HOW TO AVOID GRIEVANCES, MALPRACTICE

HOW TO AVOID GRIEVANCES, MALPRACTICE
CLAIMS AND BREACH OF FIDUCIARY DUTY CLAIMS
CHARLES M. WILSON, III
THOMAS A. GREENWALD
GoransonBain, PLLC
6900 N. Dallas Parkway, Suite 400
Plano, Texas 75024
Telephone: (214) 473-9696
Fax: (469) 467-8059
Email: [email protected]
[email protected]
State Bar of Texas
39TH ANNUAL
ADVANCED FAMILY LAW COURSE
August 5-8, 2013
San Antonio
CHAPTER 17
RESUM E OF CHARLES M . W ILSON, III
Following graduation from the University of Texas School of Law, Charlie clerked for Justice Clarence Guittard
with the Dallas Court of Appeals.
Charlie is board certified in Fam ily Law (1982), Personal Injury Trial Law (1981), and Civil Trial Law (1981)
by the Texas Board of Legal Specialization, and has practiced in those areas in North Texas area since 1975.
Charlie received the Standing Ovation award for his exceptional contributions in 2010 to the Bar’s continuing
education efforts.
Charlie received the Jim Bowm er Professionalism Award of the College of the State Bar for “Outstanding
Contributions to the Profession” in 2008.
Charlie was the 1991 recipient of the Gene Cavin Award for Excellence in Continuing Legal Education, the
highest award given in the CLE area by the State Bar of Texas.
In 1999 he received a Presidential Citation for outstanding service to the State Bar of Texas.
In 2007 Charlie joined the Board of Trustees of the Texas Center for Legal Ethics, and was the chair of the
Trustees in 2010-2011.
From 1995 thru 2001 Charlie served as a m em ber of the District 6 Grievance Com m ittee, which covers Dallas
County, serving as a panel chair for several years and the overall Com m ittee’s chair in 2000-2001.
From 1991 to 1994, Charlie served a 3 year term on the State Bar Board of Directors.
From 2001 through 2007 Charlie served two term s on the Texas Board of Legal Specialization’s Fam ily Law
Advisory Panel.
From 1997 through 2001 Charlie was a Trustee for the Texas Bar Foundation, serving as the Chair of the
Board of Trustees in 1999 to 2000. He is a sustaining Life Fellow in the Texas Bar Foundation.
Charlie is a past president of Dallas Trial Lawyers Association (1985).
He is a charter m em ber of the College of the State Bar of Texas, and from 2001-2007 served on the College’s
Board of Directors.
He is an advocate in the Am erican Board of Trial Advocates since 1999, and a Master of the Am erican Inns
of Court - Annette Stewart Inn.
He has taught Trial Advocacy at the Southern Methodist University School of Law.
Charlie is a past chairm an of the Fee Dispute Com m ittee of the Dallas Bar Association.
Charlie has served on the Dallas Bar Association’s: (1) Judiciary Com m ittee, (2) the Fam ily Law Section Board
of Directors and (3) has worked in the Pro Bono clinics in Dallas.
In the area of Continuing Legal Education, Charlie is a past Chairm an of the State Bar’s CLE Com m ittee
(1988-91), he has also been a m em ber of the MCLE Com m ittee (1989-91). Charlie is a current m em ber of
the State Bar’s CLE com m ittee.
Charlie has been a frequent author and speaker for the State Bar of Texas and has served as Course Director
for: the “Advanced Civil Trial Course”; “Advanced Personal Injury Course”; the “Ultim ate Trial Notebook
Course”; “Advanced W orker’s Com pensation Course”; “Ultim ate Pretrial Notebook Course”; “Fiduciary
Litigation Trial Notebook”;
“Advanced Trial Strategies Course”, 2012 & 2013; “Dam ages In Civil Litigation Course”; & the College of the
State Bar’s “Spring Training Course” in 2003 - 2006.
Charlie served as an Editor for the Texas Bar Journal.
Charlie served as one of the authors of Volum e II of the Texas Pattern Jury Charge.
Charlie frequently speaks in the areas of trial tactics, fam ily law, torts, evidence, procedure, professional
negligence, and the practice of law, including ethics, grievances, attorney’s fees and negligence issues.
Charlie is adm itted to practice before the District Courts of all four United States Districts in Texas, as well as
the Fifth and Eleventh Circuits and the U.S. Suprem e Court, since 1978.
THOM AS A. GREENW ALD
Goranson Bain, PLLC
6900 N. Dallas Parkway, Suite 400
Plano, Texas 75024
Telephone: (214) 473-9696
Facsim ile: (469) 467-8059
Em ail: [email protected] gbfam ilylaw.com
W ebsite: www.gbfam ilylaw.com
EDUCATION AND CERTIFICATION:
Fellow - Am erican Academ y of Matrim onial Lawyers
Board Certified - Fam ily Law Texas Board of Legal Specialization
AV Rated Martindale–Hubbell
Adm itted to State Bar of Texas
Legal Education, Texas Tech University School of Law, J.D.
Undergraduate Education, University of W isconsin - Milwaukee - B.B.A. Finance
PROFESSIONAL AFFILIATIONS:
Am erican Academ y of Matrim onial Lawyers
Am erican Bar Association
Collin County Bar Association
Collin County Bench Bar Foundation
Dallas Bar Association
Dallas Bar Foundation
State Bar of Texas
Texas Academ y of Fam ily Law Specialists
Texas Bar Foundation
The Collaborative Law Institute of Texas
COMMITTEES AND ACTIVITIES:
Texas Board of Legal Specialization, Fam ily Law Advisory Com m ission 2007 – 2012.
State Bar of Texas, District 6A Grievance Com m ittee 2002 – 2008.
Dallas Bar Association, Fam ily Law Section, Chairperson – 2005.
Dallas Bar Association, Fam ily Law Section Board of Directors 2001 – 2005.
Collin County Bench-Bar Foundation, Chairperson – 2006.
Collin County Bench-Bar Foundation, Board of Trustees 2003 – 2006.
Collin County Bar Association, Fam ily Law Section Board of Directors 2001 and 2002.
State Bar of Texas, Court Rules Com m ittee 2001 – 2003.
State Bar of Texas, Fam ily Law Section, Checklist Com m ittee 2002 and 2003.
Dallas Bar Association, Fam ily Law Section, Legislative Update Com m ittee 1999 – 2001.
Dallas Bar Association, Bench-Bar Com m ittee 1999.
Dallas Bar Association, Fam ily Law Section, Local Rules Com m ittee 1998.
Collin County Bench-Bar Foundation, Finance Com m ittee 2000.
Collin County Bar Association, Fam ily Law Section, Speaker Com m ittee 2000.
ACKNOW LEDGMENTS AND AW ARDS:
“Best Lawyers in Dallas,” D Magazine 2003, 2007-2009, 2011 and 2012.
”Top 100 Lawyers in Texas,” Texas Monthly Magazine 2009, 2011 and 2012.
”Top 100 Lawyers in Dallas/Fort W orth,” Texas Monthly Magazine 2008 - 2012.
”Texas Super Lawyer,” Texas Monthly Magazine 2003 - 2012.
“The Best Lawyers in Am erica,” W oodward and W hite Press 2005 - 2013.
“Best Lawyers in Dallas Under 40,” D Magazine 2002.
LAW RELATED ARTICLES, AND SPEAKING ENGAGEMENTS:
“Drug Testing - Use and Defense,” 38th Annual Advanced Fam ily Law Course, State Bar of Texas
2012.
“W hat Every Lawyer Should Know About W iretapping, GPS Tracking, and Other Modern
Eavesdropping devices in the Context of Fam ily Relations,” Dallas Bar Association Headnotes 2012.
“Divorce and the Stay-At-Hom e Mom ,” Huffington Post 2011.
“Finding a Fam ily Law Attorney,” Huffington Post 2011.
Trial Presentation – TAFLS Trial Institute, Texas Academ y of Fam ily Law Specialists 2011.
“The Future of Prem arital, Postm arital and Cohabitation Agreem ents,” New Frontiers in Marital
Property Law, Fam ily Law Section of the State Bar of Texas 2010.
“Collaborative Law and Prem arital, Postm arital and Cohabitation Agreem ents,” Collaborative Law
Alliance of Collin County, 2010.
"Models of Effective Presentations,” Fam ily Law on the Front Lines, University of Texas School of Law
2009.
"Models of Effective Presentations and Visual Persuasion: The Effective Use of Trial Aids,
Dem onstrative Aids, and Sum m aries,” Collin County Bench/Bar Conference, Collin County Bench
Bar Foundation 2009.
“Evidentiary and Discovery Issues in Fam ily Law Cases,” W ebcast, State Bar of Texas 2009.
“Building a Bridge in 20 Minutes or Less -Tips for an Effective 20 Minute Tem porary Hearing,” 2008
Collin County Bench Bar Conference, Collin County Bench Bar Foundation 2008.
Dallas Bar Association Presidential Citation for Outstanding Section Leadership 2005.
“Depos: The Devil’s in the Details,” New Jersey Lawyer 2005.
“Depositions,” 30th Annual Advanced Fam ily Law Course, State Bar of Texas 2004.
“Econom ic Contribution,” Fam ily Law on the Front Lines Conference, The University of Texas School
of Law 2004.
“Default Divorce,” Dallas Bar Association Headnotes 2004.
“Uncontested Divorce,” Dallas Bar Association Headnotes 2004.
“Preparing Clients for Depositions,” Am erican Academ y of Matrim onial Lawyers 2003.
“Preparing Clients for Depositions,” Am erican Academ y of Matrim onial Lawyers 2003.
“Decrees and Orders,” 29th Annual Advanced Fam ily Law Course – Boot Cam p, State Bar of Texas
2003.
“Expert Deposition and Trial Preparation,” Custody Issues in Texas, Lorm an Education Services
2003.
“2001 Legislative Update,” Fam ily Law Section Meeting, Dallas Bar Association 2001.
“Discovery Problem s,” 26th Annual Advanced Fam ily Law Course, State Bar of Texas 2000.
“Preparing for the Fam ily Law Specialization Exam ,” 26th Annual Advanced Fam ily Law Course, State
Bar of Texas 2000.
“Preparing for Your Deposition,” Dallas County Fam ily Court Services 2000.
“1999 Legislative Update,” Fam ily Law Section Meeting, Dallas Bar Association 1999.
“Stock Options: W here Are W e Now?” 25th Annual Advanced Fam ily Law Course, State Bar of
Texas 1999.
“Preparing for the Fam ily Law Specialization Exam ,” 25th Annual Advanced Fam ily Law Course, State
Bar of Texas 1999.
“1999 Revised Texas Civil Discovery Rules,” Texas Fam ily Law Practice for Paralegals, HalfMoon
LLC 1999.
“A Guide to the New Texas Rules of Civil Discovery,” Fam ily Law Section, Dallas Bar Association
1999.
“Preparing for the Fam ily Law Specialization Exam ,” 24th Annual Advanced Fam ily Law Course,
State Bar of Texas 1998.
“Rebutting the JMC Presum ption - W hat the Judge Must Hear,” 24th Annual Advanced Fam ily Law
Course, State Bar of Texas 1998.
“Parent Talk,” 1190 AM KRLD Radio 1998.
“Fam ily Law Case Update,” Fam ily Law Section, Dallas Bar Association 1998.
“1997 Legislative Update,” Fam ily Law Section Meeting, Dallas Bar Association 1997.
“People’s Law School,” People’s Law School Com m ittee, Dallas Bar Association 1997. “Fam ily Law
Legislative Update,” Fam ily Law Section, Dallas Bar Association 1997.
“Fam ily Law and Proposed Legislation,” Plano Independent Child Care Association 1997.
“Offensive Use of Collateral W itnesses in a Relocation Case,” Texas Academ y of Fam ily Law
Specialists 1997.
“Basic Pleadings in Fam ily Law Cases,” Pro Bono Fam ily Law Training, Dallas Bar Association 1996.
“Transfer Docum ents - From Aircraft to Zebras,” Advanced Fam ily Law Course for Legal Assistants
and Other Legal Professionals, State Bar of Texas 1996.
“Courthouse Decorum , Courthouse Policy and Attorney Ethics,” Fam ily Law Section Bench-Bar
Conference, Dallas Bar Association 1996.
“The Cutting Edge of Reim bursem ent,” 18th Annual Marriage Dissolution Institute, State Bar of Texas
1995.
“Fam ily Law Case Update,” Fam ily Law Section, Dallas Bar Association 1995.
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
Chapter 17
TABLE OF CONTENTS
I.
SCOPE OF THIS ARTICLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II.
FAMILY LAW AND THE TEXAS RULES OF DISCIPLINARY CONDUCT. . . . . . . . 1
A.
The Rules as Minimum Standards of Practice.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B.
The Organization of the Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
C.
The Client-Lawyer Relationship. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
D.
III.
1.
Competent and Diligent Representation. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.
Neglect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.
Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.
Confidentiality of Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.
Conflicts of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.
Conflicts of Interest - Former Client. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.
Declining or Terminating Representation. . . . . . . . . . . . . . . . . . . . . . . . . . 9
The Non-Client Relationship. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.
Persons Represented by Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.
Unrepresented Persons.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.
Threatening Civil or Criminal Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PRACTICAL ISSUES IN THE FAMILY LAW AREA. . . . . . . . . . . . . . . . . . . . . . . . . . 11
A.
The Attorney as a Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
B.
Fiduciary Status Changes Rules in Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.
Burden of Proof Shifts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.
Fairness and Reasonableness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.
Statute of Limitations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
i
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
C.
IV.
Chapter 17
4.
Forfeiture of Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.
Client Cannot Fracture Claims.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
The Attorney-Client Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.
Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.
All Contingent Fee Agreements Must be in Writing. . . . . . . . . . . . . . . . . 15
3.
A Strong Recommendation All Fee Agreements be in Writing. . . . . . . . 15
4.
Can an Attorney Fee Contract be Modified?. . . . . . . . . . . . . . . . . . . . . . . 16
IN CONCLUSION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ii
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
I.
THE SCOPE OF THIS ARTICLE
This article is intended to assist the attorney in
addressing the ethical responsibilities and
duties that the attorney undertakes from the
inception of any attorney client relationship.
These duties related to the attorney's ethical
obligation to the client, to the court and to
their law firm.
Chapter 17
II.
FAMILY LAW AND THE TEXAS
DISCIPLINARY RULES OF
PROFESSIONAL CONDUCT
A.
The Rules as Minimum Standards of
Practice
The Texas Supreme Court expressed similar
concerns about the Texas Disciplinary Rules
of Professional Conduct (the "Rules"). In the
fifteenth Preamble to the Rules, the Court
stated that:
Compliance with the applicable ethical
standards help the attorney in three different
areas. First, the attorney avoids malpractice
claims, which routinely include claims for
violations of these ethical standards, as part of
the applicable standard of care. Second, the
attorney avoids the grievance process which
monitors the ethical conduct of the members
of the bar for violations of ethical standards.
Third, the attorney's reputation is an essential
element in establishing a successful and
satisfying career.
[t]hese 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.
Likewise, these rules are not
designed to be standards for
procedural decisions.
Furthermore, the purpose of
these rules can be abused
when they are invoked by
opposing parties as procedural
weapons. The fact that a rule
is a just basis for a lawyer's
self-assessment, or for
sanctioning a lawyer under the
administration of a
disciplinary authority, does not
imply that an antagonist in a
collateral proceeding or
transaction has standing to
seek enforcement of the rule.
Accordingly, nothing in the
rules should be deemed to
augment any substantive legal
duty of lawyers or the
extra-disciplinary
Preparation and focus are the two elements
most responsible to the development of an
excellent ethical style of practice. Yet in the
tidal wave of litigation activity, attorneys
often fail to address ethical issues. This results
in a higher degree of difficulty in controlling
or dealing with an "ethically challenging"
problems in family law.
It is the author's hope that this article and
presentation will spark some new ideas and
approaches to the ethical process.
This article will present two sections of
materials. The first focuses on the Texas
Disciplinary Rules of Professional Conduct
and the second on some practical issues.
Ethical Rules
1
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
consequences of violating such
a duty.
III.
IV.
V.
VI.
VII.
Texas case law agrees that the Texas
Disciplinary Rules of Professional Conduct do
not give rise to a cause of action by a private
individual against an attorney for their
violation. See, e.g., Dyer v. Shafer, Gilliland,
Davis, McCollum & Ashley, Inc., 779 S.W.2d
474, 479 (Tex. App. - El Paso 1989, writ
denied); Martin v. Trevino, 578 S.W.2d 763,
770 (Tex. Civ. App. - Corpus Christi 1978,
writ ref'd n.r.e.); cf. Howell v. Hecht, 821
S.W.2d 627, 632 (Tex. App. - Dallas 1991,
writ denied) (violation of Texas Code of
Judicial Conduct does not create private cause
of action, only public one).
VIII.
2.
Organization of the Rules
1.
The Rules are organized into eight
chapters divided into the following
topics:
I.
II.
Advocate;
Non-Client Relationships;
Law Firms and Associations;
Public Service;
Information about Legal
Services; and
Maintaining the Integrity of
the Profession.
A varied number of Rules appear
under each chapter heading, followed
by comments that aid in their
interpretation. However, as explained
in the Preamble to the Rules:
The comments are often cast in terms of
"may" or "should" and are permissive,
defining areas in which the lawyer has
professional discretion. When a lawyer
exercises such discretion, whether by acting or
not acting, no disciplinary action may be
taken. The Comments also frequently
illustrate or explain applications of the rules,
in order to provide guidance for interpreting
the rules and for practicing in compliance with
the spirit of the rules. The Comments do not,
however, add obligations to the rules and no
disciplinary action may be taken for failure to
conform to the Comments.
However, even though no cause of action is
created, compliance with the Rules is
important, not only to avoid a disciplinary
action, but to avoid a lawsuit wherein the
violation of a Rule as a standard of practice
would lay the foundation for findings of
liability.
In other words, although an
individual cannot sue an attorney simply
because that attorney violated one of the
Disciplinary Rules, the violation of those rules
may be the deviation from standard or
acceptable practice that constitutes a negligent
breach of duty. Accordingly, if not to enhance
our ethical and professional judgment, it is
worthwhile to study the Rules as a malpractice
preventive.
B.
Chapter 17
3.
Preamble No. 10. This two-part
Preamble that precedes the Rules
discusses the aspirational guidelines
governing a lawyer's responsibility and
the scope of the Rules. Following the
Preamble is a section entitled
"Terminology" that defines terms
frequently used throughout the Rules'
eight chapters.
This paper highlights some of the Rules that
are most often the subjects of grievance
Client-Lawyer Relationship;
Counselor;
2
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
proceedings and malpractice actions that relate
to family law.
C.
b.
Client-Lawyer Relationship
Chapter I of the Rules governs the
client-lawyer relationship, including such
issues as the lawyer's duty of competent and
diligent representation, fees, confidentiality of
information, and conflicts of interest.
1.
Competent
and
Diligent
Representation: Rule 1.01(a)
2.
it is not misconduct for an
attorney to take on a type of
legal matter the attorney has
never handled previously and;
(2)
it is not misconduct to accept a
legal matter merely because
the lawyer will have to
become competent in order to
represent the client effectively.
Neglect: Rule 1.01(b)
Neglect is a specific violation. Rule 1.01(b).
Rule 1.01(c) defines neglect to mean
"inattentiveness involving a conscious
disregard for the responsibilities owed to a
client or clients." Some confusion may arise
over the distinction between inattentiveness
and conscious disregard. Comments 6 and 7
to Rule 1.01 are important because they
closely associate neglect with procrastination
and link the lawyer's duty of competent and
diligent representation to Rule 1.03.
Competence is defined by the Rules
as the possession of or the ability to
timely acquire the legal knowledge,
skill, and training
reasonably
necessary for the representation of the
client. Comments 3 and 4 to Rule
1.01 make it clear that:
(1)
In addition, Rule 1.01(a)(1) offers the
lawyer an "escape hatch" by allowing
the lawyer to associate with a
competent colleague, and Rule
1.01(a)(2) provides an "emergency"
exception to the general rule of
competency.
Under the Rules, the determination that a
lawyer's "incompetence" rose to the level of
professional misconduct is an after-the-fact
determination. Moreover, the issue of
competence typically requires expert
testimony.
In general, a lawyer should not accept
representation in a matter unless the lawyer
can perform the work competently, diligently
and without improper conflict of interest. A
significant percentage of all disciplinary
complaints in Texas involve neglect or
inadequate representation.
a.
Chapter 17
Rule 1.03 requires a lawyer to keep a client
reasonably informed about the status of a
matter and to promptly comply with
reasonable requests for information.
Frequently, client complaints arise from a
lawyer's failure to properly communicate with
the client.
3.
Fees: Rule 1.04
a.
General Rule
The Rules establish basically that a lawyer
should not enter into an arrangement for,
3
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
charge, or collect an illegal or an
unconscionable fee. Rule 1.04(a). A fee is
unconscionable if a competent lawyer could
not form a reasonable belief that the fee is
reasonable. Rule 1.04(a). The comments
state two factors indicating unconscionability:
(1)
the susceptibility of the client
to overreaching, and
(2)
the failure of the lawyer to
give a clear and accurate
explanation of how the fee will
be calculated at the outset.
Comment 8 to Rule 1.04.
Moreover, a lawyer should not handle a matter
so as to further the lawyer's financial interest
to the detriment of the client; for example, a
lawyer should not abuse a fee arrangement
based primarily on hourly charges by using
wasteful procedures. Comment 6 to Rule
1.04.
b.
(2)
(3)
(4)
the amount involved and
results obtained;
(5)
the time limitations imposed
by the client or the
circumstances;
(6)
the nature and length of the
professional relationship with
the client;
(7)
the experience, reputation, and
ability of the lawyer; and
(8)
whether the fee is fixed or
contingent or uncertain of
collection before the legal
services are rendered.
Written Fee Arrangements
Rule 1.04(c) requires that, when a lawyer has
not regularly represented the client, the lawyer
communicate the basis or rate of the fee to the
client, preferably in writing, before or within
a reasonable time after commencing
representation.
Rule 1.04(b) lists a number of factors that may
be considered in determining the
reasonableness of a fee:
(1)
Chapter 17
the time and labor required,
the novelty and difficulty of
the questions involved, and the
skill requisite to perform the
legal service properly;
c.
Payment of Fees by Third Party
A third party may pay a client's legal fees so
long as:
the likelihood, if apparent to
the client, that the work will
preclude other employment by
the lawyer;
the fee customarily charged in
the area for similar legal
services;
4
(1)
the client consents;
(2)
it does not interfere with the
lawyer's independent judgment
or the
client-lawyer
relationship; and
(3)
confidentiality is preserved.
Rule 1.08(e).
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
d.
Withdrawing for Nonpayment of Fees
(2)
use confidential information of
client to the disadvantage of
the client unless the client
consents after consultation;
(3)
use confidential information of
a former client to the
disadvantage of the former
client after the representation
is concluded unless the former
client consents after
consultation or the confidential
information has become
generally known; and
(4)
use privileged information of a
client for the advantage of the
lawyer or a third person
unless the client consents after
consultation.
Rule 1.15(b)(5) provides that a lawyer may
withdraw from representing a client if:
4.
a.
(1)
the client fails substantially to
fulfill an obligation to pay the
lawyer's fee; and
(2)
the lawyer has given the client
reasonable warning that the
lawyer will withdraw unless
the obligation is fulfilled.
Confidentiality of Information: Rule
1.05
P r i v i l e g e d In f o r m a t i o n
Unprivileged Client Information
v.
Confidential information as defined in Rule
1.05 includes both "privileged information"
and "unprivileged client information."
"Privileged information" means a client's
information protected by the lawyer-client
privilege of Rule 503 of the Texas Rules of
Evidence, Rule 503 of the Texas Rules of
Criminal Evidence, or Rule 501 of the Federal
Rules of Evidence. "Unprivileged client
information" means all other information
acquired by the lawyer during the course of or
by reason of the representation of the client
and relating to the client or furnished by the
client. Rule 1.05(a).
b.
c.
Application to Former Clients
Note that the Rule applies to former clients.
Additionally, the Preamble states that,
although most duties flowing from the
client-lawyer relationship attach only after the
client has requested the lawyer to render legal
services and the lawyer has agreed to do so,
some duties, such as confidentiality, may
attach before a client-lawyer relationship has
been established. Preamble No. 12.
d.
Permissible Disclosures
Rule 1.05(c) sets forth the instances in which
a lawyer may reveal confidential information.
Rule 1.05(d) delineates the circumstances
under which a lawyer may reveal unprivileged
client information.
General Rule of Confidentiality
Rule 1.05(b) states the general rule that a
lawyer shall not knowingly:
(1)
Chapter 17
reveal confidential information
of a client or former client;
e.
5
Mandatory Disclosures
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
Rule 1.05(e) mandates disclosure of
confidential information under certain
circumstances.
This is the so-called
"whistle-blower rule." It provides [w]hen a
lawyer has confidential information clearly
establishing that a client is likely to commit a
criminal or fraudulent act that is likely to
result in death or substantial bodily harm to a
person, the lawyer shall reveal confidential
information to the extent revelation reasonably
appears necessary to prevent the client from
committing the criminal or fraudulent act."
Chapter 17
to avoid making the lawyer a party to a
criminal act or knowingly assisting a
fraudulent act perpetrated by a client.
The comments following all of these Rules
should be consulted and may help with respect
to their application. However, it is seldom
easy to determine if and when disclosure is
required. One consolation is that Rules
1.05(c)(7) and (8) allow, but do not require, a
lawyer to reveal confidential information of a
client or former client (1) when the lawyer has
reason to believe it is necessary to do so in
order to prevent the client from committing a
criminal or fraudulent act and (2) to the
extent revelation reasonably appears necessary
to rectify the consequences of a client's
criminal or fraudulent act in the commission
of which the lawyer's services had been used.
However, this narrow rule of mandatory
disclosure is circumscribed by other rules.
Rule 1.02(d) continues to place upon the
lawyer, when the lawyer has confidential
information clearly establishing that a client is
likely to commit a crime or fraud that is likely
to result in substantial injury to another, the
duty to promptly make reasonable efforts to
dissuade the client from committing the crime
or fraud. Rule 1.02(e) requires a lawyer, upon
having confidential
information clearly
establishing that the client has committed a
crime or fraud in which the lawyer's services
have been used, to make reasonable efforts to
persuade the client to take corrective action. If
the lawyer's attempts to counsel the client not
to commit the crime or fraud are unsuccessful,
the lawyer must then re-examine Rule 1.05(e)
and consult Rule 1.05(f).
5.
Conflicts of Interest
The Rules contain a number of provisions
dealing with the issue of conflicts of interest.
Preamble 7 recognizes that conflicts are
inherent in the practice of law and that
"[v]irtually all difficult ethical problems arise
from apparent conflict between a lawyer's
responsibilities to clients, to the legal system
and to the lawyer's own interests."
a.
General Rule: Rule 1.06
Rule 1.06(b) states the general rule that a
lawyer shall not represent a person if the
representation:
Rule 1.05(f) mandates the revelation of
confidential information when required to do
so by Rules 3.03(a)(2) or 3.03(b) or by Rule
4.01(b). Rules 3.03(a)(2) and 3.03(b) deal
with the disclosure of facts to a tribunal in a
litigation context to avoid assisting a criminal
or fraudulent act and to correct previously
introduced false evidence. Rule 4.01(b)
requires that a lawyer disclose a material fact
to a third person when disclosure is necessary
(1)
6
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
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
(2)
there is little risk to any of the
clients if the contemplated
resolution is unsuccessful; and
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.
(3)
A lawyer may represent a person in these
situations if the lawyer reasonably believes the
representation of each client will not be
materially affected and each affected or
potentially affected client consents to such
representation after full disclosure. Rule
1.06(c). These restrictions extend to all
members of the law firm with which the
disqualified lawyer is associated. Rule 1.06(f).
b.
Conflict of Interest: Intermediary Rule
1.07
c.
Lawyers are often asked to represent both
sides of a divorce or a sale of residential real
estate. Rule 1.07 sets forth the rules
governing conflicts of interest where the
lawyer acts as an intermediary between
clients.
the lawyer consults with each
client about the common
representation and obtains
each client's written consent to
the common representation;
(2)
the lawyer reasonably believes
the matter can be resolved
without the necessity of
litigation, that each client will
be able to make adequately
informed decisions, and that
the lawyer reasonably believes
that
the
common
r e pres ent at i on can b e
undertaken impartially and
without improper effect on
other responsibilities the
lawyer has to any of the
clients. The lawyer must
withdraw as intermediary, and
not represent any of the clients
in the matter that was the
subject of the intermediation,
if any of those three conditions
are no longer satisfied or if any
of the clients so request. Rule
1.07(c).
Conflict of Interest:
Transactions: Rule 1.08
Prohibited
Rule 1.08(a) prohibits a lawyer from entering
into a business transaction with a client
unless:
Rule 1.07(a) provides that a lawyer shall not
act as intermediary between clients unless:
(1)
Chapter 17
7
(1)
the transaction and terms on
which the lawyer acquires the
interest are fair and reasonable
to the client and are fully
disclosed in a manner which
can be reasonably understood
by the client;
(2)
the client is given a reasonable
opportunity to seek the advice
of independent counsel in the
transaction; and
(3)
the client consents in writing.
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
Notably, Rule 1.08(j) provides that Rule
1.08(a) does not apply to standard commercial
transactions between the lawyer and the client
for products or services the client generally
markets to others.
product for the former client;
or
(3)
The remainder of Rule 1.08 details certain
specific prohibitions on business transactions
with clients. Rule 1.08(c) prohibits a lawyer,
prior to the conclusion of employment, from
making or negotiating an agreement with a
client, former client or prospective client
giving the lawyer literary or media rights.
Rule 1.08(d) forbids a lawyer's providing a
client with financial assistance in connection
with pending or contemplated litigation.
Conflict of Interest: Former Client:
Rule 1.09
a.
Rule 1.09 provides that, without prior
consent, a lawyer shall not represent
another person in a matter adverse to a
former client:
(1)
if it is the same or a
substantially related matter;
(2)
in which such other person
questions the validity of the
lawyer's services or work
the represent at ion in
reasonable probability will
violate Rule 1.05 regarding
confidential information. This
prohibition applies to all
partners and associates of the
firm in which the disqualified
attorney is practicing. Rule
1.09(b).
Furthermore, if a lawyer leaves a firm, the
lawyers who were previously associated with
that lawyer shall not knowingly represent a
client if the lawyer who left would be
prohibited from doing so or if the
representation would probably involve a
violation of Rule 1.05 and Rule 1.09(c).
It permits a lawyer to advance or guarantee
court costs and litigation expenses and, when
repayment is part of a contingent fee
arrangement, reasonably necessary medical
and living expenses, and to pay court costs
and litigation expenses for an indigent client.
Finally, Rule 1.08(h) prohibits a lawyer from
taking a proprietary interest in litigation other
than permissible contingent fees or a lien to
secure costs and expenses.
6.
Chapter 17
b.
Conflict of Interest: Organization as
Client: Rule 1.12
Rule 1.12(a) provides that a lawyer employed
or retained by an organization represents the
entity. It further states that the lawyer must
take reasonable remedial actions whenever the
lawyer learns or knows that:
8
(1)
an officer, employee or other
person associated with the
organization has committed or
intends to commit a violation
of a legal obligation to the
organization or a violation of
law which reasonably might be
imputed to the organization;
(2)
the violation is likely to
substantially injure the
organization; and
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
Chapter 17
the violation is related to a
matter within the scope of the
lawyer's representation of the
organization.
(1)
withdrawal
can
be
accomplished without material
adverse effect on the interests
of the client;
Rule 1.12(e) requires that a lawyer, in dealing
with an organization's directors, officers,
employees, members, shareholders or other
constituents, explain the identity of the client
when it is apparent that the organization's
interests are adverse to those of the
constituents with whom the lawyer is dealing
or when an explanation appears reasonably
necessary to avoid misunderstanding on their
part.
(2)
the client insists on a course of
action involving the lawyer's
services that the lawyer
reasonably believes may be
criminal or fraudulent;
(3)
the client has used the lawyer's
services to perpetrate a crime
or fraud;
(4)
the client insists upon pursuing
an objective that the lawyer
considers repugnant or
imprudent or with which the
lawyer has a fundamental
disagreement;
(5)
the client fails substantially to
fulfill an obligation to the
lawyer and the client has been
given reasonable warning that
the lawyer will withdraw;
(3)
7.
Declining or Terminating
Representation: Rule 1.15
a.
Mandatory Withdrawal
An attorney must withdraw from employment
or decline it when:
(1)
the representation will result in
a violation of the Rules or
other law;
(2)
the lawyer's physical, mental
or psychological condition
materially impairs the lawyer's
fitness to represent the client;
or
(6)
the representation will result in
an unreasonable financial
burden on the lawyer or has
been rendered unreasonably
difficult by the client; or
(3)
the lawyer is discharged with
or without good cause. Rule
1.15(a).
(7)
other good cause exists. Rule
1.15(b).
c.
b.
Permissible Withdrawal
Otherwise, a lawyer may withdraw from
representing a client only if:
Court-Ordered
Employment
Continuation
of
Rule 1.15(c) requires a lawyer to continue
representation when ordered to do so by a
court.
9
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
d.
the lawyer has the consent of the other
lawyer or is authorized by law to do
so. Rule 4.02(a) and (b). With respect
to consent, it is important to note that
Rule 4.02 requires the consent of the
other person's lawyer; the other
person's representation of the lawyer's
consent is not sufficient. Moreover,
an exception to this Rule exists for a
second opinion, which may be
rendered without notifying or seeking
consent from the original counsel.
Rule 4.02(d).
Termination of Representation
Upon termination of representation, even if a
lawyer is unfairly discharged by the client, a
lawyer must take steps to protect the client's
interests, including giving reasonable notice to
the client, allowing time for employment of
other counsel, surrendering papers and
property to which the client is entitled, and
refunding any advance payment of fee that has
not been earned. Rule 1.15(d). Rule 1.15(d)
specifically provides that a lawyer may retain
papers relating to the client to the extent
permitted by law, if such retention will not
prejudice the client in the subject matter of the
representation. However, the safer rule by far
is not to retain the client's papers; retention
invites grievances and lawsuits.
D.
The Rule expressly prohibits a lawyer from
causing or encouraging another to
communicate with a person or entity
represented by counsel. This prohibition
necessarily includes clients, even though the
Rule does not specifically obligate the lawyer
to restrain a client from communicating with
the adverse party.
Non-Client Relationships
Rules 4.02 and 4.03 set forth a lawyer's
obligations with respect to communications
with a person represented by counsel and with
an unrepresented person.
1.
Chapter 17
Communications are permissible with
employees of an opposing corporation or
government entity other than:
Persons Represented by Counsel: Rule
4.02
a.
A lawyer is prohibited from communicating
about the subject of the lawyer's
representation with:
persons having a managerial
responsibility that relates to the
subject of the representation; and
b.
persons whose act or omission in
connection with the subject of the
representation may make the
organization or government entity
vicariously liable for the act or
omission. Rule 4.02(c).
2.
Unrepresented Persons: Rule 4.03
a.
a person, organization or government
entity the lawyer knows to be
represented by another lawyer
regarding that subject; or
b.
a person or organization a lawyer
knows to be employed or retained for
the purpose of conferring with or
advising another lawyer about the
subject of the representation, unless
Rule 4.03 provides that, in dealing with a
person not represented by counsel, a lawyer
shall not state or imply that the lawyer is
10
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
disinterested. In fact, when the lawyer knows
or reasonably
should know that the
unrepresented person misunderstands the
lawyer's role, the lawyer must make
reasonable efforts to correct the
misunderstanding. Typically, situations in
which these obligations will arise include
collection matters and actions in which a
defendant is insured.
3.
Threatening Civil
Charges: Rule 4.04
or
translatable to an attorney's work on
behalf of a client.
2.
What type duties does the attorney
owe his client by virtue of the
fiduciary relationship? They include:
a.
the duty of full disclosure of all
important information [see e.g.
Johnson v. Peckham, 120 S.W.2d 786
(Tex. 1936) (partner selling his
interest to another partner has a
fiduciary duty requiring full disclosure
of all important information about the
value of the interest, even though the
partners had strained relations and one
partner had sued for an accounting and
dissolution of the partnership);
Kinzbach Tool Co. v. Corbett-Wallace
Corp., 160 S.W.2d 509, 513 (Tex.
1942) (fiduciary must deal openly and
make full disclosure to the
beneficiary)];
b.
the duty of loyalty to the beneficiary's
interests [see e.g. American Network
Leasing Corp. v. Corporate Funding
Houston, Inc., 2002 WL 31266230
(Tex. App.- Houston [1st Dist.] 2002,
pet. dism’d) ("[a] partner may not use
his position to gain a benefit for
himself at the expense of his
partners"); and Snyder v. Cowell, 2002
WL 1849145 (Tex. App.-El Paso
2003, no pet.) (trustee has a fiduciary
duty not to self-deal)];
c.
the duty to avoid conflicting positions
[see e.g. Pinnacle Data Services, Inc.
v. Gillen, 104 S.W.3d 188, 198 (Tex.
App.- Texarkana 2003, no pet.) ("[i]t
has been well established that the
directors of a corporation stand in a
Criminal
Rule 4.04(b) provides that a lawyer cannot
threaten criminal charges solely to obtain an
advantage in a civil matter. Likewise, an
attorney cannot threaten civil, criminal or
disciplinary charges against a complainant, a
witness or a potential witness in a bar
disciplinary proceeding solely to prevent
participation by such a person.
III.
PRACTICAL ISSUES IN THE
FAMILY LAW AREA
A.
ATTORNEY AS A FIDUCIARY
1.
What does this mean generally? The
obligation of a fiduciary "refers to
integrity and fidelity ...[required]
whenever one party trusts and relies
upon another..." Kinzbach Tool Co. v.
Corbett-Wallace Corp., 160 S.W.2d
509, 512 (Tex.1942). Thus a fiduciary
carries a higher obligation to put his
beneficiary's interests ahead of his
own. Crim Truck & Tractor Co. v.
Navistar International Transportation
Corp., 823 S.W.2d 591, 594
(Tex.1992). This responsibility of a
fiduciary toward a beneficiary is
articulated as a variety of duties,
including these that are particularly
Chapter 17
11
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
fiduciary relationship to the
corporation and its
stockholders, and they are
without authority to act in a
matter in which a director's
interest is adverse to that of
the corporation").
B.
FIDUCIARY STATUS CHANGES
RULES IN LITIGATION
1.
Burden of Proof Shifts. The
designation of a relationship as
fiduciary will often shift procedural
and evidentiary rules to protect the
beneficiary of a fiduciary relationship
from the disadvantages a fiduciary's
superior power may cause in the
litigation context. This burden-shifting
has been applied in favor of a client in
litigation against his lawyer.
2.
Fairness and Reasonableness. It is
important to remember that in any
claim of breach of fiduciary duty, the
burden of showing the fairness and
reasonableness is on the attorney.
Archer v. Griffin, 390 S.W.2d 735
(Tex. 1965); Ames v. Putz, 495 S. W.
2d 581, 583 (Tex. Civ. App.-Eastland
1973, writ refused). In Willis v.
Maverick, 760 S.W.2d 642, 645
(Tex.1988) the Supreme Court held:
As a fiduciary, an attorney is obligated
to render a full and fair disclosure of
facts material to the clients
representation.. further, breach of the
duty to disclose is tantamount to
concealment."
3.
Chapter 17
that the statute of limitations on a
client's claim for legal malpractice
against an attorney is subject to the
discovery rule, and thus the cause of
action does not begin to accrue until
the client discovers or should have
discovered through the exercise of
reasonable care and diligence the facts
establishing the elements of his cause
of action. The Court justified this
extension of limitations on an attorney
malpractice claim in part on the
special relationship between an
attorney and client. Noting that a
fiduciary relationship exists between
an attorney and client, the Court
reasoned that, "[a]s a fiduciary, an
attorney is obligated to render a full
and fair disclosure of facts material to
the client's representation. The client
must feel free to rely on his attorney's
advice. Facts which might ordinarily
require investigation likely may not
excite suspicion where a fiduciary
relationship is involved. ... Further,
breach of the duty to disclose is
tantamount to concealment." Id. at
645.
4.
Statute of Limitations. In Willis v.
Maverick, 760 S.W.2d 642 (Tex.
1988) the Supreme Court established
12
Forfeiture of Fees. In Burrow v. Arce,
997 S.W.2d 229, 237 (Tex. 1999) the
Supreme Court set out the parameters
for the remedy of fee forfeiture by an
attorney who breaches his fiduciary
duty to his client, irrespective of
whether the breach caused the client
actual damages. In Burrow v. Arce, the
Supreme Court held that an attorney
who engages in a clear and serious
violation of fiduciary duty to a client
may be required to forfeit some or all
of the attorney's fees paid in that case.
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
a.
b.
c.
d.
Long before Burrow v. Arce, the
Supreme Court quoted the
RESTATEMENT (SECOND) OF
TORTS SECTION 874 in holding that
a fiduciary relationship exists when
one is "under a duty to act for or give
advice for the benefit of another upon
matters within the scope of the
relation." Texas Bank and Trust v.
Moore, 595 S. W. 2d 502, 507 (Tex.
1980). Clearly, any representation of a
client falls under this broad coverage.
(4)
(5)
(6)
e.
(1)
(2)
(3)
(4)
Any facts issues may be answered by
a jury, but once the fact issues are
resolved, the trial court must
determine whether the attorney
committed a clear and serious breach
of his duty to the client and to what
extent attorney's fees should be
forfeited under the facts of the case.
Burrow, 997 S.W.2d at 245-46.
(6)
(5)
(7)
The non-exclusive list of factors for a
jury to consider in resolving any facts
disputes are:
(1)
(2)
(3)
determining
complained
occurred;
determining
complained
occurred;
the attorney's
the time;
whether the
of conduct
when the
of conduct
mental state at
13
the value of the attorney
services;
the existence of harm to the
client; and
the amount of harm to the
client. (Burrow, 997 S.W.2d at
245-46).
In determining whether equitable
relief is proper the non-exclusive list
of factors for a trial court to consider
are:
In a fee forfeiture claim the client does
not need to prove actual damages,
because the forfeiture is due to the
violation of the fiduciary relationship,
and is imposed to discourage such
conduct.
5.
Chapter 17
the gravity of the violation;
the timing of the violation;
its willfulness;
its effect on the lawyer's work
for the client;
any other threatened or actual
harm to the client;
the adequacy of other
remedies; and
the public interest in
maintaining the integrity of
attorney- client relationships.
(Burrow, 997 S.W.2d at
243-44).
Client Cannot Fracture Claims. In
Archer v. Med. Protective Co. of Fort
Wayne, Ind., 197 S.W.3d 422 (Tex.
App.-Amarillo 2006, pet. denied):
Holding that a plaintiff client cannot
fracture a legal malpractice claim into
a cause of action for breach of
fiduciary duty. However, claims
arising out of allegations of conflicts
of interest, self-dealing, or misusing
confidential information are separate
causes of action from ordinary
negligence causes. A similar holding
was made in Deutsch v. Hoover, Bax
& Slovacek, LLP, 97 S.W.3d 179 (Tex
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
.App.- Houston [14th Dist.]
2002, no pet.)
C.
THE ATTORNEY FEE CONTRACT
1.
Generally.
The attorney's fee
contract is a critical consideration in
the establishment of a good working
relationship with a client.
a.
b.
other employment of the
lawyer;
The Rule. The obvious starting point
is the provisions of Texas
Disciplinary Rules of Professional
Conduct, specifically, Rule 1.04
"Fees", which provides:
(a)
A lawyer shall not enter into
an arrangement for, charge or
collect an illegal fee or
unconscionable fee. A fee is
unconscionable if a competent
lawyer could not form a
reasonable belief that the fee is
reasonable.
Factors. The Rule then lists the eight
factors cited in the Arthur Anderson &
Co. v. Perry Equipment Corp., 945
S.W.2d 812 (Tex. 1997), where the
Texas Supreme Court held that factors
a fact finder should consider when
determining the reasonableness of a
fee include:
1.
2.
Chapter 17
2.
The time and labor required,
the novelty and difficulty of
the questions involved, and the
skill required to perform the
legal service properly;
The likelihood that the
acceptance of the particular
employment will preclude
14
3.
The fee customarily charged in
the locality for similar legal
services;
4.
The amount involved and the
results obtained;
5.
The time limitations imposed
by the client or by the
circumstances;
6.
The nature and length of the
professional relationship with
the client;
7.
The experience, reputation,
and ability of the lawyer or
lawyers performing the
services; and
8.
Whether the fee is fixed or
contingent on results obtained
or uncertainty of collection
before the legal services have
been rendered.
All contingent fee agreements must be
in writing under the mandatory
provisions of the Texas Disciplinary
Rules of Professional Conduct
1.04(d). Specifically, this Rule
requires such contracts to:
(1)
state the method by which the
fee is determined;
(2)
state the percentage that shall
accrue to the attorney in
settlement, trial or appeal - if
they are different; and
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
(3)
state the litigation and other
expenses that will be deducted
from the recovery and explain
if that deduction occurs before
or after the calculation of the
attorney's fee.
(b)
A lawyer shall explain a
matter to the extent reasonably
necessary to permit the client
to make informed decisions
regarding the representation.
(1)
3.
It is strongly advised that all other
attorney fee agreements be in writing.
Rule 1.04(c) requires the "basis or rate of the
fee shall be communicated to the client,
preferably in writing, before or within a
reasonable time after commencing the
representation."
In Levine v. Bayne, Snell & Krause,
LTD, 40 S.W.3d 92 (Tex. 2001) the
Supreme Court held that imposing the
duty to clarify the attorney-client
contract on the attorney is justified by
(1) the attorney's greater knowledge
and experience with fee agreements
and (2) the trust the client places in the
attorney. The attorney's failure to
clarify an issue in the fee agreement is
conduct that clearly violates the
standard imposed by Texas law.
d.
In Willis v. Maverick, 760 S.W.2d
642, 645 (Tex.1988) the Supreme
Court held:
.... A lawyer shall abide by a
client's decisions:
(1)
b.
c.
Rule 1.02 Scope and Objectives of
Representation
(a)
concerning
the
objectives and general
m e t h o d s
o f
representation;....."
Comment 1 (to Rule 1.03):
"The client should have
sufficient information to
participate intelligently in
decisions concerning the
objectives of representation
and the means by which they
are pursued..."
The lawyer's duty to advise the client. In
contracting with any client the attorney must
be mindful of the provisions of the Texas
Disciplinary Rules of Professional Conduct:
a.
Chapter 17
concerning
the
objectives and general
m e t h o d s
o f
representation;....."
Comment 1 (to Rule
1.02):
"....Thus, a
lawyer has very broad
discretion to determine
technical and legal
tactics subject to the
client's wishes
regarding such matters
as the expense to be
incurred...."
"Thus the failure of an attorney to make the
contract clear and precise can be grounds for
a claim of breach of fiduciary duty, asserting
the attorney's breach of the duty to disclose
constitutes concealment."
Rule 1.03 Communication
15
How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
4.
Can an attorney fee agreements be
modified?
a.
While there is no taint of fraud to a
contract entered into at the inception
of the attorney-client relationship,
there is a taint of fraud that attaches by
presumption to agreements made in
the course of an on-going
attorney-client relationship. Cole v.
McCanlies, 620 S.W.2d 713, 715
(Tex. Civ. App.-Dallas 1981, writ ref'd
n.r.e.).
b.
The modification of a fee agreement,
during the litigation, was held proper
when the opposing party brought in
new issues and parties not
contemplated in the original fee
agreement. Gill v. Randolph, 269
S.W.2d 529, 532 (Tex. Civ.
App.-Galveston 1954, writ ref'd n.r.e.).
c.
This type of modification should
always be done in writing and clearly
set out the factors involved and
changes to occur. The Comment #2
under Rule1.04 says in part: "A
written statement concerning the fees
reduces the possibility of
misunderstanding and when the
lawyer has not regularly represented
the client it is preferable for the basis
or rate of the fee to be communicated
to the client in writing...."
d.
In Sacks v. Haden, 266 S.W.3d 447
(2008), the Supreme Court held that a
written attorney fee contract that
specified only hourly rates could not
be modified by evidence of an oral
agreement to cap fee. The court ruling
was that an unambiguous contract will
Chapter 17
be enforced as written and parol
evidence will not be received for the
purpose of creating an ambiguity or to
give the contract a meaning different
from that which its language imports.
Only where a contract is ambiguous
may a court consider the parties'
interpretation and "admit extraneous
evidence to determine the true
meaning of the instrument. "Whether
a contract is ambiguous is a question
of law that must be decided by
examining the contract as a whole in
light of the circumstances present
when the contract was entered." The
plain language of the engagement
letter demonstrates that Haden agreed
to pay Sacks an hourly fee, and that no
cap on fees wasset. Haden argues that
a fee agreement must specifically state
that hourly fees will accrue without
limit in order for the agreement to be
unambiguous and enforceable. But the
lack of such explicit language is
irrelevant if the agreement can be
reasonably interpreted only one way.
The Supreme Court held that it has
never held that an open-ended hourly
fee agreement will be enforced only if
it expressly states there is no cap on
fees, and they declined to do so now.
When a contract is unambiguous, the
parol evidence rule precludes
consideration of evidence of prior or
contemporaneous agreements unless
an exception to the parol evidence rule
applies.
IV.
IN CONCLUSION
These Rules, however, often seem
contradictory and very difficult to apply in
complicated situations. Many lawyers in
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How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
attempting to justify some course of conduct
can find some disciplinary rule authorizing the
very act preferred by the lawyer. It seems
clear that some overriding approach to ethical
decision-making is necessary in the practice of
law as is necessary in all decision-making. A
lawyer needs some basic guidelines in truly
seeking to avoid committing malpractice,
grievable offenses, or acts lowering his
opinion of himself. The following three
suggestions may or may not help.
1.
level of arrogance, increase the amount of
communication and keep in perspective that
the client not the lawyer owns the lawsuit.
3.
Choose to Make Less Money
This Rule runs counter to human self-interest
and is difficult to follow. In facing an ethical
dilemma with a dollar value attached, a lawyer
should at least analyze the choices to
determine the economic impact of each
choice. If there is a fee dispute, a lawyer
should calculate the options which produce
both the largest and smallest fees. In selecting
the lowest fee option, a lawyer greatly reduces
the likelihood of a malpractice or grievance
claim. A lawyer will feel better about his
profession if his image is tied up in something
other than the size of fees being generated.
The profit-motive may in fact explain many
grievances and lawsuits filed against lawyers.
Certainly the fear of such filings can motivate
some attorneys to comply with the Rules and
the various state and county creeds of
professional conduct.
Good Ethics or Good Tactics
It is important in any continuing litigation for
a lawyer's relationship with the court and
opposing counsel to be a priority in delivering
a high quality, low cost product to the client.
A lawyer's ethical decisions pursuant to the
Texas Rules of Professional Conduct will
result in more favorable treatment from the
court and a better result for the client. It is
difficult to adhere to this Rule in the heat of
litigation, but a conscientious lawyer should
recognize that long-term ethical conduct
results in fewer instances of malpractice or
grievable offenses and produces good results
in most cases. When a litigation lawyer is
faced with difficult choices and is uncertain of
the proper strategy, the ethical choice most
always produces the best result.
2.
Chapter 17
However it is the author's hope that most
attorneys may be motivated as envisioned by
Preamble 9 of the Rules:
"Each lawyer's own conscience is the
touchstone against which to test the extent to
which his actions may rise above the
disciplinary standards prescribed by these
rules. The desire for the respect and
confidence of the members of the profession
and of the society which it serves provides the
lawyer the incentive to attain the highest
possible degree of ethical conduct. The
possible loss of that respect and confidence is
the ultimate sanction.
So long as its
practitioners are guided by these principles,
the law will continue to be a noble profession.
Remember that the Client is the
Principle
Most lawyers understand the relationship
between an attorney and client as a fiduciary
relationship and that of an agent/principal. It
is often easy for the lawyer to forget who is
the principal. The control of the lawsuit
belongs to the client, and it is the client who is
always the principal. Designating the client as
the principal enables the lawyer to lower the
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How to Avoid Grievances, Malpractice Claims and Breach of Fiduciary Duty Claims
This is its greatness and its strength, which
permit no compromise."
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