Association House of Delegates, can be obtained at www.americanbar.org/groups/professional_
responsibility/publications/model_rules_of_professional_conduct/.
§ 1.7Texas Code of Ethics and Professional Responsibility for Legal Assistants
The Code of Ethics and Professional Responsibility adopted by the board of directors of the Paralegal Division of the State Bar of Texas can be found on the Internet at https://txpd.org/ethics-pages/professional-ethics-and-the-paralegal/.
Adopted by the Texas Supreme Court and courts of appeals in 1989, the Texas Lawyer’s Creed is a mandate to the legal profession that goes beyond disciplinary rules and standards. The Texas Disciplinary Rules of Professional Conduct are cast in terms of “shall” and “shall not” and are merely a “floor” of professional conduct. The Texas Lawyer’s Creed recognizes that professionalism requires more than mere compliance with these imperatives. The Creed addresses an attorney’s most important relationships in his or her practice of law: those between the attorney and our legal system, the attorney and the client, the attorney and other attorneys, and the attorney and the judge.
According to The Order of Adoption, the standards set forth in the Creed are not a set of rules that attorneys can use and abuse to incite ancillary litigation or arguments over whether or not they have been observed.
The Creed requires an attorney to advise clients of its contents when undertaking representation. See form 2-2 in this manual for the full text of the Texas Lawyer’s Creed as appended to the attorney’s employment contract.
[Sections 1.9 and 1.10 are reserved for expansion.]
III. Professional Responsibility
§ 1.11:1Definitions and Sanctions
Professional misconduct that subjects an attorney to disciplinary action includes violation of a disciplinary rule and violation of the barratry statute. See Tex. Penal Code § 38.12.
An attorney who has knowledge that another attorney has committed a violation of the rules of professional conduct that raises a substantial question as to that attorney’s honesty, trustworthiness, or fitness as an attorney in other respects is required to inform the appropriate disciplinary authority. Tex. Disciplinary Rules Prof’l Conduct R. 8.03(a), reprinted in Tex. Gov’t Code Ann., tit 2, subtit. G, app. A (Tex. State Bar R. art. X, § 9).
On proof of conviction of a felony involving moral turpitude or of a misdemeanor involving theft, embezzlement, or fraudulent misappropriation of money or property, suspension pending appeal is mandatory. An attorney who receives probation will be suspended. Tex. Gov’t Code § 81.078(b). On proof of final conviction, the attorney will be disbarred. Tex. Gov’t Code § 81.078(c); Tex. Rules Disciplinary P. R. 8.05.
Moral turpitude is inherently immoral conduct that is willful, flagrant, or shameless and that shows a moral indifference to the opinion of the good and respectable members of the community. Searcy v. State Bar of Texas, 604 S.W.2d 256, 258 (Tex. App.—San Antonio 1980, writ ref’d n.r.e.).
In a significant change of policy, the Texas Supreme Court held that under Texas’s disciplinary scheme, an attorney who had pleaded guilty to possession of a controlled substance—a third-degree felony—was not subject to compulsory discipline. Instead, the attorney’s actions could be reviewed and sanctioned following standard grievance procedures. In re Lock, 54 S.W.3d 305, 312 (Tex. 2001).
The term misconduct is defined in both the Texas Rules of Disciplinary Procedure and the Texas Disciplinary Rules of Professional Conduct. Professional misconduct by an attorney includes—
1.acts or omissions, individually or in concert with another person or persons, that violate one or more of the Texas Disciplinary Rules of Professional Conduct;
2.conduct that occurs in another jurisdiction, including before any federal court or federal agency, and results in the disciplining of the attorney in that other jurisdiction, if the conduct is professional misconduct under the Texas Disciplinary Rules of Professional Conduct;
3.violation of any disciplinary or disability order or judgment;
4.conduct that constitutes barratry as defined by Texas law;
5.failure to comply with rule 13.01 of the Texas Rules of Disciplinary Procedure relating to notification of the attorney’s cessation of practice;
6.practice of law either during a period of suspension or when on inactive status;
7.conviction of a serious crime or being placed on probation for a serious crime with or without an adjudication of guilt (“serious crime” means barratry; any felony involving moral turpitude; any misdemeanor involving theft, embezzlement, or fraudulent or reckless misappropriation of money or other property; or any attempt, conspiracy, or solicitation of another to commit any of these crimes; Tex. Rules Disciplinary P. R. 1.06GG); or
8.conviction of an intentional crime or being placed on probation for an intentional crime with or without an adjudication of guilt (“intentional crime” means any serious crime that requires proof of knowledge or intent as an essential element or any crime involving misapplication of money or other property held as a fiduciary; Tex. Rules Disciplinary P. R. 1.06V).
Tex. Rules Disciplinary P. R. 1.06CC.
An attorney shall not—
1.violate the disciplinary rules, knowingly assist or induce another to do so, or do so through the acts of another, whether or not the violation occurred in the course of an attorney-client relationship;
2.commit a serious crime or commit any other criminal act that reflects adversely on the attorney’s honesty, trustworthiness, or fitness as an attorney in other respects (“serious crime” means barratry; any felony involving moral turpitude; any misdemeanor involving theft, embezzlement, or fraudulent or reckless misappropriation of money or other property; or any attempt, conspiracy, or solicitation of another to commit any of these crimes; Tex. Disciplinary Rules Prof’l Conduct R. 8.04(b));
3.engage in conduct involving dishonesty, fraud, deceit, or misrepresentation;
4.engage in conduct constituting obstruction of justice;
5.state or imply an ability to influence improperly a governmental agency or official;
6.knowingly assist a judge or judicial officer in conduct that is a violation of applicable rules of judicial conduct or other law;
7.violate any disciplinary or disability order or judgment;
8.fail to timely furnish to the Office of the Chief Disciplinary Counsel or a district grievance committee a response or other information as required by the Texas Rules of Disciplinary Procedure, unless he in good faith timely asserts a privilege or other legal ground for failure to do so;
9.engage in conduct that constitutes barratry as defined by Texas law;
10.fail to comply with rule 13.01 of the Texas Rules of Disciplinary Procedure relating to notification of an attorney’s cessation of practice;
11.engage in the practice of law when the attorney is on inactive status, except as permitted by section 81.053 of the Government Code or article XIII of the State Bar Rules (concerning certain volunteer work), or when the attorney’s right to practice has been suspended or terminated, including but not limited to situations where an attorney’s right to practice has been administratively suspended for failure to timely pay required fees or assessments or for failure to comply with article XII of the State Bar Rules relating to mandatory continuing legal education; or
12.violate any other Texas laws relating to the professional conduct of attorneys and to the practice of law.
Tex. Disciplinary Rules Prof’l Conduct R. 8.04(a).
The attorney-client relationship is not a necessary element in a charge of a violation of rule 8.04, as it is under many other disciplinary rules. These forms of misconduct are prohibited regardless of whether they involve the practice of law.
§ 1.11:2Examples of Misconduct
An attorney’s attempt to get a client to sign a false affidavit was professional misconduct under former DR 1-102(A)(3)–(5), and this violation, standing alone, warranted suspension for two years, even though it (“attempted perjury”) might not be a violation of the Penal Code. Archer v. State, 548 S.W.2d 71, 76 (Tex. App.—El Paso 1977, writ ref’d n.r.e.).
An attorney’s conviction for knowingly making a false statement on a loan application constituted a crime involving moral turpitude warranting disbarment. Searcy v. State Bar of Texas, 604 S.W.2d 256, 258–59 (Tex. App.—San Antonio 1980, writ ref’d n.r.e.).
Bond jumping and importation and distribution of marijuana were all acts involving moral turpitude within the meaning of the State Bar Act providing for disbarment. Attorneys are held to a more strict standard than laypersons because of public trust. An attorney assumes responsibility to the law itself because the attorney is an officer of the court. Muniz v. State, 575 S.W.2d 408, 411 (Tex. App.—Corpus Christi–Edinburg 1978, writ ref’d n.r.e.).
A Florida attorney was suspended for three months after he wrote letters prejudicial to his clients’ efforts to adopt a child. The attorney wrote the letters after getting into a fee dispute with his clients in the adoption proceedings. The court held that, though the clients suffered no actual harm, the attorney’s intentional and unjustifiable attempt to injure them resulted from his allowing “personal prejudices to interfere with his professional responsibilities.” The fee dispute arose after the clients had received the child but before a final hearing. In a letter to the social worker assigned to the case, the attorney intimated that the couple might not be financially able to care for the child and urged further investigation. After the social worker refused to withdraw her favorable opinion, the attorney wrote another letter that detailed the fee disagreement, indicated his “distress” at having the child placed with his clients, and implied that he had concerns about the couple’s moral standards. Florida Bar v. Ball, 406 So. 2d 459, 460 (Fla. 1981).
An Ohio attorney was publicly reprimanded for uttering and transmitting obscene language to the adverse party and to other attorneys in pending litigation because that conduct violated the disciplinary rule prohibiting lawyers from engaging in any conduct that adversely reflects on fitness to practice law. Columbus Bar Ass’n v. Riebel 432 N.E.2d 165, (Ohio 1982).
Attorney’s fees may give rise to a variety of ethical considerations, which are discussed in chapter 20 in this manual.
§ 1.13:1Conflicts of Interest between Attorney and Client
Generally: An attorney has a strong fiduciary relationship to the client that precludes any conflict of interest. Smith v. Dean, 240 S.W.2d 789, 791 (Tex. App.—Waco 1951, no writ).
Refusing to Accept Employment: If there is a potential conflict of interest between the interests of the client and those of the attorney, the attorney must refuse that employment:
(a)A lawyer shall not represent opposing parties to the same litigation.
(b)In other situations and except to the extent permitted by paragraph (c), a lawyer shall not represent a person if the representation of that person:
(1)involves a substantially related matter in which that person’s interests are materially and directly adverse to the interests of another client of the lawyer or the lawyer’s firm; or
(2)reasonably appears to be or become adversely limited by the lawyer’s or law firm’s responsibilities to another client or to a third person or by the lawyer’s or law firm’s own interests.
(c)A lawyer may represent a client in the circumstances described in (b) if:
(1)the lawyer reasonably believes the representation of each client will not be materially affected; and
(2)each affected or potentially affected client consents to such representation after full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation and the advantages involved, if any.
(d)A lawyer who has represented multiple parties in a matter shall not thereafter represent any of such parties in a dispute among the parties arising out of the matter, unless prior consent is obtained from all such parties to the dispute.
(e)If a lawyer has accepted representation in violation of this Rule, or if multiple representation properly accepted becomes improper under this Rule, the lawyer shall promptly withdraw from one or more representations to the extent necessary for any remaining representation not to be in violation of these Rules.
(f)If a lawyer would be prohibited by this Rule from engaging in particular conduct, no other lawyer while a member or associated with that lawyer’s firm may engage in that conduct.
Tex. Disciplinary Rules Prof’l Conduct R. 1.06. (Rule 6.05 provides exceptions to the conflicts-of-interest provisions in rule 1.06 for nonprofit and limited pro bono legal services. See Tex. Disciplinary Rules Prof’l Conduct R. 6.05.)
COMMENT: Although not required, a written waiver from each client can avoid future problems or allegations of misconduct.
An attorney who had formerly represented both parties on common matters was allowed to testify in a divorce case regarding the wife’s fitness to have custody of the children. The attorney had represented the couple before in adoption proceedings and in two unrelated damage suits. The court said the record did not show that an attorney-client relationship ever existed between the attorney and the wife concerning the divorce and noted that the attorney withdrew as counsel for the husband when it became evident the attorney would have to testify. Grosberg v. Grosberg, 68 N.W.2d 725, 727 (Wis. 1955).
An attorney, while representing the husband in a contested divorce, joined the law firm representing the wife in the same action. He then filed a motion attempting to hold his former client in contempt. The district grievance committee ruled that, once the attorney established an attorney-client relationship with the husband, he acted improperly in subsequently representing the wife in the same matter, regardless of whether any confidences were actually revealed. Neither he nor his firm could represent the wife. 45 Tex. B.J. 605 (1982).
The duty to withdraw because of conflict also applies to court-appointed attorneys. In Haley v. Boles, 824 S.W.2d 796 (Tex. App.—Tyler 1992, orig. proceeding), a trial judge appointed an attorney to represent an indigent criminal defendant. The trial court denied the attorney’s motion to withdraw based on the fact that the wife of the attorney’s partner was the district attorney. In conditionally granting the subsequent application for writ of mandamus, the court of appeals noted that the propriety of attorney-spouses representing opposing parties in a criminal case was a case of first impression but that, if there is impropriety in spouses representing adversaries, the disqualification extends to the partners and associates of the spouse. Haley, 824 S.W.2d at 797.
Former Clients: An attorney may permissibly acquire an interest adverse to that of a former client only on a showing that acquiring the interest did not require breaching any confidence, taking any unfair advantage, or using any information acquired in the attorney-client relationship. Waters v. Bruner, 355 S.W.2d 230, 233 (Tex. App.—San Antonio 1962, writ ref’d n.r.e.).
A law firm had no duty to protect a former client’s property that was the subject of a writ of execution issued to the firm under a judgment against the former client for unpaid attorney’s fees. Since the attorney-client relationship had ended well before the litigation began, the firm had no duty to protect the property sold to satisfy the judgment. Merrell v. Fanning & Harper, 597 S.W.2d 945, 950 (Tex. App.—Tyler 1980, no writ).
Acquiring Interest in Litigation: An attorney shall not acquire a proprietary interest in the cause of action or subject matter of litigation the attorney is conducting for a client, except that the attorney may acquire a lien granted by law to secure the attorney’s fee or expenses and contract in a civil case with a client for a contingent fee. Tex. Disciplinary Rules Prof’l Conduct R. 1.08(h).
The rule is preventive, for it may be violated even without a showing that a client has suffered actual harm. The rule prohibits attorneys from acquiring proprietary interests in the subject matter of litigation in order to avoid the possibility of adverse influence on the attorney and harm to the client. State v. Baker, 539 S.W.2d 367, 373 (Tex. App.—Austin 1976, writ ref’d n.r.e), overruled on other grounds, Cosgrove v. Grimes, 774 S.W.2d 662, 665 (Tex. 1989). In Baker, the attorney was disciplined for purchasing property on the client’s behalf at a sheriff’s sale and thereafter using title to the property to secure fees for himself without notice to and consent of the client.
Loans to Clients: An attorney shall not provide financial assistance to a client in connection with pending or contemplated litigation or administrative proceedings, except that an attorney may advance or guarantee court costs, expenses of litigation or administrative proceedings, and reasonably necessary medical and living expenses, the repayment of which may be contingent on the outcome of the matter, and an attorney representing an indigent client may pay court costs and expenses of litigation on behalf of the client. Tex. Disciplinary Rules Prof’l Conduct R. 1.08(d).
It is generally improper for an attorney to advance money for the client’s living expenses. Comm. on Interpretation of the Canons of Ethics, State Bar of Tex., Op. 106 (1954) (personal injury case).
Business Ventures with Clients: An attorney shall not enter into a business transaction with a client unless the transaction and terms on which the attorney acquires the interest are fair and reasonable to the client and are fully disclosed in a manner that can be reasonably understood by the client, the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction, and the client consents in writing thereto. Tex. Disciplinary Rules Prof’l Conduct R. 1.08(a).
Standard commercial transactions between the attorney and the client for products or services that the client generally markets to others are excluded from the definition of “business transactions.” Tex. Disciplinary Rules Prof’l Conduct R. 1.08(j). Tex. Disciplinary Rules Prof’l Conduct R. 1.08 cmt. 2 reiterates this exclusion, noting that the general prohibition does not apply to standard commercial transactions between the attorney and client for products or services that the client generally markets, such as banking or brokerage services, medical services, products manufactured or distributed by the client, and utilities services. In these transactions the attorney has no advantage in dealing with the client, and the restrictions are unnecessary and impracticable. The rule departs from former DR 5-104(A), which forbade an attorney to enter into a business transaction with a client if they had differing interests and if the client expected the attorney to exercise his professional judgment to protect the client, unless the client consented after disclosure. The rule does not refer to the exercise of the attorney’s professional judgment or to the client’s expectations. Business transactions are flatly prohibited unless the attorney strictly complies with Tex. Disciplinary Rules Prof’l Conduct R. 1.08(a), which appears to require written consent of the client regardless of his expectations.
§ 1.13:2Conflicts of Interest among Clients
Conflicts Created by Multiple Representation: An attorney may not accept or continue employment if two or more of the attorney’s clients might have interests that are conflicting, inconsistent, diverse, or otherwise discordant. Lott v. Ayres, 611 S.W.2d 473, 476 (Tex. App.—Dallas 1980, writ ref’d n.r.e.).
Rule 1.06 provides:
(a)A lawyer shall not represent opposing parties to the same litigation.
(b)In other situations and except to the extent permitted by paragraph (c), a lawyer shall not represent a person if the representation of that person:
(1)involves a substantially related matter in which that person’s interests are materially and directly adverse to the interests of another client of the lawyer or the lawyer’s firm; or
(2)reasonably appears to be or become adversely limited by the lawyer’s or law firm’s responsibilities to another client or to a third person or by the lawyer’s or law firm’s own interests.
(c)A lawyer may represent a client in the circumstances described in (b) if:
(1)the lawyer reasonably believes the representation of each client will not be materially affected; and
(2)each affected or potentially affected client consents to such representation after full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation and the advantages involved, if any.
(d)A lawyer who has represented multiple parties in a matter shall not thereafter represent any of such parties in a dispute among the parties arising out of the matter, unless prior consent is obtained from all such parties to the dispute.
(e)If a lawyer has accepted representation in violation of this Rule, or if multiple representation properly accepted becomes improper under this Rule, the lawyer shall promptly withdraw from one or more representations to the extent necessary for any remaining representation not to be in violation of these Rules.
(f)If a lawyer would be prohibited by this Rule from engaging in particular conduct, no other lawyer while a member or associated with that lawyer’s firm may engage in that conduct.
Tex. Disciplinary Rules Prof’l Conduct R. 1.06. (Rule 6.05 provides exceptions to the conflicts-of-interest provisions in rule 1.06 for nonprofit and limited pro bono legal services. See Tex. Disciplinary Rules Prof’l Conduct R. 6.05.)
The prohibition extends only to interests that are in fact adverse and hostile. For example, it did not preclude one attorney from representing both parents in a proceeding to terminate their parental rights. In re H.W.E., 613 S.W.2d 71, 72 (Tex. App.—Fort Worth 1981, no writ); see also Tex. Fam. Code § 107.013(b).
An attorney may properly represent both buyer and seller in real estate transactions if all parties agree after full disclosure of the facts. One court held such representation proper under these circumstances: The purchasers were satisfied with the attorney’s handling of the original transaction; they were aware of the attorney’s position as trustee; and they understood that as trustee he had power to sell the property in case of default. Dillard v. Broyles, 633 S.W.2d 636, 642 (Tex. App.—Corpus Christi–Edinburg 1982, writ ref’d n.r.e.).
Conflicts Created by Prior Representation: Without prior consent, an attorney who personally has formerly represented a client in a matter shall not thereafter represent another person in a matter adverse to the former client in which the other person questions the validity of the attorney’s services or work product for the former client, or if the representation in reasonable probability will involve a violation of Tex. Disciplinary Rules Prof’l Conduct R. 1.05, or if it is the same or a substantially related matter. Tex. Disciplinary Rules Prof’l Conduct R. 1.09(a). (Rule 6.05 provides exceptions to the conflicts-of-interest provisions in rule 1.09 for nonprofit and limited pro bono legal services. See Tex. Disciplinary Rules Prof’l Conduct R. 6.05.)
The fact that the lawyer has no recollection of the initial consultation or the matter disclosed in the meeting is of no consequence. The former client is entitled to a conclusive presumption that he imparted confidences and secrets. In re Z.N.H., 280 S.W.3d 481, 485 (Tex. App.—Eastland 2009, no pet.).
The issue of what constitutes a “substantial relation” in this regard has arisen in some cases. An attorney’s representation of a husband and wife in a personal injury action involving the wife’s injuries did not preclude his representation of the wife in a divorce action filed while the first suit was pending. When the firm assumed representation of the wife in the divorce, it terminated representation of the husband in the personal injury suit. Lott v. Lott, 605 S.W.2d 665, 668 (Tex. App.—Dallas 1980, writ dism’d). The prior representation of a couple in a protest to a zoning change did not prevent an attorney from later representing the husband in a divorce case. In re Frost, No. 12-08-00154-CV, 2008 WL 2122597 (Tex. App.—Tyler May 21, 2008, orig. proceeding) (mem. op.).
Similarly, the court did not find a sufficient relation to create a conflict when an attorney represented a clinic in a contract dispute against a doctor to whom he had previously given advice on the status of an out-of-state divorce decree. Braun v. Valley Ear, Nose & Throat Specialists, 611 S.W.2d 470, 472 (Tex. App.—Corpus Christi–Edinburg 1980, no writ).
A party who fails to seek disqualification timely waives the complaint. Grant v. Thirteenth Court of Appeals, 888 S.W.2d 466, 468 (Tex. 1994) (orig. proceeding) (per curiam). The court will consider the length of time between the moment the conflict became apparent to the aggrieved party and the time the motion for disqualification is filed in determining whether the complaint was waived. Vaughan v. Walther, 875 S.W.2d 690, 690–91 (Tex. 1994) (orig. proceeding) (per curiam); see also In re Epic Holdings, Inc., 985 S.W.2d 41, 52–54 (Tex. 1998) (orig. proceeding). The court should also consider any other evidence that indicates the motion is being filed not due to a concern that confidences related in an attorney-client relationship may be divulged, but as a dilatory trial tactic. See Spears v. Fourth Court of Appeals, 797 S.W.2d 654, 656 (Tex. 1990) (orig. proceeding); Wasserman v. Black, 910 S.W.2d 564, 568 (Tex. App.—Waco 1995, orig. proceeding).
COMMENT: Because the appeal of the denial of attorney disqualification does not adequately remedy the injury, mandamus relief is available to correct an abuse of discretion.
“Friendly Divorces”: One attorney’s representation of both parties in a divorce is a common source of conflict of interest. The husband and wife usually initiate this arrangement to save expenses when they consider that the divorce will be friendly. However, once a conflict arises, they both are likely to blame the attorney for their problems, for each party will maintain that the attorney was his or her exclusive representative. One commentator has observed:
In handling the dissolution of a marital estate, the attorney’s ethical obligations require attempts to maximize the client’s share of marital property, minimize tax consequences and protect support, custody and visitation rights. When an attorney attempts to represent both parties to a divorce, there is an inherent conflict which necessarily limits the ability of the attorney to advocate the best interests of the client.
Ronald E. Mallen, On Guard: How to Avoid That Malpractice Suit, 1 Fam. Advoc. 10, 12 (1978). See also section 1.25:3 below regarding the attorney’s duty to advise clients of conflict of interest.
Separation agreements, like divorces, can generate the same problems with conflict of interest. A separation agreement may be voided because of one party’s taking unfair advantage or overreaching. One court found that a husband was the unwitting victim of a separation agreement that was “unconscionable, oppressive and unfair” because of the following conditions: He was unfamiliar with the technicalities of the agreement; he was led to believe that his wife’s attorney would protect both their interests; and he was not advised before making the agreement that he should seek independent legal advice. Jensen v. Jensen, 557 P.2d 200 (Idaho 1976).
“An attorney may ethically communicate with an opposing party who is not represented by counsel with respect to prospective litigation provided he does not mislead the opposing party in any way or undertake to advise him as to the law or his status as a litigant.” Comm. on Interpretation of the Canons of Ethics, State Bar of Tex., Op. 335 (1967).
For an in-depth discussion of multiple representation of spouses in an uncontested divorce, see Nancy J. Moore, Conflicts of Interest in the Simultaneous Representation of Multiple Clients: A Proposed Solution to the Current Confusion and Controversy, 61 Texas L. Rev. 211, 245–58 (1982).
Note: Tex. Comm. on Prof’l Ethics, Op. 583 (2008) states, “Under the Texas Disciplinary Rules of Professional Conduct, a lawyer may not agree to serve both as a mediator between parties in a divorce and as a lawyer to prepare the divorce decree and other necessary documents to effect an agreement resulting from the mediation. Because a divorce is a litigation proceeding, a lawyer is not permitted to represent both parties in preparing documents to effect the terms of an agreed divorce.”
Rule 1.05 of the Texas Disciplinary Rules of Professional Conduct concerns the attorney’s duties with regard to the confidentiality of client information. See the discussion in the practice notes in section 2.8 in this manual regarding confidences and secrets of clients and the obtaining of information.
An attorney must hold funds and other property belonging in whole or in part to clients or third persons that are in an attorney’s possession in connection with a representation separate from the attorney’s own property. These funds must be kept in a separate account, designated as a “trust” or “escrow” account, maintained in the state where the attorney’s office is situated or elsewhere with the consent of the client or third person. Other client property must be identified as such and appropriately safeguarded. The attorney must keep complete records of account funds and other property and preserve them for five years after termination of the representation. Tex. Disciplinary Rules Prof’l Conduct R. 1.14(a).
On receiving funds or other property in which a client or third person has an interest, an attorney must promptly notify the client or third person. Unless expressly permitted in the rules or otherwise permitted by law or by agreement with the client, an attorney must promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, on request by the client or third person, promptly render a full account regarding the property. Tex. Disciplinary Rules Prof’l Conduct R. 1.14(b).
When in the course of representation an attorney is in possession of funds or other property in which both the attorney and another person claim interests, the attorney must keep the property separate until there is an account and severance of their interests. All funds in a trust or escrow account may be disbursed only to those persons entitled to receive them by virtue of the representation or by law. If a dispute arises concerning their interests, the attorney must keep the portion in dispute separate until the dispute is resolved, and the undisputed portion must be distributed appropriately. Tex. Disciplinary Rules Prof’l Conduct R. 1.14(c).
A two-year suspension of an attorney’s license was upheld as a proper sanction for commingling funds. The jury found that the attorney had deposited a client’s funds in a general business account. The court held that a fraudulent, willful, or culpable intent was not necessary to invoke the suspension and that the client’s consent did not absolve the attorney from liability. The purpose of former DR 9-102 was to guard against loss of a client’s funds that may occur even with “good intentions.” Archer v. State, 548 S.W.2d 71, 73–74 (Tex. App.—El Paso 1977, writ ref’d n.r.e.).
True retainer fees are earned when received and may be deposited in the attorney’s account, but a refundable retainer belongs to the client until it is earned or expenses are incurred and must be held in the lawyer’s trust account. Retainer fees are discussed in section 20.4 in this manual.
It is unconstitutional to prohibit attorneys from advertising prices charged for uncontested divorces, simple adoptions, uncontested personal bankruptcies, changes of name, and routine services, as long as the advertising is not false, deceptive, or misleading. Bates v. State Bar of Arizona, 433 U.S. 350 (1977).
However, certain restrictions on targeted direct-mail solicitation may be imposed by a state bar without violating the First Amendment free-speech guarantees as applied to commercial speech. “Intermediate scrutiny” is to be applied to regulation of commercial speech, and state bar associations have the right to restrict certain forms of advertising by lawyers. Florida Bar v. Went for It, Inc., 515 U.S. 618 (1995).
§ 1.16:2Texas Advertising Guidelines
The following practice notes briefly summarize salient parts of the rules adopted by the Supreme Court of Texas relating to advertising, but attorneys planning any form of advertising or solicitation, including on websites, should examine the advertising rules closely and direct any inquiries to the Advertising Review Committee of the State Bar of Texas.
For purposes of the advertising rules, an “advertisement” is a communication substantially motivated by pecuniary gain that is made by or on behalf of a lawyer to members of the public in general, which offers or promotes legal services under circumstances where the lawyer neither knows nor reasonably should know that the recipients need legal services in particular matters. Tex. Disciplinary Rules Prof’l Conduct R. 7.01(b)(1). A “solicitation communication” is a communication substantially motivated by pecuniary gain that is made by or on behalf of a lawyer to a specific person who has not sought the lawyer’s advice or services that reasonably can be understood as offering to provide legal services that the lawyer knows or reasonably should know the person needs in a particular matter. Tex. Disciplinary Rules Prof’l Conduct R. 7.01(b)(2).
A statement or disclaimer required by the advertising rules must be sufficiently clear that it can reasonably be understood by an ordinary person, and it must be made in each language used in the communication. A statement that a language is spoken or understood does not require a statement or disclaimer in that language. Tex. Disciplinary Rules Prof’l Conduct R. 7.01(d).
Communications about Services: Making or sponsoring false or misleading communications about lawyers’ services or qualifications is specifically prohibited. Information about legal services must be truthful and nondeceptive. A communication is false or misleading if it contains a material misrepresentation of fact or law or omits a fact necessary to make the statement considered as a whole not materially misleading. A statement is misleading if there is a substantial likelihood that the statement will lead a reasonable person to formulate a specific conclusion about the lawyer or the lawyer’s services for which there is no reasonable factual foundation. A statement is also misleading if it is substantially likely to create unjustified expectations about the results the lawyer can achieve. Tex. Disciplinary Rules Prof’l Conduct R. 7.01(a).
A lawyer may not state or imply that the lawyer can achieve results in the representation by unlawful use of violence or means that violate the rules or other law. Tex. Disciplinary Rules Prof’l Conduct R. 7.01(e).
A lawyer who advertises the amount of a verdict, knowing that the verdict was later reduced or reversed or that the case was settled for a lesser amount, must state in each advertisement of the verdict, with equal or greater prominence, the amount of money that the client ultimately received. Tex. Disciplinary Rules Prof’l Conduct R. 7.01(g).
Firm Names: A lawyer may practice law under a trade name that is not false or misleading. A law firm name may include the names of current members of the firm and of deceased or retired members of the firm, or of a predecessor firm, if there has been a succession in the firm identity. The name of a lawyer holding a public office may not be used in the law firm’s name, or in communications on its behalf, during any substantial period in which the lawyer is not actively and regularly practicing with the firm. A law firm with an office in more than one jurisdiction may use the same name or other professional designation in each jurisdiction, but identification of the lawyers in an office of the firm must indicate the jurisdictional limitations on those who are not licensed to practice in the jurisdiction where the office is located. Tex. Disciplinary Rules Prof’l Conduct R. 7.01(c).
A lawyer may state or imply that the lawyer practices in a partnership or other entity only when that is accurate. Tex. Disciplinary Rules Prof’l Conduct R. 7.01(f).
Advertisements: Advertisements for legal services are governed by rule 7.02.
An advertisement of legal services must publish the name of a lawyer who is responsible for the content of the advertisement and identify the lawyer’s primary practice location. Tex. Disciplinary Rules Prof’l Conduct R. 7.02(a).
A lawyer who advertises may communicate that the lawyer does or does not practice in particular fields of law but—with certain exceptions—may not state that the lawyer has been certified or designated by an organization as possessing special competence or that the lawyer is a member of an organization the name of which implies that its members possess special competence. Tex. Disciplinary Rules Prof’l Conduct R. 7.02(b).
The first exception provides that a lawyer who has been awarded a Certificate of Special Competence by the Texas Board of Legal Specialization in the area so advertised may state with respect to each such area, “Board Certified, area of specialization -- Texas Board of Legal Specialization.” Tex. Disciplinary Rules Prof’l Conduct R. 7.02(b)(1).
The second exception is for a lawyer who is a member of an organization the name of which implies that its members possess special competence, or who has been certified or designated by an organization as possessing special competence in a field of practice. Such a lawyer may include a factually accurate, nonmisleading statement of that membership or certification, but only if the organization has been accredited by the Texas Board of Legal Specialization as a bona fide organization that admits to membership or grants certification only on the basis of published criteria that the Texas Board of Legal Specialization has established as required for such certification. Tex. Disciplinary Rules Prof’l Conduct R. 7.02(b)(2).
If a lawyer’s advertisement discloses a willingness to render services on a contingent fee basis, the advertisement must state whether the client will be obligated to pay for other expenses, such as the costs of litigation. Tex. Disciplinary Rules Prof’l Conduct R. 7.02(c).
A lawyer who advertises a specific fee or range of fees for an identified service must conform to the advertised fee or range of fees for the period during which the advertisement is reasonably expected to be in circulation or otherwise expected to be effective in attracting clients, unless the advertisement specifies a shorter period. However, a lawyer is not bound to conform to the advertised fee or range of fees for a period of more than one year after the date of publication, unless the lawyer has expressly promised to do so. Tex. Disciplinary Rules Prof’l Conduct R. 7.02(d).
Solicitations and Other Prohibited Communications: A lawyer may not solicit professional employment from a nonclient, in person or by regulated telephone, social media, or other electronic contact, unless the target of the solicitation is another lawyer; a person who has a family, close personal, or prior business or professional relationship with the lawyer; or a person the lawyer knows to be an experienced user of the type of legal services involved for business matters. Tex. Disciplinary Rules Prof’l Conduct R. 7.03(b). A lawyer “solicits” employment by making a “solicitation communication,” as that term is defined in rule 7.01(b)(2) (“a communication substantially motivated by pecuniary gain that is made by or on behalf of a lawyer to a specific person who has not sought the lawyer’s advice or services that reasonably can be understood as offering to provide legal services that the lawyer knows or reasonably should know the person needs in a particular matter”). Tex. Disciplinary Rules Prof’l Conduct R. 7.03(a)(2). “Regulated telephone, social media, or other electronic contact” means telephone, social media, or electronic communication initiated by a lawyer, or by a person acting on behalf of a lawyer, that involves communication in a live or electronically interactive manner. Tex. Disciplinary Rules Prof’l Conduct R. 7.03(a)(1).
Because rule 7.01 provides that a solicitation communication is one that is substantially motivated by pecuniary gain, this ban does not apply to the activities of lawyers working for public or charitable legal services organizations. Tex. Disciplinary Rules Prof’l Conduct R. 7.03 cmt. 1. Nor does it apply if the communication is directed to the general public. Tex. Disciplinary Rules Prof’l Conduct R. 7.03 cmt. 2. Otherwise permissible targeted solicitation through regular mail, email, or other means not involving communication in a live or electronically interactive manner is not prohibited by rule 7.03. See Tex. Disciplinary Rules Prof’l Conduct R. 7.03 cmts. 3–6.
A lawyer may not send, deliver, or transmit—or knowingly permit or cause another person to do so—a communication that involves coercion, duress, overreaching, intimidation, or undue influence. Tex. Disciplinary Rules Prof’l Conduct R. 7.03(c). A lawyer may not send, deliver, or transmit—or knowingly permit or cause another person to do so—a solicitation communication to a prospective client, if (1) the communication is misleadingly designed to resemble a legal pleading or other legal document or (2) the communication is not plainly marked or clearly designated an advertisement unless the target of the communication is another lawyer; a person who has a family, close personal, or prior business or professional relationship with the lawyer; or a person the lawyer knows to be an experienced user of the type of legal services involved for business matters. Tex. Disciplinary Rules Prof’l Conduct R. 7.03(d). (Communications containing certain elements are rebuttably presumed to be “plainly marked or clearly designated” as advertisements. See Tex. Disciplinary Rules Prof’l Conduct R. 7.03 cmt. 10.)
A lawyer may not pay, give, or offer to pay or give referral fees to a nonlawyer, except for nominal gifts not intended or reasonably expected to be a form of compensation for recommending the lawyer’s services. However, a lawyer may pay for advertising and for the expenses of a lawyer referral service and may refer clients to another lawyer or a nonlawyer professional under certain circumstances. Tex. Disciplinary Rules Prof’l Conduct R. 7.03(e).
A lawyer may not—to secure employment—pay, give, advance, or offer to pay, give, or advance anything of value to a prospective client, except for actual litigation expenses and other amounts allowed under rule 1.08(d) or ordinary social hospitality of nominal value. Tex. Disciplinary Rules Prof’l Conduct R. 7.03(f).
Rule 7.03 does not prohibit communications authorized by law, such as notice to class members in class action litigation. Tex. Disciplinary Rules Prof’l Conduct R. 7.03(g).
Filing Requirements: Except for communications that are exempt under rule 7.05 (see below), a lawyer must file certain materials with the State Bar’s Advertising Review Committee no later than ten days after the date of dissemination of an advertisement of legal services or ten days after the date of a solicitation communication sent by any means. The materials required to be filed are a copy of the advertisement or solicitation communication (including packaging if applicable) in the form in which it appeared or will appear on dissemination; a completed lawyer advertising and solicitation communication application; and payment of the required fee. Tex. Disciplinary Rules Prof’l Conduct R. 7.04(a). If the same form solicitation letter is sent to several persons, only a representative sample of the letter and accompanying envelope need be filed. Tex. Disciplinary Rules Prof’l Conduct R. 7.04 cmt. 2.
There is a specific procedure for preapproval of advertisements and solicitation communications by the Advertising Review Committee. A lawyer seeking preapproval may submit the material specified in rule 7.04(a) to the committee not fewer than thirty days before the date of first dissemination. In the case of an advertisement or solicitation communication that has not yet been produced, the documentation will consist of a proposed text, production script, or other description, including details about the illustrations, actions, events, scenes, and background sounds that will be depicted. A finding of noncompliance by the committee is not binding in a disciplinary proceeding, but a finding of compliance is binding in the submitting lawyer’s favor as to all materials submitted for preapproval if the lawyer fairly and accurately described the advertisement or solicitation communication that was later produced. A finding of compliance is admissible evidence if offered by a party. Tex. Disciplinary Rules Prof’l Conduct R. 7.04(c).
If, based on filings, the committee reasonably believes a lawyer disseminated a communication that violates rule 7.01, 7.02, or 7.03 or otherwise engaged in conduct that raises a substantial question about the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects, the committee must report the lawyer to the appropriate disciplinary authority. Tex. Disciplinary Rules Prof’l Conduct R. 7.04 cmt. 1.
If requested by the Advertising Review Committee, a lawyer must promptly submit information to substantiate statements or representations made or implied in an advertisement or solicitation communication. Tex. Disciplinary Rules Prof’l Conduct R. 7.04(b). This provision does not apply to communications not substantially motivated by pecuniary gain. Tex. Disciplinary Rules Prof’l Conduct R. 7.04 cmt. 3.
Exemptions from Filing Requirements: Certain types of communications, unless they fail to comply with rules 7.01, 7.02, and 7.03, are exempt from the filing requirements. These communications are described in detail in rule 7.05 and include certain communications of a bona fide nonprofit legal aid organization; certain information and links posted on a law firm website; listings in a regularly published law list; announcement cards stating new or changed associations, new offices, or similar changes relating to a lawyer or law firm, and business cards; professional newsletters and solicitation communications sent to certain types of recipients; certain communications in social media or other media that do not expressly offer legal services; certain advertisements that identify a lawyer or a firm as a contributor or sponsor of a charitable, community, or public interest program, activity, or event; and communications that contain only certain basic types of information about the lawyer or the firm. See Tex. Disciplinary Rules Prof’l Conduct R. 7.05.
Communications not substantially motivated by pecuniary gain need not be filed. Tex. Disciplinary Rules Prof’l Conduct R. 7.05 cmt. 1.
Prohibited Employment: An attorney is generally prohibited from accepting or continuing employment if the employment was procured by conduct prohibited by the advertising rules, certain criminal conduct, or barratry. See Tex. Disciplinary Rules Prof’l Conduct R. 7.06.
Jurisdiction: Rule 8.05 designates who will be subject to discipline by the State Bar of Texas for violation of the Texas advertising guidelines. In certain cases, an attorney admitted in Texas may be disciplined for advertisements made in other jurisdictions. Tex. Disciplinary Rules Prof’l Conduct R. 8.05.
§ 1.16:3Television Advertising
Subchapter J of chapter 81 of the Texas Government Code applies to television advertisements that promote a person’s provision of legal services or solicit clients to receive legal services. See Tex. Gov’t Code § 81.151(a). “Based on clear legislative intent, the State Bar Advertising Review Department considers Section 81.151 to apply only to television advertisements for legal services regarding medications or medical devices.” www.texasbar.com/Content/NavigationMenu/ForLawyers/
GrievanceandEthics/AdvertisingReview (click on “Frequently Asked Questions Regarding SB 1189 effective Sept. 1, 2019”).
An attorney who finds it necessary to testify as a witness should first consult rule 3.08, which provides:
(a)A lawyer shall not accept or continue employment as an advocate before a tribunal in a contemplated or pending adjudicatory proceeding if the lawyer knows or believes that the lawyer is or may be a witness necessary to establish an essential fact on behalf of the lawyer’s client, unless:
(1)the testimony relates to an uncontested issue;
(2)the testimony will relate solely to a matter of formality and there is no reason to believe that substantial evidence will be offered in opposition to the testimony;
(3)the testimony relates to the nature and value of legal services rendered in the case;
(4)the lawyer is a party to the action and is appearing pro se; or
(5)the lawyer has promptly notified opposing counsel that the lawyer expects to testify in the matter and disqualification of the lawyer would work substantial hardship on the client.
(b)A lawyer shall not continue as an advocate in a pending adjudicatory proceeding if the lawyer believes that the lawyer will be compelled to furnish testimony that will be substantially adverse to the lawyer’s client, unless the client consents after full disclosure.
(c)Without the client’s informed consent, a lawyer may not act as advocate in an adjudicatory proceeding in which another lawyer in the lawyer’s firm is prohibited by paragraphs (a) or (b) from serving as advocate. If the lawyer to be called as a witness could not also serve as an advocate under this Rule, that lawyer shall not take an active role before the tribunal in the presentation of the matter.
Tex. Disciplinary Rules Prof’l Conduct R. 3.08.
However, disqualification is a severe remedy. In re Sanders, 153 S.W.3d 54, 57 (Tex. 2004) (orig. proceeding). “Mere allegations of unethical conduct or evidence showing a remote possibility of a violation of the disciplinary rules will not suffice” to merit disqualification. Spears v. Fourth Court of Appeals, 797 S.W.2d 654, 656 (Tex. 1990) (orig. proceeding). Because of the severity of the remedy, courts must adhere to an exacting standard so as to discourage the use of a motion to disqualify as a dilatory trial tactic. In re Butler, 987 S.W.2d 221, 224 (Tex. App.—Houston [14th Dist.] 1999, orig. proceeding). The party requesting disqualification must demonstrate that the opposing lawyer’s dual role as attorney and witness will cause the party actual prejudice. Ayres v. Canales, 790 S.W.2d 554, 558 (Tex. 1990) (orig. proceeding); see also In re Frost, No. 12-08-00154-CV, 2008 WL 2122597 (Tex. App.—Tyler May 21, 2008, orig. proceeding) (mem. op.). Finally, a lawyer should not seek to disqualify an opposing lawyer by unnecessarily calling that lawyer as a witness. Tex. Disciplinary Rules Prof’l Conduct R. 3.08 cmt. 10.
[Sections 1.18 through 1.20 are reserved for expansion.]
§ 1.21Nature of Legal Malpractice Action
The weight of authority in Texas holds that a legal malpractice action is a common-law tort arising from an attorney’s negligence that breaches a duty to represent a client competently and that proximately causes damages to the client. See Woodburn v. Turley, 625 F.2d 589 (5th Cir. 1980); Oldham v. Sparks, 28 Tex. 425, 428 (1866); Gabel v. Sandoval, 648 S.W.2d 398, 399 (Tex. App.—San Antonio 1983, writ dism’d).
There is some Texas authority for breach-of-contract malpractice actions based on an attorney’s breach of agreement to perform legal services. See Bolton v. Foreman, 263 S.W.2d 618, 619 (Tex. App.—Galveston 1953, writ ref’d n.r.e.); Kruegel v. Porter, 136 S.W. 801, 803 (Tex. App. 1911), aff’d, 155 S.W. 174 (Tex. 1913). With the advent of advertising and specialization by attorneys in Texas, the historical basis for the courts’ reluctance to hold attorneys liable on an implied or expressed warranty theory may slowly erode.
In addition to other remedies, a client may seek fee forfeiture. The Texas Supreme Court has held that a client need not prove actual damages in order to obtain a forfeiture of an attorney’s fee when the attorney breaches his fiduciary duty to the client, because the central purpose of the remedy regarding forfeiture is to protect the relationship of trust from an agent’s disloyalty or other misconduct. Burrow v. Arce, 997 S.W.2d 229, 237–40 (Tex. 1999). For a detailed discussion of the Burrow case and fee forfeiture in general, see Gregg S. Weinberg & B. Todd Wright, “Trust Me” and Other Swear Words—Another Grim Tale of Attorney’s Fee Forfeiture, in State Bar of Tex. Prof. Dev. Program, Advanced Family Law Course 25 (2000).
§ 1.22Elements of Legal Malpractice
§ 1.22:1Attorney-Client Relationship and Duty
In a negligence action for malpractice, the plaintiff must prove the existence of an attorney-client relationship at the time of the alleged malpractice. Shropshire v. Freeman, 510 S.W.2d 405, 406 (Tex. App.—Austin 1974, writ ref’d n.r.e.).
An attorney shall not accept or continue employment in a legal matter that he knows or should know is beyond his competence unless another attorney competent to handle the matter is associated with him in the matter (with the client’s prior informed consent) or unless the advice or assistance of the attorney is required in an emergency and the attorney limits the advice and assistance to that which is reasonably necessary under the circumstances. Additionally, an attorney shall not neglect a legal matter entrusted to him or “frequently” fail to carry out completely the obligations that the attorney owes his clients. “Neglect” is defined as inattentiveness involving a conscious disregard for the responsibilities owed a client. Tex. Disciplinary Rules Prof’l Conduct R. 1.01.
The general duties of an attorney in representing a client have been described as follows:
Ordinarily when an attorney engages in the practice of the law and contracts to prosecute an action in behalf of his client, he impliedly represents that (1) he possesses the requisite degree of learning, skill, and ability necessary to the practice of his profession and which others similarly situated ordinarily possess; (2) he will exert his best judgment in the prosecution of the litigation entrusted to him; and (3) he will exercise reasonable and ordinary care and diligence in the use of his skill and in the application of his knowledge to his client’s cause.
Cook v. Irion, 409 S.W.2d 475, 477 (Tex. App.—San Antonio 1966, no writ), disapproved on other grounds, Cosgrove v. Grimes, 774 S.W.2d 662, 665 (Tex. 1989) (quoting Hodges v. Carter, 239 N.C. 517, 80 S.E.2d 144 (1954)).
COMMENT: There is a conflict of authority regarding the enforceability of a provision in a legal services contract requiring the arbitration of a malpractice claim. Several cases approve enforcement of such arbitration clauses. See In re Pham, 314 S.W.3d 520, 526 (Tex. App.—Houston [14th Dist.] 2010, orig. proceeding); Tanox, Inc. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P., 105 S.W.3d 244, 268 (Tex. App.—Houston [14th Dist.] 2003, pet. denied); Henry v. Gonzalez, 18 S.W.3d 684, 691–92 (Tex. App.—San Antonio 2000, pet. dism’d). But see In re Godt, 28 S.W.3d 732, 738–39 (Tex. App.—Corpus Christi–Edinburg 2000, orig. proceeding), which holds to the contrary. See also Jean Fleming Powers, Ethical Implications of Attorneys Requiring Clients to Submit Malpractice Claims to ADR, 38 S. Tex. L. Rev. 625 (1997). In In re Pham, 314 S.W.3d at 526, the Houston court of appeals said that the public policy arguments against enforcement of such clauses are best directed to the legislature.
§ 1.22:2Negligent Breach of Duty
“Neglect” Is Not Negligence: “Neglect of a legal matter entrusted to him” involves indifference and consistent failure to carry out the obligation that the attorney has assumed to the client or conscious disregard for responsibilities owed the client. “Neglect is usually evidenced by more than a single act or omission.” 61 A.B.A. J. 986 (1975) (ABA Informal Op. 1273).
Good-Faith Errors in Judgment: The “error in judgment” rule has been substantially rewritten in Cosgrove v. Grimes, 774 S.W.2d 662, 664–65 (Tex. 1989). Cosgrove initially retained an attorney (Bass) to sue for a personal injury claim arising from an automobile accident. Bass left town and, according to Cosgrove, told Cosgrove he had turned the case over to attorney Grimes. However, Grimes testified that he first heard of the case when Cosgrove came to his office a mere five days before the statute of limitations was to have expired. Cosgrove gave Grimes the information about the accident, including its location and the person to sue (one Timothy Purnell). Grimes testified that he found Cosgrove to be an intelligent man on whom he could rely for the basic facts. Suit was filed on the basis of the information. It later was discovered that Purnell was the passenger, not the driver, and that the petition stated the wrong location of the accident. Both the decision of the court of appeals (Cosgrove v. Grimes, 757 S.W.2d 508, 510–11 (Tex. App.—Houston [1st Dist.] 1988)) and that of the supreme court detail the application of the error-in-judgment rule.
The rule, commonly known as the good-faith defense, has historically excused an attorney for any error in judgment if he acted in good faith and in an honest belief that the act or advice was well founded and in the best interest of the client. See Cook v. Irion, 409 S.W.2d 475, 477 (Tex. App.—San Antonio 1966, no writ), disapproved on other grounds, Cosgrove, 774 S.W.2d at 665, in which the plaintiffs’ attorneys in a personal injury action sued only one of three potential defendants. An instructed verdict was granted against the plaintiffs after the two-year statute of limitations expired. In an appeal from the legal malpractice action, the court concluded that the good-faith defense applied and that the appellants had failed to establish the attorneys’ negligence.
The good-faith exception has been applied to an attorney’s failure to dispose of a client’s nonvested military retirement benefits in a divorce action and to warn him of a possible later partition action based on the unclear law at the time. Medrano v. Miller, 608 S.W.2d 781, 784 (Tex. App.—San Antonio 1980, writ ref’d n.r.e.), disapproved on other grounds, Cosgrove, 774 S.W.2d at 665. It has been held inapplicable in the following disciplinary proceedings:
1.Violating a disciplinary rule prohibiting receiving compensation from anyone other than one’s client. State v. Baker, 539 S.W.2d 367, 375 (Tex. App.—Austin 1976, writ ref’d n.r.e.), disapproved on other grounds, Cosgrove, 774 S.W.2d at 665.
2.Violating disciplinary rules against commingling. Archer v. State, 548 S.W.2d 71, 74 (Tex. App.—El Paso 1977, writ ref’d n.r.e.).
3.Making false statements that suit had been filed and failing to file suit before the running of the statute of limitations. Hicks v. State, 422 S.W.2d 539, 542 (Tex. App.—Houston [14th Dist.] 1967, writ ref’d n.r.e.), disapproved on other grounds, Cosgrove, 774 S.W.2d at 665.
A review of the cases involving the rule indicates quite clearly that it had been held to be a subjective test before the decision in Cosgrove. Cosgrove mandates that the proper standard is the objective exercise of professional judgment:
There is no subjective good faith excuse for attorney negligence. A lawyer in Texas is held to the standard of care which would be exercised by a reasonably prudent attorney. The jury must evaluate his conduct based on the information the attorney has at the time of the alleged act of negligence. In some instances an attorney is required to make tactical or strategic decisions. Ostensibly, the good faith exception was created to protect this unique attorney work product. However, allowing the attorney to assert his subjective good faith, when the acts he pursues are unreasonable as measured by the reasonably competent practitioner standard, creates too great a burden for wronged clients to overcome. The instruction to the jury should clearly set out the standard for negligence in terms which encompass the attorney’s reasonableness in choosing one course of action over another.
If an attorney makes a decision which a reasonably prudent attorney could make in the same or similar circumstance, it is not an act of negligence even if the result is undesirable. Attorneys cannot be held strictly liable for all of their clients’ unfulfilled expectations. An attorney who makes a reasonable decision in the handling of a case may not be held liable if the decision later proves to be imperfect. The standard is an objective exercise of professional judgment, not the subjective belief that his acts are in good faith.
Cosgrove, 774 S.W.2d at 664–65.
No Ensuring Desired Result: The duty to use reasonable care, diligence, and skill does not include ensuring or guaranteeing the desired result. Cosgrove, 774 S.W.2d at 665.
To constitute malpractice, the attorney’s negligent breach of duty must proximately cause the client’s damages. See Peeler v. Hughes & Luce, 909 S.W.2d 494, 496 (Tex. 1995); Patterson & Wallace v. Frazer, 79 S.W. 1077, 1080–81 (Tex. App. 1904, no writ).
A client who claims that the attorney’s malpractice caused loss of the cause of action must prove that the initial suit would have been successful but for the attorney’s negligence and must show the amount that could have been collected on a successful judgment. Jackson v. Urban, Coolidge, Pennington & Scott, 516 S.W.2d 948, 949 (Tex. App.—Houston [1st Dist.] 1974, writ ref’d n.r.e.).
In an Oregon case, for example, a child sued an attorney who had negligently failed to perfect her adoption. On discovering the legally defective procedure, the would-be father refused to recognize any obligation to support the child. The court dismissed the suit because it found insufficient certainty that the child would have collected support but for the attorney’s negligence. Metzker v. Slocum, 537 P.2d 74 (Or. 1975).
Note, however, that the determination of proximate cause differs in cases of malpractice involving the negligent handling of an appeal. Although the issue of proximate cause is usually a question of fact, the supreme court has determined that in a case of appellate legal malpractice it is a question of law. Millhouse v. Wiesenthal, 775 S.W.2d 626, 628 (Tex. 1989).
§ 1.22:4Client Must Be Damaged
Amount of Damages: Another essential element is that the client must sustain damages as a result of the attorney’s negligence. Fireman’s Fund American Insurance Co. v. Patterson & Lamberty, Inc., 528 S.W.2d 67, 69 (Tex. App.—Tyler 1975, writ ref’d n.r.e.).
On proof that the attorney’s negligence proximately caused the client’s damages, proper recovery is the amount the client would have recovered from the original defendant. Schlosser v. Tropoli, 609 S.W.2d 255, 259 (Tex. App.—Houston [14th Dist.] 1980, writ ref’d n.r.e.) (upholding $100,000 judgment against attorney who allowed case to be dismissed for want of prosecution).
In a malpractice action by a husband for the attorney’s failure to raise the issue of retirement benefits and secure the benefits for the husband at the time of the divorce, the court found that the plaintiff had suffered no damage. The husband was in no worse position because of the subsequent partition of the benefits than he would have been if the benefits had been properly divided in the divorce suit eight years earlier. Medrano v. Miller, 608 S.W.2d 781, 784 (Tex. App.—San Antonio 1980, writ ref’d n.r.e.), disapproved on other grounds, Cosgrove v. Grimes, 774 S.W.2d 662, 665 (Tex. 1989).
If the attorney is found liable, any payment collected from the original defendant is credited against damages assessed against the attorney. Fireman’s Fund American Insurance Co., 528 S.W.2d at 70.
If a judgment is entered against a client because of the attorney’s negligence, the client may recover the amount of the judgment from the attorney even if the client has not yet paid the judgment. Montfort v. Jeter, 567 S.W.2d 498, 499–500 (Tex. 1978).
Recovery in a malpractice action is not limited to actual damages but may also include damages for mental anguish and exemplary damages. See Montfort, 567 S.W.2d at 500.
Requirement of Actual Damages: The client must suffer actual damages in order to recover from a negligent attorney. In Philips v. Giles, 620 S.W.2d 750, 751 (Tex. App.—Dallas 1981, no writ), the court upheld an attorney’s plea in abatement in a malpractice suit on the grounds that the plaintiff-client’s suit was premature. In the client’s divorce, the attorney had negotiated a settlement in which the husband agreed to pay the wife $500,000 in monthly installments over five years, and the attorney allegedly told the wife she would owe no taxes on the settlement. After the wife’s accountant told her that the monthly payments were taxable, she began paying taxes and sought reimbursement from the attorney. The appellate court held the malpractice action premature since no actual tax liability had been established.
Deciding when an action is premature, however, is not always straightforward. In Bailey v. Travis, 622 S.W.2d 143 (Tex. App.—Eastland 1981, writ ref’d n.r.e.), summary judgment for the attorney in a malpractice action was upheld. Travis had represented Bailey in a case, but Bailey hired a different attorney to appeal. While appeal was pending, Travis successfully sued Bailey for attorney’s fees from the first case. Bailey later sued Travis for malpractice in the first trial, but Travis successfully moved for summary judgment on the basis that, under rule 97 of the Texas Rules of Civil Procedure, the malpractice action should have been filed as a compulsory counterclaim when Travis sued Bailey for attorney’s fees. In upholding the summary judgment, the appeals court held that Bailey had been damaged as a result of the alleged malpractice at the time he filed his answer in Travis’s suit for fees. Accordingly, said the court, “Bailey’s claim . . . had ripened into an enforceable cause of action, even though the full extent of his damages might not have been known.” Bailey, 622 S.W.2d at 144. See section 1.24:1 below for a discussion of when a cause of action accrues.
§ 1.22:5Additional Meritorious Action
In addition to establishing the defendant-attorney’s primary negligence, the plaintiff-client must often prove an additional meritorious lawsuit in a legal malpractice action to establish that he or she would have prevailed in the suit that is the subject of the malpractice action. The plaintiff-client must establish that the underlying cause of action was meritorious, that it would have resulted in a favorable judgment but for the attorney’s negligence, and that the judgment could have been collected. Lynch v. Munson, 61 S.W. 140, 142 (Tex. App.—1901, no writ).
§ 1.22:6Breach-of-Contract Action
The plaintiff’s burden of proof in a legal malpractice action under the theory of breach of contract has three main elements: existence of the contract, breach by the attorney, and damages. See Kruegel v. Porter, 136 S.W. 801 (Tex. App.—1911), aff’d, 155 S.W. 174 (Tex. 1913).
§ 1.23Who Can Sue for Legal Malpractice
§ 1.23:1No Private Actions under Texas Disciplinary Rules of
Professional Conduct
The Disciplinary Rules of Professional Conduct exist solely as professional sanctions and do not create a private cause of action for malpractice. Comment 15 in the preamble states: “These rules do not undertake to define standards of civil liability of lawyers for professional conduct. Violation of a rule does not give rise to a private cause of action nor does it create any presumption that a legal duty to a client has been breached.”
In an action in which the physician in a medical malpractice action filed a counterclaim against the attorney representing the plaintiff and alleged that the attorney knew the plaintiff’s claim was frivolous, the court dismissed the counterclaim for failure to state a cause of action. The court held that the remedy provided in the former Texas Code of Professional Responsibility is a public, not a private, one. It entitles the physician to file a grievance complaint, but not a malpractice action. Martin v. Trevino, 578 S.W.2d 763, 770 (Tex. App.—Corpus Christi–Edinburg 1978, writ ref’d n.r.e.). But see Quintero v. Jim Walter Homes, Inc., 709 S.W.2d 225, 233 (Tex. App.—Corpus Christi–Edinburg 1985, writ ref’d n.r.e.) (appellant should seek recovery in private cause of action against appellee’s attorney whose violation of former Texas Code of Professional Responsibility rendered postjudgment settlement agreement unenforceable).
§ 1.23:2Privity Generally Required
Texas law does not extend an attorney’s liability for negligence beyond the client to third persons. Bryan & Amidei v. Law, 435 S.W.2d 587, 593 (Tex. App.—Fort Worth 1968, no writ).
Attorney immunity is an affirmative defense for the attorney. Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015). Generally, attorneys are immune from civil liability to nonclients for actions taken if the attorneys conclusively establish that their alleged conduct was within the scope of their legal representation of a client. Diaz v. Monnig, No. 04-15-00670-CV, 2017 WL 2351095, at *4 (Tex. App.—San Antonio May 31, 2017, no pet.) (mem. op.).
In McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787 (Tex. 1999), the court held that, although persons not in privity with an attorney cannot sue the attorney for legal malpractice, a nonclient may sue an attorney for negligent misrepresentation without regard to the nonclient’s lack of privity with the attorney.
The privity requirement has consistently been held to preclude a negligence action by intended beneficiaries against an attorney who had failed to prepare a will in accordance with the testator’s wishes before the testator’s death. Thomas v. Pryor, 847 S.W.2d 303, 304–05 (Tex. App.—Dallas 1992), writ granted, judgm’t vacated w.r.m., 863 S.W.2d 462 (Tex. 1993); Dickey v. Jansen, 731 S.W.2d 581 (Tex. App.—Houston [1st Dist.] 1987, writ ref’d n.r.e.). However, this position has been criticized, and in at least one case, when the supreme court granted writ of error, the attorney’s insurer settled the case. Berry v. Dodson, Nunley & Taylor, P.C., 729 S.W.2d 690 (Tex. 1987); Berry v. Dodson, Nunley & Taylor, P.C., 717 S.W.2d 716 (Tex. App.—San Antonio 1986, writ granted). Also, one court has held that an heir could proceed with a negligent misrepresentation claim against the decedent’s attorneys if the heir’s relationship with the attorneys was that of a joint client. Estate of Arlitt v. Paterson, 995 S.W.2d 713, 720–21 (Tex. App.—San Antonio 1999, pet. denied), disapproved on other grounds, Belt v. Oppenheimer, Blend, Harrison & Tate, Inc., 192 S.W.3d 780 (Tex. 2006).
The lack-of-privity defense does not extend to fraudulent conduct that is outside the scope of the attorney’s legal representation of his client, just as it does not extend to other wrongful conduct outside the scope of representation. Cantey Hanger, L.L.P., 467 S.W.3d at 484. Such acts are entirely foreign to the duties of an attorney. Poole v. Houston & T.C. Railway Co., 58 Tex. 134, 137 (1882).
§ 1.24Defenses to Legal Malpractice
§ 1.24:1Statutes of Limitation
In Texas, malpractice claims are tort actions governed by the two-year statute of limitations. See Tex. Civ. Prac. & Rem. Code § 16.003. If the suit is brought on a legitimate breach-of-contract theory based on a contractual relationship, it is governed by the four-year statute of limitations. See Tex. Civ. Prac. & Rem. Code § 16.051. However, malpractice actions have been barred by the two-year statute even though the pleadings were couched in breach-of-contract language and filed within four years of the alleged malpractice. See Woodburn v. Turley, 625 F.2d 589 (5th Cir. 1980); Gabel v. Sandoval, 648 S.W.2d 398, 399 (Tex. App.—San Antonio 1983, writ dism’d); Citizens State Bank of Dickinson v. Shapiro, 575 S.W.2d 375, 386–87 (Tex. App.—Tyler 1978, writ ref’d n.r.e.). Where limitations had run on the malpractice claim but not on the suit for breach of fiduciary duty, the court had discretion to dismiss both claims if it believed that the client would not have succeeded on the claim for breach of fiduciary duty. Webb v. Crawley, 590 S.W.3d 570 (Tex. App.—Beaumont 2019, no pet.).
Beginning of Period: As a general rule, the statute of limitations begins to run in legal malpractice actions when the tort occurs. The tort occurs when “the force wrongfully put in motion produces the injury, the invasion of personal or property rights accruing at that time.” Atkins v. Crosland, 417 S.W.2d 150, 153 (Tex. 1967) (quoting 34 Am. Jur. Limitations of Actions § 160 at 126). Earlier cases had held that the period began “when the negligence or breach of duty occurs.” Crawford v. Davis, 148 S.W.2d 905, 908 (Tex. App.—Eastland 1941, no writ).
In a malpractice action for failing to secure an express lien in a deed and thus subordinating the client’s lien, the court determined that the limitations period began when the faulty deed was filed, not when the plaintiff later suffered damage as a result of the negligence. Cox v. Rosser, 579 S.W.2d 73, 76 (Tex. App.—Eastland 1979, writ ref’d n.r.e.).
When an attorney negligently advised a client to execute a release that inadvertently surrendered the client’s entire cause of action, the limitations period began when the client detrimentally relied on the attorney’s advice and signed the release. The times when the advice was given and when the damage occurred were not controlling. Pack v. Taylor, 584 S.W.2d 484, 486 (Tex. App.—Fort Worth 1979, writ ref’d n.r.e.); see also Zidell v. Bird, 692 S.W.2d 550, 557 (Tex. App.—Austin 1985, no writ) (discussing rule for determining when negligence cause of action accrues).
“Discovery Rule”: Before 1988, courts had declined to extend the “discovery rule” to legal malpractice actions. Used most frequently in medical malpractice actions, the rule begins the limitations period when the plaintiff discovers an injury if the plaintiff could not know of the injury at the time it occurred.
In 1988 the supreme court imposed the discovery rule in legal malpractice cases. Willis v. Maverick, 760 S.W.2d 642, 644 (Tex. 1988). In Willis, a husband and wife asked an attorney friend to draft the property settlement agreement in their divorce. The first draft of the agreement gave the wife the right to remain in the parties’ home until the youngest child reached age eighteen. At the husband’s urging, the attorney deleted that provision. The wife testified at trial that, despite the deletion, the attorney told her she would still have to agree before the home could be sold. Less than a year after the divorce, the husband sought partition of the home. Not surprisingly, the wife filed a malpractice action against the attorney. The divorce decree was signed on November 19, 1979. The wife received notice of the partition attempt on September 18, 1980. The malpractice suit was filed on December 21, 1981. The attorney argued that the statute of limitations had expired because the date of injury was the date of divorce. The court disagreed, holding that the statute of limitations for legal malpractice actions does not begin to run until the claimant discovers or should have discovered through the exercise of reasonable care and diligence the facts establishing the elements of his cause of action. Mrs. Willis’s discovery date was the date of notice of the partition. Therefore, the action was timely filed. The appellate court’s determination that the discovery rule does not apply to legal malpractice was overruled.
In 1990 the supreme court reiterated that the discovery rule applies in a legal malpractice cause of action. Burns v. Thomas, 786 S.W.2d 266, 267 (Tex. 1990).
A defendant seeking summary judgment based on limitations must prove when the cause of action accrued and negate the discovery rule by proving as a matter of law that there is no fact issue about whether the plaintiff discovered or should have discovered the nature of the injury. The defendant bears the burden of negating the discovery rule as a matter of law. Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988).
Statute Tolled While Underlying Lawsuit Appealed: When an attorney allegedly commits malpractice while providing legal services in the prosecution or defense of a claim that results in litigation, the statute of limitations on the malpractice claim against the attorney is tolled until all appeals on the underlying claim are exhausted or the litigation is otherwise finally concluded. Apex Towing Co. v. Tolin, 41 S.W.3d 118, 119 (Tex. 2001). Limitations are tolled for the second cause of action because the viability of the second cause of action depends on the outcome of the first. Hughes v. Mahaney & Higgins, 821 S.W.2d 154, 157 (Tex. 1991).
Fraudulent Concealment: The running of the statute is tolled when the attorney fraudulently conceals the negligence from the client. McClung v. Johnson, 620 S.W.2d 644, 647 (Tex. App.—Dallas 1981, writ ref’d n.r.e.) (failure to disclose tolls the statute of limitations during attorney-client relationship, but tolling ceases when relationship ends); Anderson v. Sneed, 615 S.W.2d 898, 902 (Tex. App.—El Paso 1981, no writ) (attorney fraudulently concealed his failure to file personal injury case within limitations period); Crean v. Chozick, 714 S.W.2d 61, 62–63 (Tex. App.—San Antonio 1986, writ ref’d n.r.e.) (client’s allegations that attorney failed to disclose legal effect of signed requests for admissions raised material fact issue on concealment, thus tolling statute of limitations).
The good-faith defense is the equivalent of the “error in judgment” rule. See section 1.22:2 above.
A malpractice action may be barred if the client’s claims are satisfied otherwise. For example, when a client was able to receive all retirement benefits in a subsequent partition action against her ex-husband, summary judgment was granted to her attorney, even though he failed to procure these benefits in the divorce. Perkins v. Barrera, 607 S.W.2d 3, 5–7 (Tex. App.—Tyler 1980, no writ).
Another defense an attorney may assert is contributory negligence. In a divorce settlement, for example, relying on a client’s faulty information regarding marital assets may not amount to malpractice. See Boley v. Boley, 506 S.W.2d 934 (Tex. App.—Fort Worth 1974, no writ). However, an attorney has been held liable for malpractice for relying on a client’s faulty information in a personal injury action. See Cosgrove v. Grimes, 774 S.W.2d 662 (Tex. 1989).
A client’s agreement to hold the attorney harmless for any potential liability is not a defense to a malpractice action. An attorney is generally prohibited from obtaining an agreement attempting to limit liability for legal malpractice. Tex. Disciplinary Rules Prof’l Conduct R. 1.08(g).
§ 1.25Potential Areas for Legal Liability
A substantial proportion of all attorney-related litigation involves fee disputes. Usually a lawsuit for fees results in a compulsory counterclaim for malpractice under Texas Rule of Civil Procedure 97(a). See Goggin v. Grimes, 969 S.W.2d 135, 138 (Tex. App.—Houston [14th Dist.] 1998, no pet.); CLS Associates, Ltd. v. AB, 762 S.W.2d 221, 224 (Tex. App.—Dallas 1988, no writ). See chapter 20 for further discussion.
§ 1.25:2Failure to Advise Client of Legal Consequences of Acts
An Arkansas court upheld a malpractice judgment resulting from an attorney’s failure in a divorce action to advise the wife of the consequences of executing a property settlement without obtaining a lien on the husband’s property. She had no security for payments due under the settlement agreement, and the attorney was held liable for payments on which the husband defaulted. Rhine v. Haley, 378 S.W.2d 655 (Ark. 1964).
COMMENT: During negotiations of a settlement, the attorney should be mindful of identifying available assets to secure payments to be made to the client.
§ 1.25:3Failure to Advise Client of Conflict of Interest
An attorney representing both parties in a divorce action may be liable to one spouse if the settlement is uneven. In Ishmael v. Millington, 241 Cal. App. 2d 520, 50 Cal. Rptr. 592 (1966), the husband’s business attorney drew up a property settlement based solely on the husband’s fraudulent assessment of the value of the property at approximately one-tenth of its true value. The wife did not see the attorney before the hearing at which the court approved the settlement. In holding the wife’s subsequent malpractice suit viable, the court found that an attorney representing both spouses in a divorce has a duty to advise them of the advantage of having separate counsel and to take affirmative action to protect both parties’ interests. The court noted:
The edge of danger gleams if the attorney has previously represented the husband. A husband and wife at the brink of division of their marital assets have an obvious divergence of interests. Representing the wife in an arm’s length divorce, an attorney of ordinary professional skill would demand some verification of the husband’s financial statement; or, at the minimum, inform the wife that the husband’s statement was unconfirmed, that wives may be cheated, that prudence called for investigation and verification. Deprived of such disclosure, the wife cannot make a free and intelligent choice.
Ishmael, 241 Cal. App. 2d at 527, 50 Cal. Reptr. at 596; see also “Friendly Divorces” under section 1.13:2 above.
§ 1.25:4Failure to Avoid Improper Entry of Judgment against Client
Allowing the entry of a judgment against a client without the client’s consent may be legal malpractice. The attorney is liable for any damages imposed on the client as a result of the improperly entered judgment. Montfort v. Jeter, 567 S.W.2d 498, 499–500 (Tex. 1978).
An attorney who negligently failed to appear or notify the client of the divorce trial setting became liable to the client, whose spouse got custody of the children, the house, a share of the family business, and alimony based on an inflated estimate of the client’s worth. Warwick, Paul & Warwick v. Dotter, 190 So.2d 596 (Fla. Dist. Ct. App. 1966).
To pursue a legal malpractice action against an attorney who negligently allows a default judgment to be entered, the client must establish that he both suffered monetary loss and had a meritorious defense. Rice v. Forestier, 415 S.W.2d 711, 713 (Tex. App.—San Antonio 1967, writ ref’d n.r.e.).
§ 1.25:5Failure to Convey Settlement Offer to Client
An attorney must inform clients of offers of settlement made by the opposing party. See Tex. Disciplinary Rules Prof’l Conduct R. 1.02(a). There are certain exceptions. See Tex. Disciplinary Rules Prof’l Conduct R. 1.02 cmts. 2, 3.
In Smiley v. Manchester Insurance & Indemnity Co., 375 N.E.2d 118 (Ill. 1978), an attorney’s failure to convey a settlement agreement to his client was found to be negligence as a matter of law.
§ 1.25:6Failure to Timely Pursue Client’s Claim
An attorney who negligently lets the statute of limitations run on a client’s cause of action becomes liable for any amount the client could have collected from the original defendant. Patterson & Wallace v. Frazer, 79 S.W. 1077, 1083 (Tex. App. 1904, no writ); Fox v. Jones, 14 S.W. 1007 (Tex. App. 1889, no writ). “Missing the statute of limitations is a classic example of negligence that any layperson can understand. No expert testimony is necessary in such cases.” Mazuca & Associates v. Schumann, 82 S.W.3d 90, 97 (Tex. App.—San Antonio 2002, pet. denied).
§ 1.25:7Inappropriate Relationships with Clients
The attorney who engages in sexual misconduct with a client is inviting disaster. The only reported Texas case involving sexual misconduct by a lawyer is Kahlig v. Boyd, 980 S.W.2d 685 (Tex. App.—San Antonio 1998, pet. denied). Client, Kahlig, brought suit against his former attorney, Boyd, based on fraud and a claim for deceptive trade practices, after the client discovered that the attorney was having an affair with Kahlig’s current wife during a custody case with a former wife. The trial court held that the attorney’s behavior did not constitute fraud or a deceptive trade practice. The court of appeals agreed, stating that “while we have determined that Boyd’s conduct does not give rise to a legal remedy under the theories presented at trial under current Texas law, substantial questions remain about the ethical propriety of Boyd’s conduct. The proper forum to determine these ethical issues is the State Bar of Texas Grievance Committee.” See Kahlig, 980 S.W.2d at 691. The attorney was sanctioned by the Committee.
An attorney’s fee amounting to $3 million was forfeited because of an improper romantic relationship between the attorney and client. The trial court described the conduct as a serious breach of fiduciary duty. See Piro & Lilly, L.L.P. v. Sarofim, No. 01-00-00398-CV, 2002 WL 538741, at *8–10 (Tex. App.—Houston [1st Dist.] Apr. 11, 2002) (not designated for publication). There is ample authority for the forfeiture of the attorney’s fee for breach of fiduciary duty. See Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999).
§ 1.26Procedures to Help Avoid Malpractice Actions
Attorneys for the Texas Lawyers’ Insurance Exchange advise that attorneys who follow the procedures described below can reduce the chances of facing a malpractice claim.
To avoid missing important deadlines, every firm should have an effective calendaring system that includes all cases the firm handles, not just those in the litigation section. Deadlines are crucial to all types of law practice. For example, one attorney postponed drafting a will for so long that the testator died, and the expected beneficiary sued for malpractice. See Estate of Arlitt v. Paterson, 995 S.W.2d 713 (Tex. App.—San Antonio 1999, writ denied). When a tickler system is set up so that every file comes up for regular review, problems like this can be avoided. Files coming up for review may need no action other than being “retickled,” but the review provides the attorney a good occasion to write the client that things are proceeding as expected or to explain why no immediate action is necessary. The system also provides incentive to make progress on files that are not urgent and would otherwise remain idle for too long.
Attorneys should always write nonengagement letters when they decline or withdraw from employment and should keep a permanent file of these letters. This practice can eliminate many potential malpractice actions based on claims that an attorney failed to pursue a claim for a client. See form 2-3 and the practice notes in section 2.2 in this manual.
Complete records of trust account funds and other property should be kept by the lawyer and preserved for a period of five years after termination of the representation. Tex. Rules Disciplinary P. R. 17.10; Tex. Disciplinary Rules Prof’l Conduct R. 1.14(a). A court of appeals has held that the term other properties, as used in the disciplinary rules, includes the client’s papers and other documents that the lawyer has in his file. Hebisen v. State, 615 S.W.2d 866, 868 (Tex. App.—Houston [1st Dist.] 1981, no writ). Also, files concerning clients who refused legal advice should be maintained and should contain a copy of the letter to the client detailing advice given, reasons for the advice, and confirmation that the client declined to accept the advice.
COMMENT: It may be inappropriate for the attorney to destroy the client’s file. Because the attorney is the agent of the client, the work product generated by the attorney in representing the client belongs to the client. In re George, 28 S.W.3d 511, 516 (Tex. 2000). Moreover, information contained in the file may become necessary after several years, as in the case of QDROs.
§ 1.26:4Problems When Firms Break Up
When a firm breaks up or when one or more members leave, confusion may arise over which attorneys retain which clients. To avoid such confusion, the firm should contact every client who will be affected, confirm which attorney the client wishes to retain, and preserve the agreement in writing. This procedure can avert the frequent potential for malpractice that occurs when an attorney leaves a firm without arranging for someone to handle a file, to the legal detriment of the client. See also section 1.13 above.
§ 1.26:5Supervision of Support Staff and New Associates
Attorneys need to supervise their support staff and new associates closely. If, for example, a law clerk arrives at the wrong answer to an important question, the attorney is the one who will take the wrong action and face a possible malpractice suit. Clerks should be told to document their research so that its accuracy can be verified, and new secretaries should be responsible for filing petitions only when the attorney is certain that they know where and by when to file them. In short, all personnel must know both substantively and procedurally what their jobs require. Careful screening and interviewing of applicants can help, of course, as can hiring only professional secretaries and paralegals. Instruction and training of support staff in the area of security and confidentiality of client information is critical.
For a detailed discussion on this issue, see Edward L. Wilkinson, Supervising Lawyers, Supervised Lawyers, and Nonlawyer Assistants—Ethical Responsibilities under the State Bar Rules, 64 Tex. B.J. 452 (2001); see also Tex. Disciplinary Rules Prof’l Conduct R. 5.01–.03.
Many malpractice suits result from mistakes made during periods of personal stress, and some attorneys let themselves become overextended or burdened with too many cases and other responsibilities so that they lose both perspective and effectiveness. For their clients’ sake as well as their own, many attorneys would be wise to slow down the pace and offer each other support when signs of stress, such as abuse of alcohol or other drugs, become evident. The Texas Lawyers’ Assistance Program, which may be contacted at 1-800-343-8527, is an excellent resource for obtaining immediate peer support for lawyers whose lives or practices are suffering because of physical or mental illness, including substance abuse or emotional distress. All information provided to the Texas Lawyers’ Assistance Program is confidential.
§ 1.27Standard of Care for Specialists
All Texas attorneys, whether specialized or not, appear now to be under the same standard of care. However, attorneys who have been board certified as specialists in Texas and who hold themselves out to the public as specialists may eventually be held to a higher standard, perhaps the same standard of care as that applied to similar specialists in other fields.
Texas courts have held in medical malpractice cases that specialists must exercise a higher degree of skill than that of general practitioners. King v. Flamm, 442 S.W.2d 679, 681 (Tex. 1969).
At least one other jurisdiction has held legal specialists to a higher standard of care than the ordinary practitioner. In Wright v. Williams, 47 Cal. App. 3d 802, 810, 121 Cal. Rptr. 194, 199 (1975), the California court of appeals held the following:
One who holds himself out as a legal specialist performs in similar circumstances to other specialists but not to general practitioners of the law. We thus conclude that a lawyer holding himself out to the public and the profession as specializing in an area of the law must exercise the skill, prudence, and diligence exercised by other specialists of ordinary skill and capacity specializing in the same field.
The case involved a maritime law specialist.
§ 1.28Standard of Care for Court-Appointed Representatives
See chapter 13 of this manual for discussion of the standard of care for ad litems and amicus attorneys.
§ 1.29Attorney Professional Liability Insurance
Professional liability insurance most often chosen by attorneys is known as a “claims made and reported policy.” This type of policy provides coverage for those claims made against the named insured and reported during the period while the policy is in effect. The definitions of some important terms in this type of coverage follow.
Insured means the insured named in the policy, any past or present partner, officer, director, member of a professional association, stockholder, employee, independent contractor, or of counsel as respects professional services rendered on behalf of the named insured. Attorneys who retire from the named insured are also covered. Coverage is available for members of prior law firms and predecessor firms.
Covered conduct means any claims arising out of the conduct of the insured’s profession as a lawyer or as a lawyer acting as an arbitrator, as a mediator, as a notary public, as an officer of any bar association, and in certain other capacities. The insured is also covered when acting in the capacity of a lawyer as an administrator, executor, guardian, or trustee.
Liability limits are stated in the policy declarations and include damages, attorney’s fees, other fees and costs, and expenses of investigating the claim.
Deductible is stated in the declarations, is applied to each claim, and is paid by the insured. It is first applied to the claims expenses with the remainder, if any, applied to the damages.
Disciplinary proceedings are covered by the policy, and the insured is indemnified for any reasonable fees, costs, and expenses incurred in responding to them.
Extended reporting period coverage allows the insured to purchase, for an additional premium, extended reporting period coverage for one, two, or three years or for an unlimited period after the insured separates from the named insured firm.
[Section 1.30 is reserved for expansion.]
V. Ineffective Assistance of Counsel
§ 1.31Right to Effective Assistance of Counsel
There is a statutory right to counsel for indigent parents in cases filed by a governmental entity seeking termination of the parent-child relationship or the appointment of a conservator of a child. See Tex. Fam. Code § 107.013(a)(1). More importantly, there is a right to effective assistance of counsel in such termination cases. In re M.S., 115 S.W.3d 534, 544 (Tex. 2003). The Fort Worth court of appeals observed that “[i]t would seem a useless gesture on the one hand to recognize the importance of counsel in termination proceedings, as evidenced by the statutory right to appointed counsel, and, on the other hand, not require that counsel perform effectively.” See In re K.L., 91 S.W.3d 1, 13 (Tex. App.—Fort Worth 2002, no pet.).
COMMENT: Although the doctrine of ineffective assistance of counsel has not previously been applied in nongovernmental termination cases, the trend seems to point in that direction.
§ 1.32Standard for Determining Effective Assistance
The criminal case standard regarding assistance of counsel applies equally in termination cases. In re M.S., 115 S.W.3d 534, 545 (Tex. 2003). In a criminal law context, the test for determining whether a defendant has been accorded ineffective assistance of counsel was announced by the United States Supreme Court in Strickland v. Washington, 466 U.S. 668 (1984):
First the defendant must show that counsel’s performance was deficient. This requires showing that counsel made errors so serious that counsel was not functioning as the “counsel” guaranteed the defendant by the Sixth Amendment. Second, the defendant must show that the deficient performance prejudiced the defense. This requires showing that counsel’s errors were so serious as to deprive the defendant of a fair trial, a trial whose result is reliable . . . . [T]he proper standard for attorney performance is that of reasonably effective assistance.
Strickland, 466 U.S. at 687.
In determining whether counsel’s performance in a particular case is deficient, the court must take into account all of the circumstances surrounding the case and primarily focus on whether counsel performed in a “reasonably effective” manner. In re M.S., 115 S.W.3d at 545. Counsel’s performance falls below acceptable levels of performance when the “representation is so grossly deficient as to render proceedings fundamentally unfair . . . .” Brewer v. State, 649 S.W.2d 628, 630 (Tex. Crim. App. 1983). In evaluating attorney performance, courts must give great deference to counsel’s performance, indulging “a strong presumption that counsel’s conduct falls within the wide range of reasonable professional assistance,” including the possibility that counsel’s actions are strategic. Strickland, 466 U.S. at 689. The challenged conduct will constitute ineffective assistance only when “the conduct was so outrageous that no competent attorney would have engaged in it.” Garcia v. State, 57 S.W.3d 436, 440 (Tex. Crim. App. 2001).
§ 1.33Proof of Ineffective Assistance
The appellant has the burden of proving ineffective assistance of counsel by a preponderance of the evidence. Thompson v. State, 9 S.W.3d 808, 813 (Tex. Crim. App. 1999). An assertion of ineffective assistance will be sustained only if the record affirmatively supports such a claim. See Ex parte Ewing, 570 S.W.2d 941, 943 (Tex. Crim. App. 1978). When the record is silent as to defense counsel’s subjective motivations, courts will ordinarily presume that the challenged action might be considered sound trial strategy. Rylander v. State, 101 S.W.3d 107, 110–11 (Tex. Crim. App. 2003). In determining claims of ineffective assistance, courts will not indulge in speculation. See Jackson v. State, 877 S.W.2d 768, 771 (Tex. Crim. App. 1994). An error in trial strategy will be deemed inadequate representation only if counsel’s actions are without any plausible basis. See Ex parte Ewing, 570 S.W.2d at 945; Thomas v. State, 886 S.W.2d 388, 392 (Tex. App.—Houston [1st Dist.] 1994, pet. ref’d).
In Bermea v. Texas Department of Family & Protective Services, 265 S.W.3d 34, 43 (Tex. App.—Houston [1st Dist.] 2008, pet. denied), the court of appeals held that the failure to file a statement of the point or points on which a party intends to appeal constitutes deficient conduct by the attorney, which satisfies the first prong of the test announced in Strickland v. Washington, 466 U.S. 668 (1984). However, the second prong of the Strickland test requires a showing that the results of the proceedings would have been different if the party had effective counsel.
§ 1.34Presumptions against Ineffective Assistance
The review of defense counsel’s representation is highly deferential and presumes that counsel’s actions fell within a wide range of reasonable professional assistance. Bone v. State, 77 S.W.3d 828, 833 (Tex. Crim. App. 2002). The appellant must overcome the presumption that counsel’s actions might be considered sound trial strategy. Stafford v. State, 813 S.W.2d 503, 506 (Tex. Crim. App. 1991). Without a record to explain trial counsel’s rationale, there is a “strong presumption that counsel was competent.” Perez v. State, 56 S.W.3d 727, 730–31 (Tex. App.—Houston [14th Dist.] 2001, pet. ref’d).
[Sections 1.35 through 1.40 are reserved for expansion.]
VI. Texas Deceptive Trade Practices–Consumer
Protection Act Liability
§ 1.41Application of Act to Legal Services
There is a professional services exemption to the Deceptive Trade Practices–Consumer Protection Act (DTPA). “Nothing in this subchapter shall apply to a claim for damages based on the rendering of a professional service, the essence of which is the providing of advice, judgment, opinion, or similar professional skill.” Tex. Bus. & Com. Code § 17.49(c).
However, the section also provides exceptions to the exemption. The following acts would bring professional services back into the DTPA: an express misrepresentation of a material fact that cannot be characterized as advice, judgment, or opinion; a failure to disclose information in violation of Tex. Bus. & Com. Code § 17.46(b)(24); an unconscionable action or course of action that cannot be characterized as advice, judgment, or opinion; or a breach of an express warranty that cannot be characterized as advice, judgment, or opinion. Tex. Bus. & Com. Code § 17.49(c)(1)–(4). These exceptions apply to an action against both a professional rendering services and any entity that could be held vicariously liable for the professional’s conduct. Tex. Bus. & Com. Code § 17.49(d).
All DTPA actions must be brought within two years of the date on which the act or practice occurred or within two years after the consumer discovered or reasonably should have discovered the act or practice. This period may be extended for 180 days if the plaintiff proves that failure to timely commence the action was caused by the defendant’s knowingly engaging in conduct solely calculated to induce the plaintiff to refrain from or postpone commencing the action. Tex. Bus. & Com. Code § 17.565.
[Sections 1.43 through 1.50 are reserved for expansion.]
A grievance may be filed with the State Bar by any person who believes that a rule of professional conduct has been violated by an attorney. In most cases, grievances must be filed within four years from the time of the alleged act of misconduct. See Tex. Rules Disciplinary P. R. 17.06.
When a complainant signs the grievance form, the attorney-client privilege is waived in order for the chief disciplinary counsel to investigate the complaint. See Tex. R. Evid. 503(d)(3); Tex. Disciplinary Rules Prof’l Conduct R. 1.05.
The chief disciplinary counsel shall within thirty days examine each grievance received to determine whether it constitutes an inquiry, a complaint, or a discretionary referral. If the grievance is determined to constitute a complaint, the attorney (respondent) shall be provided a copy of the complaint with notice to respond in writing to the allegations in the complaint. The attorney shall deliver the response to both the office of the chief disciplinary counsel and the complainant within thirty days after receipt of the notice. See Tex. Rules Disciplinary P. R. 2.10. Failure to respond to a complaint is a separate violation of the disciplinary rules. Tex. Disciplinary Rules Prof’l Conduct R. 8.04(a)(8). For example, an attorney’s failure to respond to four disciplinary complaints warranted disbarment. Rangel v. State Bar of Texas, 898 S.W.2d 1, 3–4 (Tex. App.—San Antonio 1995, no writ).
The chief disciplinary counsel will investigate the complaint to determine whether there is just cause. The determination must generally be made within sixty days of the date the respondent’s response to the complaint is due but may be extended under certain circumstances. The chief disciplinary counsel may set a complaint for an investigatory hearing, a nonadversarial proceeding that may be conducted by teleconference and is strictly confidential. The investigatory hearing may result in a sanction negotiated with the respondent or in the chief disciplinary counsel’s dismissing the complaint or finding just cause. Tex. Rules Disciplinary P. R. 2.12.
On investigation, if the chief disciplinary counsel determines that just cause does not exist to proceed on the complaint, the chief disciplinary counsel shall place the complaint on a summary disposition panel docket, which may be conducted by teleconference. At the summary disposition panel docket, the chief disciplinary counsel will present the complaint together with any information, documents, evidence, and argument deemed necessary and appropriate by the chief disciplinary counsel, without the presence of the complainant or respondent. The summary disposition panel shall determine whether the complaint should be dismissed or should proceed. If the panel dismisses the complaint, both the complainant and respondent will be notified. There is no appeal from a determination by the summary disposition panel. All complaints presented to the summary disposition panel and not dismissed will proceed in accordance with rules 2.14 and 2.15. The fact that a complaint was placed on the summary disposition panel docket and not dismissed is wholly inadmissible for any purpose in the instant or any subsequent disciplinary proceeding or disciplinary action. Tex. Rules Disciplinary P. R. 2.13.
Files of dismissed disciplinary proceedings will be retained for 180 days, after which time they may be destroyed. No permanent record will be kept of complaints dismissed except to the extent necessary for statistical reporting purposes. Tex. Rules Disciplinary P. R. 2.16D.
For each complaint not dismissed after an investigatory hearing, resolved through a negotiated judgment entered by an investigatory panel, or dismissed by a summary disposition panel, the chief disciplinary counsel shall give the respondent written notice of the acts or omissions engaged in by the respondent and of the Texas Disciplinary Rules of Professional Conduct that the chief disciplinary counsel contends are violated by the alleged acts or omissions. Tex. Rules Disciplinary P. R. 2.14D.
A respondent given written notice of the allegations and rule violations complained of, in accordance with rule 2.14, shall notify the chief disciplinary counsel whether the respondent seeks to have the complaint heard in a district court of proper venue, with or without a jury, or by an evidentiary panel of the committee. The election must be in writing and served on the chief disciplinary counsel no later than twenty days after the respondent’s receipt of written notification pursuant to rule 2.14. If the respondent timely elects to have the complaint heard in a district court, the matter will proceed in accordance with part III of the Texas Rules of Disciplinary Procedure. If the respondent timely elects to have the complaint heard by an evidentiary panel or fails to timely file an election, the matter will proceed in accordance with the rules governing hearings before and imposition of sanctions by an evidentiary panel. Tex. Rules Disciplinary P. R. 2.15; see also Tex. Rules Disciplinary P. R. 2.17, 15.01–.09.
The respondent or the commission may appeal the judgment of the evidentiary panel to the Board of Disciplinary Appeals. Tex. Rules Disciplinary P. R. 2.23. An appeal from the decision of the Board of Disciplinary Appeals on an evidentiary proceeding is to the Supreme Court of Texas in accordance with Tex. Rules Disciplinary P. R. 7.11. Tex. Rules Disciplinary P. R. 2.27. If the complaint is heard in a district court, the judgment may be appealed as in civil cases generally. Tex. Rules Disciplinary P. R. 3.15.
[Sections 1.52 through 1.60 are reserved for expansion.]
The following websites contain information relating to the topic of this chapter:
American Bar Association Model Rules of Professional Conduct (§ 1.6)
www.americanbar.org/groups/professional_responsibility/publications/
model_rules_of_professional_conduct/
Ethics Opinions issued by the Professional Ethics Committee of the Supreme Court of Texas (§ 1.5)
www.legalethicstexas.com/Ethics-Resources/Opinions.aspx
State Bar Rules (§ 1.3)
www.legalethicstexas.com/Ethics-Resources/Rules.aspx
Texas Code of Ethics and Professional Responsibility for Legal Assistants (§ 1.7)
https://txpd.org/ethics-pages/professional-ethics-and-the-paralegal/