conflicts, contracts, and costs: a quick ...conflicts, contracts and costs: a quick ethics update on...

CONFLICTS, CONTRACTS, AND COSTS: A QUICK ETHICS

UPDATE ON CRITICAL LAW PRACTICE CONSIDERATIONS

CLAUDE E. DUCLOUX

400 W. 15th Street, Suite 808

Austin, Texas 78701

Telephone: (512) 474-7054

Telecopier: (512) 474-5605

E-Mail: [email protected]

State Bar of Texas

ESSENTIALS OF BUSINESS LAW

April 29 - 30, 2010

Dallas

CHAPTER 14

CLAUDE E. DUCLOUX

400 W. 15th Street, Suite 808 Austin, Texas 78701

Telephone: (512) 474-7054 Telecopier: (512) 474-5605

E-Mail: [email protected]

EDUCATION University of Texas, Austin, B.A., 1972 St. Mary's University, San Antonio, J.D., December 1976 BAR ADMISSIONS Texas1977; California 1978, Colorado 2003 Various US District Courts and Circuit Courts of Appeal EMPLOYMENT Assistant General Counsel, State Bar of Texas: 1978-1980 Robinson, Felts, Starnes, Angenend & Mashburn; Civil Trial Attorney, 1980-1987 Wood, Lucksinger & Epstein; Civil Trial Attorney, 1987-1989 Private practice; Civil Trial Attorney, Business Formation, Transactions, Trials and Appeals, Mediation and Arbitration; 1989-Present PROFESSIONAL ACTIVITIES President, Travis County Bar Association (now, Austin Bar Association); 1997-1998;

(All officer positions: Pres.-Elect; Comptroller, Treasurer, Secretary '95-96; Director) Chair, Texas Board of Legal Specialization, 1997-1998

Director, 1994-1997; Civil Trial Law Advisory Commission, 1985-1994 Board Certified: Civil Trial Law, 1984; Civil Appellate Law, l987

Chair, Texas Bar Foundation 2005-2006; Secretary-Treasurer (04-05); Trustee 2004-2008 Sustaining Life Fellow, District Nine Membership Chair 1996-98; numerous awards committees 1996-2008

Chair, Texas Center for Legal Ethics and Professionalism: 2004-06, Trustee 2003-07 Authored numerous Professionalism Video Tapes: 1996(segment on "Office Procedure and Practices"), Co-wrote "Ethics Jeopardy,” 1997, “Ethics Jeopardy II,” 2001; Defense Ethics tapes, Skills updates, 2005.

Chair, College of the State Bar of Texas; 1992-94; Vice-Chair 1990-92; Director, 1988-98, Member 1985-Present; Board Advisor 1999-2000, Numerous Committees Chair, State Bar of Texas Annual Meeting (Texas Bar Convention), 2001 Chair, United States Fifth Circuit Judicial Conference, Austin 2004 President, St. Mary’s Law Alumni Association, 2006-07, Trustee, 2001-pres. Associate, American Board of Trial Advocates, 1999- pres. Director, State Bar of Texas; District 9, 1998-2001; Executive Committee 1999-2001

(Outstanding 3rd Year Director Award - 2001) Director, Austin Lawyers Care (now: Volunteer Legal Services of Central Texas), 86-89 Director, Austin Young Lawyers Association, 1984-1986 Editor, Travis County Practice Handbook, 1984, 1986 Trustee; St Mary’s University, San Antonio, Texas 2007-08 Member and Founder “Bar & Grill Singers,” Lawyer Group performing musical parody across the country, and raising (through Jan 2008) $400,000 for pro bono causes. Member, Supreme Court Advisory Committee on Court-Annexed Mediation, 1996-1998 PROFESSIONAL HONORS Annual Professionalism Award, College of the State Bar of Texas, 2002 Outstanding Young Lawyer Award, 1987 (Awarded by Austin Young Lawyers Association) Presidential Citation; State Bar of Texas, 2001 and 2006 Pro Bono Award, Volunteer Legal Services of Central Texas, 1991, 1993, 1997, 1999 W. Frank Newton Award (Statewide Annual Pro Bono Award given by State Bar of Texas), 2000 Professionalism Award, Austin Bar Association, 2007 Outstanding Mentor of the Year Award, Austin Young Lawyers Association, 2007. MILITARY SERVICE U.S. Army; 1st Cavalry Division, 1972-1974 (Awarded Army Commendation Medal, 1974)

Conflicts, Contracts and Costs: A Quick Ethics Update

on Critical Law Practice Considerations Chapter 14

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TABLE OF CONTENTS

PART I: CONFLICTS OF LAW: You Can’t Be Everybody’s Best Friend . . . Or Lawyer, Either.

1. General Rules .................................................................................................................................................. 1

2. Related Rules on Conflicts .............................................................................................................................. 4

3. Raising the Conflict Issue ................................................................................................................................ 4

4. Prohibited Conduct .......................................................................................................................................... 4

5. The Three Big Questions ................................................................................................................................. 4

6. Exceptions to Conflict of Interest Rules .......................................................................................................... 5

7. Is Withdrawal the Solution? ............................................................................................................................ 5

8. Non-litigation Matters ..................................................................................................................................... 5

9. Entering Into a Business Transaction with a Client ........................................................................................ 5

10. Literary or Media Rights ................................................................................................................................. 6

11. Payments from Third Parties ........................................................................................................................... 6

12. Successive Government and Private Employment .......................................................................................... 6

13. Rule Making .................................................................................................................................................... 6

14. The Chinese Wall ............................................................................................................................................ 6

15. Confidential Knowledge Precluding Representation ...................................................................................... 6

16. Private Lawyer Becoming Government Lawyer ............................................................................................. 6

17. Government Lawyers Negotiating for Employment ....................................................................................... 6

18. Organization Versus Officers and Directors ................................................................................................... 7

19. Withdrawing for Nonpayment of Fees ............................................................................................................ 7

20. Judicial Tests - The Judicially Developed “Substantial Relationship Test.” ................................................... 7

21. The Key to Conflicts ....................................................................................................................................... 7

22. Proposed New Disciplinary Rules ................................................................................................................... 7

23. Conclusion ....................................................................................................................................................... 8

PART II: DOCUMENTING THE ATTORNEY-CLIENT RELATIONSHIP

I. THE LAW ...................................................................................................................................................... 8

II. OVERALL MESSAGE OF AGREEMENT: WHAT AND HOW YOU COMMUNICATE IS

IMPORTANT .................................................................................................................................................. 8

III. ELEMENTS OF A GOOD WRITTEN AGREEMENT: ................................................................................ 8

IV. DISCUSS FULLY YOUR MONETARY EXPECTATIONS ........................................................................ 9

V. RESOLVING BILLING CONTROVERSIES ................................................................................................ 9

VI. ABANDONMENT OF CLIENT ................................................................................................................... 9

PART III: THE COST OF DOING BUSINESS

Analysis ................................................................................................................................................................. 10

Seeing Law as a Business ...................................................................................................................................... 10

Office Systems ...................................................................................................................................................... 11

Working as an Ethical Lawyer: The Four Responsibilities ................................................................................... 12

Bad Things Happen – How to Handle a Grievance .............................................................................................. 12

Three Cardinal Rules for Success ......................................................................................................................... 12

Improve and Defend Your Profession: Give Something Back ............................................................................. 13

Define Your Own Success .................................................................................................................................... 13



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EXHIBIT A

Attorney Fee [short form] Contract ....................................................................................................................... 15

EXHIBIT B

Attorney Fee [Long form] Contract ...................................................................................................................... 17

EXHIBIT C

Notes Concerning the Proposed Amendments to the Texas Disciplinary Rules of Professional Conduct ........... 24



1

CONFLICTS, CONTRACTS, AND

COSTS: A QUICK ETHICS UPDATE

ON CRITICAL LAW PRACTICE

CONSIDERATIONS

By: Claude E. Ducloux

Austin, Texas

This presentation is intended to remind lawyers of

their duties in three critical areas that affect a great

majority of practicing attorneys. Those areas are:

1. A short reminder of our responsibility to

analyze the rules regarding conflicts of

interest and either avoid or resolve conflicts

as they arise;

2. A reminder how lawyers can be protected by

appropriately documenting files, including a

solid attorney-client contract, outlining the

expectations of both the attorney and the

client throughout the representation, as well

as closing letters; and

3. Keeping your law offices running smoothly

and efficiently by choosing the right

equipment and procedures for serving clients,

maximizing your talents, and protecting

yourself.

Portions of this paper were taken and adapted from

earlier CLE presentations which I presented in various

institutes and specialty programs.

Part I:

CONFLICTS OF LAW:

You Can’t Be Everybody’s Best Friend . . . or

Lawyer, either.

Most lawyers enjoy pursuing, keeping and

securing as many clients as possible. Lawyers who

have recently started practice have very little worry

that their clients’ interests are going to conflict, mainly

because they don’t have very many clients. The larger

the firm, however, the more necessary it is to ensure

that the interests of various clients do not get you into

trouble.

This article will focus on the big issues facing

lawyers, and emphasize hints to analyze dangerous

situations when they arise. The key to all of this,

however, is knowing the rules, and applying your own

best intellectual honesty.

1. General Rules In Texas, the Disciplinary Rules regarding

conflicts of interest are as follows:

Rule 1.06 - Conflict of Interest: General Rule

(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

material 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 obtain 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 lawyers would be prohibited by this Rule

from engaging in particular conduct, no other

lawyer, while a member or associated with



2

that lawyer’s firm, may engage in that

conduct.

Rule 1.07 - Conflict of Interest: Intermediary

(a) A lawyers shall not act as intermediary

between clients unless:

(1) the lawyer consults with each client

concerning the implications of the

common representation, including the

advantages and risks involved, and the

effect on the attorney-client privileges,

and obtains each clients’ written consent

to the common representation;

(2) the lawyer reasonably believes that the

matter can be resolved without the

necessity of contested litigation on terms

compatible with the clients’ best

interests that each client will be able to

make adequately informed decisions in

the matter and that there is little risk of

material prejudice to the interests of any

of the clients if the contemplated

resolution is unsuccessful; and

(3) the lawyer reasonably believes that the

common representation can be

undertaken impartially and without

improper effect on the responsibilities

the lawyer has to any of the clients.

(b) While acting as intermediary, the lawyer

shall consult with each client concerning the

decision to be made and the considerations

relevant in making them, so that each client

can make adequately informed decisions.

(c) A lawyer shall withdraw as intermediary if

any of the clients so requests or if any of the

conditions stated in paragraph (a) is no

longer satisfied. Upon withdrawal, the

lawyer shall not continue to represent any of

the clients in the matter that was the subject

of the intermediation.

(d) Within the meaning of this Rule, a lawyer

acts as intermediary if the lawyer represents

two or more parties with potentially

conflicting interests.

(e) If a lawyer would be prohibited by this Rule


lawyer while a member of or associated with

that lawyer’s firm may engage in that

conduct.

Rule 1.08 - Conflict of Interest: Prohibited

Transactions

(a) A lawyer shall not enter into a business

transaction with a client unless:

(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 thereto.

(b) A lawyer shall not prepare an instrument

giving the lawyer or a person related to the

lawyer as a parent, child, sibling, or spouse

any substantial gift from a client, including

testamentary gift, except where the client is

related to the donee.

(c) Prior to the conclusion of all aspects of the

matter giving rise to the lawyer’s

employment, a lawyer shall not make or

negotiate an agreement with a client,

prospective client, or former client giving the

lawyer literary or media rights to a portrayal

or account based in substantial part on

information relating to the representation.

(d) A lawyer shall not provide financial

assistance to a client in connection with

pending or contemplated litigation or

administrative proceedings, except that:

(1) a lawyer 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

(2) a lawyer representing an indigent client

may pay court costs and expenses of

litigation on behalf of the client.

(e) A lawyer shall not accept compensation for

representing a client from one other than the

client unless:

(1) the client consents;

(2) there is no interference with the

lawyer’s independence of professional



3

judgment or with the client-lawyer

relationship; and

(3) information relating to representation of

a client is protected as required by Rule

1.05.

(f) A lawyer who represents two or more clients

shall not participate in making an aggregate

settlement of the claims of or against the

clients, or in a criminal case an aggregated

agreement to guilty or nolo contendere pleas,

unless each client has consented after

consultation, including disclosure of the

existence and nature of all the claims or pleas

involved and of the nature and extent of the

participation of each person in the settlement.

(g) A lawyer shall not make an agreement

prospectively limiting the lawyer’s liability

to a client for malpractice unless permitted

by law and the client is independently

represented in making the agreement, or

settle a claim for such liability with an

unrepresented client or former client without

first advising that person in writing that

independent representation is appropriate in

connection therewith.

(h) A lawyer shall not acquire a proprietary

interest in the cause of action or subject

matter of litigation the lawyer is conducting

for a client, except that the lawyer may:

(1) acquire a lien granted by law to secure

the lawyer’s fee or expenses; and

(2) contract in a civil case with a client for a

contingent fee that is permissible under

Rule 1.04.

(i) If a lawyer would be prohibited by this Rule


lawyer while a member of or associated with

that lawyer’s firm may engage in that

conduct.

(j) As used in this Rule, business transactions

does not include standard commercial

transactions between the lawyer and the

client for products or services that the client

generally markets to others.

Rule 1.09 - Conflict of Interest: Former Client

(a) Without prior consent, a lawyer who

personally has formerly represented a

client in a matter shall not thereafter

represent another person in a matter

adverse to the former client:

(1) in which such other person questions the

validity of the lawyer’s services or work

product for the former client;

(2) if the representation in reasonably

probability will involve a violation of

Rule 1.05; or

(3) if it is the same or a substantially related

matter.

(b) Except to the extent authorized by Rule 1.10,

when lawyers are or have become members

of or associated with a firm, none of them

shall knowingly represent a client if any one

of them practicing alone would be prohibited

from doing so by paragraph (a).

(c) When the association of a lawyer with a firm

has terminated, the lawyers who were then

associated with that lawyer shall not

knowingly represent a client if the lawyer

whose association with that firm has

terminated would be prohibited from doing

so by paragraph (a)(1) or if the representation

in reasonable probability will involve a

violation of Rule 1.05.

Rule 1.10 - Successive Government and Private

Employment

(a) Except as law may otherwise expressly

permit, a lawyer shall not represent a private

client in connection in a matter in which the

lawyer participated personally and

substantially as a public officer or employee,

unless the appropriate government agency

consents after consultation.

(b) No lawyer in a firm with which a lawyer

subject to paragraph (a) is associated may

knowingly undertake or continue

representation in such a matter unless:

(1) the lawyer subject to paragraph (a) is

screened from any participation in the

matter and is apportioned no part of the

fee therefrom; and

(2) written notice is given with reasonable

promptness to the appropriate

government agency.

(c) Except as law may otherwise expressly

permit, a lawyer having information that the

lawyer knows or should know is confidential

government information about a person or

other legal entity acquired when the lawyer

was a public officer or employee may not



4

represent a private client whose interests are

adverse to that person or legal entitle.

(d) After learning that a lawyer in the firm is

subject to paragraph (c) with respect to a

particular matter, a firm may undertake or

continue representation in that matter only if

that disqualified lawyer is screened from any

participation in the matter and is apportioned

no part of the fee therefrom.

(e) Except as law may otherwise expressly

permit, a lawyer serving as a public officer or

employee shall not:

(1) participate in a matte involving a private

client when the lawyer had represented

that client in the same matter while in

private practice or nongovernmental

employment, unless under applicable

law no one is, or by lawful delegation

may be, authorized to act in the lawyer’s

stead in the matter; or

(2) negotiate for private employment with

any person who is involved as a party or

as attorney for a party in a matter in

which the lawyer is participated

personally or substantially.

(f) As used in this rule, the term matter does not

include regulation-making or rule-making

proceedings or assignments, but includes:

(1) any adjudicatory proceeding,

application, request for a ruling or other

determination, contract, claim,

controversy, investigation, charge

accusation, arrest or other similar,

particular transaction involving a

specific party or parties; and

(2) any other action of transaction covered

by the conflict of interest rules of the

appropriate government agency.

(g) As used in this rule, the term confidential

government information means information

which has been obtained under governmental

authority and which, at the time this rule is

applied, the government is prohibited by law

from disclosing to the public or has a legal

privilege not to disclose, and which is not

otherwise available to the public.

(h) As used in this Rule, Private Client includes

not only a private party but also a

governmental agency if the lawyer is not a

public officer or employee of that agency.

(i) A lawyer who serves as a public officer or

employee of one body politic after having

served as public officer of another body

politic shall comply with paragraphs (a) and

(c) as if the second body politic were a

private client and with paragraph (e) as if the

first body politic were a private client.

2. Related Rules on Conflicts There are four other Disciplinary Rules which

address closely related matters:

1. Rule 1.15 covers declining or terminating

representation in certain circumstances;

2. Rule 2.01 covers an attorney’s role as an

advisor;

3. Rule 2.02 provides guidance for when a

lawyer is evaluating for use by third persons;

and

4. Rule 3.08 deals with the lawyer’s ethical duties

when he or she is called as a witness.

3. Raising the Conflict Issue Whose job is it to raise the conflict issue? It’s

yours, the lawyer’s job.

4. Prohibited Conduct In general terms, our Rules of Conflict of Interest

prohibit representation in four conflict of interest

situations. You should not represent:

1. Opposing parties in the same litigation;

2. A person whose representation involves a

substantially related matter in which the

person’s interests are “materially and directly

adverse” to the interests of another client;

3. A person whose representation “reasonably

appears” adversely limited by your

responsibilities to another client, or a third

person, or to your firm; and

4. Any of multiple parties whom the lawyer has

previously represented in a matter if a dispute

arises concerning the same matter and the

same parties.

5. The Three Big Questions Attorney John Rothermel, III of San Antonio, has

written extensively on avoiding conflicts of interest in

real estate situations. He has boiled it down to three

questions that you must ask yourself. The attorney

must be able to answer “no” honestly to the following

three questions:



5

1. Will my representation of A be materially

and directly adverse to the interest of B?

2. Do I have duties to a third party which will

limit my representation of either A or B?

3. Will my representation of either client be

adversely limited by my own interests or that

of my law firm?

If all of these questions are answered negatively, the

attorney may represent multiple parties without getting

the consent of the parties. However, consent is still a

first level way to protect the attorney from claims of

disappointed clients.

6. Exceptions to Conflict of Interest Rules Once you answer the big three questions, there

may still be some doubt in your mind. Remember,

even if you have concluded that the clients’ interests

will not be “materially” affected by joint

representation, you may still need to obtain permission.

That involves disclosure:

Most attorneys believe that, so long as the

“disclose” directly the conflict, they can

represent whomever they want. This

overlooks the requirement of Rule 1.06 that

the lawyer must reasonably believe the

representation of those two clients will not be

materially affected by simultaneous

representation.

Therefore, even if you do form a reasonable belief that

the two clients won’t be materially affected, you must

disclose. Rule 1.06 itemizes a five-party disclosure

standard as follows. You must disclose:

1. The existence of the conflict;

2. The nature of the conflict;

3. The implications of the conflict;

4. The possible adverse consequences of the

common representation; and

5. The advantages of common representation.

7. Is Withdrawal the Solution?

Can you simply cure any conflict by withdrawing

from representing one of the two clients? The Rule

envisions that you must promptly withdraw from as

many representations so that there is no remaining

conflict of interest. In many cases this means you have

to disqualify yourself completely.

8. Non-litigation Matters

What about conflicts such as contract

negotiations, estate planning, or general counseling?

The following factors can be considered in evaluating

potential conflicts of interest:

1. The duration of the lawyer-client

relationship;

2. The closeness or intimacy of that

relationship;

3. The nature of the functions being performed;

4. The likelihood that the actual conflict will

arise; and

5. The likely prejudice if conflict arises (see

comment 13 to Rule 1.06).

Remember that you can’t represent multiple parties in

a negotiations when their interests are fundamentally

antagonistic, but common representation may be

permissible if the parties are generally aligned in

interest although their may be some difference of

interest (see comment 14 to Rule 1.06). There are

numerous situations where conflicts arise, as follows:

1. Lawyers serving as both counsel and member

of an organization board;

2. Disputes following multiple representation;

3. Inconsistent positions on legal issues;

4. Advocacy against the client in unrelated

matters; and

5. Imputed disqualification (partner is

disqualified so you are disqualified).

9. Entering Into a Business Transaction with a

Client The general rule is a lawyer cannot enter into a

business transaction with a client unless the following

conditions are met:

1. The transaction and the terms on which the

lawyer acquires the interest must be fair and

reasonable to the client and the transaction

and terms are fully disclosed to the client

in a manner that can be reasonably

understood (see Rule 1.08 (a)(1));

2. The client must have reasonable opportunity

to seek advice of independent counsel; and

3. The client must consent in writing.

It’s the “in writing” requirement that most lawyers

overlook.

Note that this doesn’t apply to routine transactions

where each one engages the other in their normal

routine business. This rule typically involves the “non-

routine” transactions; such as client and lawyer going

into business together or the lawyer acquiring a

percentage ownership in the client’s business.



6

10. Literary or Media Rights Since the lawyer’s acquisition of the client’s

literary or media rights can create an incentive for the

lawyer to act in a manner that would sensationalize the

story and increase publicity value but harm client

representation, the Rules restrict such agreements (see

Rule 1.08(c). These prohibitions are not subject to

client waiver, but the prohibition terminates when the

matter is concluded that gave rise to the employment.

Caution, however, since the prohibition regarding

literary or media rights applies throughout “all aspects

of the matter,” this may continue beyond the term of

your representing the client.

11. Payments from Third Parties

When a third party pays a lawyers fee, potential

exists for improper control or influence. Rule 1.08 (e)

allows such arrangement if three conditions are met:

1. The client consents;

2. The payment does not interfere with the

lawyer’s professional judgment or the

lawyer’s relationship with the client; and

3. The information relating to the lawyer’s

representation of the client is protected as

required by confidentiality rules (see Rule

1.05).

12. Successive Government and Private Employment The Texas Rules address conflicts of interest

relating to the risk that a lawyer might exploit public

office for the advantage of a client. The so-called

“revolving door” problem (see Rule 1.09, 1.10, and

comment 9). A lawyer entering or leaving public

office may have some unfair advantage in the form of

access to confidential information, personal

relationships or influence. Any lawyer seeking to take

advantage of that is subject to disqualification as is his

or her law firm in the matter related to the previous

employment.

Moreover, Rule 1.10 (a) restricts any previous

government employee who joins a private practice

from representing a private client in connection with a

matter he/she personally participated while in public

office, unless the representation is expressly permitted

by law or the appropriate government agency consents

after consultation. Thus, the agency can bar the

representation by withholding its consent.

13. Rule Making The Rule provision doesn’t apply when the

lawyer’s involvement in the governmental activity was

merely regulation making or rule making (see Rule

1.10 (f)).

14. The Chinese Wall Rule 1.10 authorizes a “Chinese Wall” procedure

to deal with a government lawyer joining a private

firm. Even if a lawyer in the firm may not represent a

private client because of the lawyer’s own previous

government employment, other lawyers may represent

a client in the matter if the former government

employee is screened from participation and receives

none of the fee. If you are going to attempt to use this

procedure you should prepare a memorandum to

distribute to all members of the firm explaining the

procedure, documenting how it will work, and

instructing that the former government lawyer should

be screened from participation.

Additionally, the government agency must be

given written notice of this potential conflict as soon as

reasonably possible (see Rule 1.10, Comment 6).

15. Confidential Knowledge Precluding

Representation A former government employee or official who

has confidential government information (which means

actual knowledge as opposed to imputed knowledge)

may not represent a private client whose interests are

adverse, unless expressly allowed by law.

16. Private Lawyer Becoming Government Lawyer When a private lawyer joins the government

service, he or she is also subject to special

disqualification rules. He may not participate in a

matter involving a private client when the lawyer

previously represented the client in the same matter

while in private practice. Obviously, this rule makes

sense.

It is also important to note that imputed

disqualification (that is that all members of a private

law firm can’t participate if one member is

disqualified) does not apply to the government. Just

because one governmental officer is disqualified,

another governmental lawyer may step in. It is

advisable, however, that the governmental agency use

a “Chinese Wall” screening of the disqualified lawyer.

17. Government Lawyers Negotiating for

Employment For a government lawyer to enter negotiations for

private employment with someone who has a matter

before the lawyer would create a potential for improper

influence. The Rules prohibit negotiations with

anyone involved in the matter in which the lawyer is

participating personally and substantially. Similar

prohibition applies to adjudicatory officials (see Rule

1.10 (e)(2) and Rule 1.11). Law clerks, by custom and

practice, enjoy a more liberal standard because they



7

must seek other employment prior to the end of their

clerkship. A law clerk, therefore, may negotiate for

employment with a party or a lawyer involved in a

matter in which the clerk is participating as long as the

clerk notified adjudicatory official (Rule 1.11 (b)).

18. Organization Versus Officers and Directors

One of the biggest booming areas of conflict of

interest is when a lawyer attempts to represent a

corporation and its officers and directors when a

conflict exists. This may come in the formation of the

entity of later when problems arise after the entity has

been in business for some period of time.

A lawyer should always make clear both to

himself/herself and the client whom the lawyer is

representing.

While it is generally understood a lawyer may

form a tighter bond with a particular corporate officer,

the lawyer should always remember who the client is

or suffer the consequences.

19. Withdrawing for Nonpayment of Fees In many situations, a conflict will arise if the

client fails to honor the fee agreement, and the lawyer

chooses to enforce the contract, either by refusing to

perform any further services, or to withdraw

completely. Care MUST be taken to preserve (or

conversely, to not prejudice) the clients rights. This

involves carefully following both the disciplinary rules,

and the Texas Rules of Civil Procedure and your local

rules, if litigation is pending.

Rule 1.15 (b)(5) provides that a lawyer may

withdraw from representing a client if:

(a) The client fails substantially to fulfill an

obligation to pay the lawyer’s fees; and

(b) The lawyer has given the client reasonable

warning that the lawyer will withdraw unless

the obligation is fulfilled.

CAVEAT: It is important to remember, however,

that most courts interpret the “file” as belonging to the

client and it is the recommendation of almost all

lawyers (including this one) that you make the file

available to the client and if you want to keep copies,

make those copies at your own expense!

By all means, “paper” your withdrawal

thoroughly, including the warning letters to the client,

and the withdrawal procedures you have followed.

20. Judicial Tests - The Judicially Developed

“Substantial Relationship Test.” When a conflict arises from the attorney’s

representation of one client in a matter adverse to a

former client, disqualification is typically urged on the

ground that confidences revealed to the attorney by the

former client may be used against that client. To

resolve this, the Court’s have relied on a judicially

developed “Substantial Relationship Test.” (see

“Conflicts of Interest Motions to Disqualify - -

Identifying the Rules of the Game,” Texas Bar

Journal, Vol. 57, No. 3 at 240, March 1994). Under

this test the movant is not required to establish specific

confidential information revealed to the attorney that is

relevant to the current litigation. Rather, the movant

must demonstrate that the matters embraced within the

present suit “. . . are substantially related to matters or

cause of action wherein the attorney previously

represented him.” In re: Yarn Processing Patent

Validity Litigation, 530 F.2d 83, 89 (5th Cir. 1976)

(quoting T.C. Theater Corp. v. Warner Brothers

Pictures, 113 F.Supp. 265, 240 (S.D.N.Y. 1953)).

If the test is met, there is a presumption that the

former client has disclosed information necessitating

the disqualification. (Use of this test is illustrated in

Howard v. Texas Department of Human Services, 791

S.W.2d 313 (Tex. App. - - Corpus Christi 1990) where

the Court held that the attorney’s prior representation

of the movant in a case involving conservatorship of

her children conflicted with the subsequent

representation of the children as attorney ad litem in a

cause of action seeking to terminate her parental rights.

For other cases and resources discussing the

Substantial Relationship Test see Gleason v. Coman,

693 S.W.2d 563 (Tex. App. - - Dallas [14th Dist.] 1985)

(disqualifying an attorney from representing the ex-

wife in a modification against her ex-husband); and

Davis v. Stansbury, 824 S.W.2d 278 (Tex. App. - -

Houston [1st Dist.] 1992) (different partners

unwittingly consulting with opposing parties in a

divorce).

21. The Key to Conflicts A thorough reading of the Rules seems to suggest

that the key to understanding conflicts is the concept of

material adversity. This harkens back to the original

analysis: “Can I honestly say that the interests of these

clients are not materially adverse?”

22. Proposed New Disciplinary Rules

Of great consequence are the new proposed

changes to the Texas Disciplinary Rules of

Professional Conduct now being reviewed by the

Texas Supreme Court. See:

http://www.supreme.courts.state.tx.us/advisories/overv

iew_102909.htm

Several attorneys who have shown interest and

leadership in the field of legal ethics have filed

extensive comments in letters to the Supreme Court. A

very extensive commentary was authored by attorneys

http://www.TexasBarCLE.com/CLE/PMCasemaker.asp?table=US_5thcircuit&volume=530&edition=F.2d&page=83&id=121473_01

http://www.TexasBarCLE.com/CLE/PMCasemaker.asp?table=US_distctopinions&volume=113&edition=F.Supp.&page=265&id=121473_01

http://www.TexasBarCLE.com/CLE/PMCasemaker.asp?table=TX_caselaw&volume=791&edition=S.W.2d&page=313&id=121473_01





8

Charles Herring, Jim McCormack and Amon Burton,

and is summarized in the attached Exhibit C attached

to this paper. Copies of the entire letter is available by

contacting Chuck Herring at cherring@herring-

irwin.com.

23. Conclusion Just as you can’t be everyone’s best friend, you

can’t be everyone’s lawyer.

Always analyze any situation as thoughtfully and

honestly as possible. If your client have materially

opposite interests, don’t try to represent either client.

If you believe you can obtain consent, do it fully,

thoroughly and in writing.

Finally, practice law ethically, and above all be

courteous to your clients and opposing or cooperating

counsel. Your life is easier, and personal goodwill is

powerful “social insurance” that you may someday

need. When you practice honestly and ethically,

ultimately, there’s far less paperwork.

Part II:

DOCUMENTING THE ATTORNEY-CLIENT

RELATIONSHIP:

Too few of us accurately document what it is

we’re going to do for the client. However, it serves

both our interests and the client’s interest to make sure

there is a clear understanding of each party’s

expectations in every respect.

I. The Law –

See Rule 1.04 of the Texas Disciplinary Rules of

Professional Conduct. Every lawyer should be

generally familiar with the factors under 1.04.

A. Part A simply says your fee can’t be

unconscionable. Defined as “a competent

lawyer could not form a reasonable belief

that the fee is reasonable.”

B. 1.04(b) gives you the eight (8) factors to be

considered.

C. Part C says you have to communicate that to

the client within a reasonable amount of time

after commencing the representation.

D. Part D says a contingent fee has to be in

writing and include the method by which the

fee shall be determined.

E. Part E prohibits a contingent fee in criminal

cases.

F. Part F deals with the new splitting of

contingency fees and what you have to do.

II. Overall Message of Agreement: What and how

you communicate is important.

A. Always try to have a written fee agreement.

B. Make sure you discuss reasonable

expectations.

C. Make sure you discuss with the client how

they plan to pay you.

D. Does this client have the money?

See SAMPLE FEE AGREEMENTS

(Appended hereto)

III. Elements of a Good Written Agreement:

1. Fully identify the Client

2. Identify each attorney who will be taking

responsibility

3. Client Matter and Subject of the

Representation.

4. Identify any additional legal matters which

may arise if you expect to handle them, or if

you anticipate “subbing” them out to another

attorney or firm.

5. The Fee Basis

a. Referring attorney?

b. New Matter: Contingency or hourly

c. Flat basis.

d. Hourly fee adjustments every ___

months.

e. Differing rates for attorneys identified.

f. Increasing percentages or other fees on

appeal

g. Costs expected

h. Retainers

i. Methodology for calculating fees earned

(contingency basis).

6. Expenses anticipated

a. Disclaimer of non-litigation expenses

(loans to client, paying client bills)

b. How expenses will be calculated and

absorbed in various contingency

scenarios.

7. Use of Attorney Trust Accounts. (no interest

to be earned)

8. Attorney’s Representation and Warranties

9. Attorneys Duties

10. Client’s Rights

11. Client’s Responsibilities

12. Termination by Client

13. Termination/Withdrawal by Attorney

14. Employment of Other/Successor Counsel



9

15. Venue

16. Merger

17. Optional Clauses: Rejection of Settlement

Offers

18. State Bar Rule Notice

19. Communication Information: who and when

client should speak with, office hours, etc.,

email communications.

20. Also, if your work is short in duration,

consider having an automatic “completion of

services” clause. This protects you from a

client for whom you haven’t done anything

in 5 years from coming back and saying “my

file is still open.”

IV. Discuss fully your monetary expectations.

But be wary of predictions: clients will only

remember your most conservative estimate.

V. Resolving Billing Controversies

A. What is the timing of the controversy?

B. Would you be embarrassed to have your fees

reviewed?

C. Is it likely that this client will ever pay you?

D. How badly do you need this money?

E. Referral to ADR or fee dispute committees.

F. Remember, counter-claims are compulsory in

a suit to collect attorney’s fees, which means

they have to sue you for malpractice.

Following are some malpractice cases

derived from fees:

1. Van Dyke v. Boswell, O’Toole, Davis &

Pickering, 697 S.W.2d 381 (Tex. 1985)

2. Meek v. Bishop, Peterson & Sharp, 919

S.W.2d 805 (Tex. App. - - Houston [14th

Dist.] 1996, writ den’d)

3. Judwin Properties, Inc. v. Griggs &

Harrison, 911 S.W.2d 498 (Tex. App. -

- Houston [1st Dist.] 1995, no writ)

4. Bray v. Jordan, 796 S.W.2d 296 (Tex.

App. - - El Paso 1990, no writ)

5. First State Bank v. Chappell & Handy,

729 S.W.2d 917 (Tex. App. - - Corpus

Christi 1987, writ ref’d n.r.e.)

6. Telfair v. Bridges, 161 S.W.3d 167

(Tex. App. - - Eastland 2005, no pet.)

VI. Abandonment of Client –

If you abandon your client before the proceeding

reached its termination; or, “who commits a material

breach of contract, forfeits all right to compensation.”

Augustson v. Linea Area Nacional – Chile, 76 F.3d 658

(5th Cir. 1996). Lesson: huge risk for suing for fees!

Part III:

THE COST OF DOING BUSINESS

The legal profession, like the world generally, is

populated with scores of different personality types,

talents, abilities, fears and passions. Generally, we try

to employ our strengths and control our weaknesses in

our efforts to make a living in this ever-more

complicated world. Some efforts are more successful

than others. Here are some of the best ideas for

securing success, improving your performance and

your success and comfort though a four-part analysis

as follows:

1. Analyze Yourself: No one knows you better

than you. We must each undertake a candid

survey of our own strengths and weaknesses,

abilities and faults. Integral to this analysis is

a thoughtful listing of the things that make us

happy. If you do not have, at least, a desire,

hope and plan for happiness, any long-term

endeavor in your life will ultimately fail.

Ultimately, this is an “existential” analysis of

why we do what we do.

2. Decide What Business You’re In:

Understanding the business nature of your

practice and circumstances. This involves

the analysis of your financial macrocosm and

financial microcosm. By that, every lawyer

needs to understand how much you are going

to need to earn almost on a daily basis to

meet you personal goals for liquidity and,

ultimately, happiness. Those lawyers who

are trust babies and simply practice law

because they like it may not need to take this

as seriously as others. However, for most of

us, law is our primary source of income and

it’s important for us to have both a “big

picture” and a “little picture” which validates

our business plan.

3. Use the Right Equipment in Practice:

Because we are all different personalities, we

will need to concentrate on office systems

that compliment our strengths and guard

against overlooking something that exploits

our weaknesses in interest or management

style.

4. Evaluate Client Sources: Who is going to

pay you? Evaluating your clients and

sources of clientele is crucial. Once you’ve

acknowledged that the practice of law is a

business and, unless you are doing pro bono,

you have to make sure that you are serving

clientele that appropriately appreciate your








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10

services: in other words, they pay you.

Hang in there, while we discuss each of these concepts.

Analysis

It is important that you know your professional

skills. At least once every few years, you should sit in

a room when you have a good solid 30 minutes and ask

yourself these questions:

1. Your World: What makes you happy?

Things could be as simple as exercising,

hiking, tending to animals or pets, hunting,

performing, singing, simply spending time

with family, spouse or significant others,

reading or other activities.

Do you expect or seek fame?

How important are “Creature comforts”?

Cars? Boats?

What about your family’s expectations?

How are your personal relationships?

Do you make time for hobbies?

Is traveling important? Where? Why?

If you will write these things down, it will help you

focus on the type of activities you are going to

emphasize in your personal life to accomplish those

interests. You will also see patterns emerge and

ultimately you will find out how to do more of those

things.

Many people have been brought up with a work

ethic which indicates that happiness should only come

as a secondary by-product of success at work. But it

helps to remember: this is your one and only life. Make

sure you minimize your regrets.

2. Your Skills. Ask yourself these questions:

A. What are you good at? List your skills.

B. Do you have good academic

knowledge?

C. Are you good at finding the right

answer?

D. Do you have good communication

skills?

i. Are you a good writer?

ii. Are you a good speaker and can

you speak extemporaneously?

E. What are your memory skills?

F. Do you have interpersonal skills or

ability to relate and empathize with

clients?

G. What about your judgment when it

comes to finding solutions?

H. Are you a “detail” person? Do you rely

only on writings, or do you simply rely

on memory?

I. Do you have technical or engineering

skills that can be put to use in practice?

J. How much do you want to work?

If you are honest with yourself, it will help you to

adjust your goals and income.

Seeing Law as a Business

1. The Concept of Practicing Law –

A. What Impact to do you have on the work that

you do?

B. What is your business model?

C. Will you only be performing hourly services?

D. Contingency Work?

E. Flat Fee for “the whole job?” (How will you

define it?)

2. Personal goals -

A. Do you want to be high profile, low profile?

B. Who will be your client base for this

proposed business model?

3. Making it Cash-Flow- you can’t pay the bills with

good intentions.

Lawyers are paid problem solvers (i.e., pro bono aside,

you can’t work for free), so it is important that every

lawyer understand his/her financial

macrocosm/microcosm? Perform this exercise, which

is dubbed the “4 hour per day method:”

A. Create a monthly budget for everything,

including your office overhead, your personal

overhead, home mortgage, car payments, etc.

and then add a comfortable amount of

savings on top of that of not less than

$1,000.00 per month.

B. Take that total monthly budget and divide it

by 20. This resulting figure is the typical

amount you will have to earn daily during the

practice of law, given that there are

approximately 20 working days per month.

C. Divide your daily amount by 4. In a perfect

world that final number should be not greater

than the usual and customary billing rate for

an attorney of your experience. Any lawyer



11

in private practice should be able to survive

on about 4 paid hours per day.

Example: Monthly needs for all purposes

(household mortgage, bills, office

overhead) = $15,000 per month. Divided

by 20 = $750 per day. Divided by 4 =

$187.50 per hour.

Therefore, your economic microcosm is to be able to

look at your output or time records each day and ask

yourself: “Will these clients I served today pay me for

4 hours of my time today?” Note, this doesn’t mean

that you get to the office at 8:00 a.m. and get to leave

at 12:00 p.m. everyday. But, for many lawyers a

substantial portion of office time is not legitimately

billable due to other obligations, volunteer work or

events that infiltrate their time.

D. What if this process results in a billing rate

that is too high?

If the use of this formula results in a

billing rate that is higher than a lawyer

of your age, experience or geography

can support, you will at least see how

many billable and collectible hours you

are challenged to accomplish daily. It

will force you to adjust your

expectations accordingly, as well as,

perhaps, your spending habits, or find

ways to adjust overhead.

CAVEAT: Make sure you also have included

expected TAXES! in your monthly overhead

plan, unless you are a salaried employee, and

pay your taxes in a timely fashion and put

away adequate money for retirement.

Office Systems

Once you’ve assessed your skills, talents and

weaknesses, adjust your office systems to maximize

your potential. These include the basic systems:

1. Your Own Strengths and Weaknesses;

A. What is your firm capacity? How many staff

do you have?

Bottom line: Do you have enough to respond

promptly to client needs and office work-

product output?

B. What is your state of technology/equipment?

Bottom line: Does your technology support

your information needs?

C. Are you having any fun based upon the

availability of staff and equipment?

Although stress is a regular by-product of practice, if

your equipment or lack thereof causes you more, look

at changing or updating.

2. Keeping files;

A. What numbering system?

B. How are they kept and retired?

C. How do you backup items on the office

system?

Bottom Line: can you easily access client

information, and is it safely protected?

3. Financial control:

A. Reviewing statements and checks;

B. Who is allowed to sign checks; and

C. Categorizing expenses for tax purposes:

Do you do this daily? Monthly? Do

you use codes? Or, do you enter it into a

tax software system?

4. Managing phone calls: Always return phone calls

(or have staff do so).

5. The Scourge of Managing Emails. Should you

have a “quiet time” where you do not turn on your

machine?

6. Communications;

A. How do you record outgoing

communications?

B. How do you record incoming

communications?

C. Correspondence: do you take extra care to

craft your outgoing correspondence? Would

everything you’ve written today look good as

a 3 ft. x 4 ft. exhibit?

7. Work Product - Four Tips for Work Product

A. Get a mentor or a lawyer you trust to read

you drafts of briefs. You will be surprised

how your arguments will change if you take

the opportunity to have another lawyer look

at that work. Unquestionably it will improve

you work product.

B. Preparing for a hearing. Make sure you

make your argument to either a group of

friendly lawyers or others first. Always talk



12

to people as if you were sitting at a kitchen

table. Ask how the argument sounded to

them. Did they understand you? Always

make sure you tell an interesting story and

have a theme.

C. The Rule of Primacy: When requesting relief

from a Judge in a hearing always tell the

Judge what you want first before you go into

any background: “Judge, in this motion I am

asking you to compel X to attend a

deposition next Tuesday.”

D. Drafting contracts and other documents.

Make sure you understand the law involved.

Don’t simply borrow a form from another

lawyer. Always look at two or three different

forms and compare provisions.

Who is Going to Pay You? - Evaluating Clients

1. What do you know about this client that is

coming in?

2. What do they want you to do?

3. Are you the first attorney to discuss this

client’s problem? Are the you second? Are

you the third?

4. Are you asking appropriate questions and are

you finding out that the particular problem

that this client is asking about is just “the tip

of the iceberg?”

5. What is the likelihood of this client being

able to pay you for the entire project? Hint:

if the client is being sued for defaulting on a

financial obligation, there is every danger

that he will default on his obligation to you

too.

6. Analyze your firm capacity. Do you have

enough staff to handle a complex case? If

you don’t, don’t attempt to do so.

7. Learn to say “NO.”

Working as an Ethical Lawyer: The Four

Responsibilities The Texas Lawyer’s Creed reminds us that we

have four competing duties:

1. To your client;

2. To your fellow lawyer;

3. To the administration of justice; and

4. To yourself

All of your activities during the day should be vetted

through these four responsibilities. Whenever you

have a question or a difficult situation, consider

applying a question of whether or not the

responsibilities are being met through the proposed

course of action.

Bad Things Happen – How to Handle a Grievance Every Lawyer should know where to find the

Texas Rules of Disciplinary Procedure. The easiest

place to instantly access them are at www.txethics.org,

which is the Texas Center for Legal Ethics and

Professionalism. Outside those rules, however, here

are the three most important tips, which lawyers

familiar with the system will impart:

1. Always respond timely and completely;

2. Never respond pro se. Always have some

lawyer you trust review your response or

write it for you;

3. If the Grievance Committee finds “just

cause,” know your deadlines: must make

election within 20 days of receipt to either

have an evidentiary panel or District Court.

Know What Clients Want Few lawyers are aware, because we often do not

listen to them, of what our client’s value about our

services and advice, and want THEY want from us. A

survey performed almost ten years ago revealed this

desires, in this order of priority:

1. Collaboration (we try to achieve their goals);

2. Accessibility (we keep them “in the loop”);

3. Good Listener/Effective Communicator (we make

them feel that we hear their concerns);

4. Accountability (we don’t blame-shift, even to

office staff or other team members);

5. Respect and Courtesy (remember, they’re the

customer); and

6. Competence (isn’t that odd? Our professional

competence is LEAST important!)

Three Cardinal Rules for Success

Years of law practice inform me that these

concepts are inviolate:

1. Always tell the truth. (Ultimately, there’s far

less paperwork with the truth)

2. Treat every client like they were going to live

next door to you for the rest of your life.

3. Never sue a client. It is fraught with peril.



13

Improve and Defend Your Profession: Give

Something Back

As attorneys, we have both a professional duty not

only to improve the profession, but to defend the

profession from unwarranted attacks. We hold a public

trust, at the very least:

1. To support the fair administration of justice;

2. To make sure people understand the judiciary

is the third branch of government; and

3. To speak out as a true professional when you

see undue criticism.

Define Your Own Success:

Follow the Rules and Your Heart, and You

will be a Success: Here is a definition for “success:”

(attributed to Ralph Waldo Emerson)

“To laugh often and much; to win respect of

intelligent people and the affection of

children; to earn the appreciation of honest

critics and endure the betrayal of false

friends; to appreciate beauty, to find the best

in others; to leave the world a bit better

whether by a healthy child, a garden patch, or

a redeemed social condition; to know that

even one life has breathed easier because you

have lived. This is to have succeeded.”

When it’s all said and done…how will you be

remembered?

*Claude Ducloux gratefully acknowledges the

following authors whose work he has reviewed and

portions of which are included by permission of the

authors, all of whose works he strongly recommends as

further resources, many of which are available online

at www.texasbarcle.com:

1. Charles F. Herring, Jr., “Texas Legal

Malpractice and Lawyer Discipline: A Guide

to the Liability and Discipline of Texas

Lawyers and Judges” 2008 Seventh Edition,

copyright 2008 by American Lawyer

Media, L.P.

2. Professor Robert P. Schuwerk, “Conflict of

Interest and Confidentiality Rules” from the

State Bar of Texas Evidence and

Discovery Course 2001.

3. Tom Watkins, “Conflicts of Interest and

Other Ethical Issues Incident to Handling of

a Divorce” from the State Bar of Texas

New Frontiers in Marital Property 2002.

4. Vincent R. Johnson, Professor of Law, St.

Mary’s University, “Can You Take the Case”

from the State Bar of Texas 23rd

Advanced Civil Trial Course, July 2000.

5. John F. Rothermel, III; “Dual

Representation: Avoiding Conflicts of

Interest” from the State Bar of Texas Real

Estate Boot Camp 2003.

6. Texas Center for Legal Ethics and

Professionalism Index to “Texas Professional

Ethics Opinions”



15

Exhibit A – Attorney Fee [short form] Contract

ATTORNEY FEE CONTRACT

STATE OF TEXAS §

§

COUNTY OF TRAVIS §

WHEREAS, Peter Griffin ("Client") desires to employ Glen Quagmire ("Attorney") to

represent him in the following legal matter:

A modification action to be filed in the District Court of Travis County, and responses

thereto;

and to represent Client in any and all claims and defenses to which the client may be entitled in

connection therewith;

WITNESS THEREFORE THE FOLLOWING AGREEMENT:

Client hereby employs Glen Quagmire as legal counsel to represent him in the above stated

matters and issues related to the above-referenced modification action, and any hearings, discovery

matters or settlement negotiations of the above-referenced matter and in any related matter

necessary to the resolution of any pending controversies.

Client agrees to compensate Attorney by paying attorneys fees at the rate of $275.00 per hour

for all legal work performed in this matter. Attorney will charge lesser rates for work performed by

legal assistants and/or law clerks ($40.00 per hour).

Attorney acknowledges the receipt of a retainer from Client in the amount of $1500.00. This

retainer shall be deposited into the Attorney’s trust account, to be drawn out monthly and credited

against attorneys fees to be earned by attorney. Any unused retainer shall be refunded to Client if

the matter is concluded prior to the exhaustion of any funds held on retainer. No Funds deposited in

Attorney’s Client trust account will earn interest for Client.

Attorney will provide Client, at monthly intervals, an itemized statement setting forth in

reasonable detail, all services by Attorney on behalf of Client, and any costs which have been

incurred and/or advanced by Attorney on behalf of Client in the above-referenced matter.

IN THE EVENT AN APPEAL IS NECESSARY AFTER ANY TRIAL, IT IS

UNDERSTOOD THAT ATTORNEY WILL NOT PROCEED WITH AN APPEAL WITHOUT AN

ADDITIONAL AGREEMENT WITH CLIENT FOR ATTORNEY'S SERVICES.

No claim will be compromised or settled without the express authorization of Client.

Client understands that Attorney has made no representations promises or warranties



16

concerning the likelihood of a favorable outcome of any action filed or to be filed. Any statements

by Attorney in this regard are statements of opinion only.

Expenses

Client agrees to reimburse Attorney for any and all expenses incurred by Attorney in

connection with the prosecution and settlement of claims, including, but not limited to, court costs,

deposition fees, transcript fees, reproduction fees, expert witness fees, travel expenses, investigative

expenses, telephone expenses and other expenses which Attorney determines to be necessary.

Termination or Withdrawal

In the event Client desires to dismiss Attorney and retain other counsel after the date of

signing this contract, IT IS UNDERSTOOD THAT THE TERMS OF THIS CONTRACT

PERTAINING TO THE FEES FOR SERVICES RENDERED UP TO AND INCLUDING THE

DATE OF DISMISSAL SHALL REMAIN IN FULL FORCE AND EFFECT.

It is agreed that Attorney may withdraw from the Client's representation in this matter at any

time if the client insists upon pursuing a course of conduct which, in Attorney's opinion, is illegal or

unethical, or is contrary to Attorney's advice even if not illegal, or if Client disregards his obligation

to pay for Attorney's fees or expenses when due and payable.

In the event of termination or withdrawal from employment, Attorney will take reasonable

steps to avoid foreseeable prejudice to the Client, including giving notice, allowing time for

employment of other counsel, and returning to Client all papers and property to which Client is

entitled. If Client discharges Attorney, such notice shall be in writing.

This agreement shall be construed under and in accordance with the laws of the State of

Texas. All obligations of the parties are performable and fees are to be paid in Travis County,

Texas.

EXECUTED this ______ day of _______________, 2009.

ATTORNEY: CLIENT:

______________________________ ______________________________

Glen Quagmire Peter Griffin 480 W. 15th Street, Suite 100 123 Quohog Drive

Austin, Texas 78701 Round Rock, Texas 78681

(512) 555- 4321 512 555-1234

(512) 555-4444 (FAX)



17

Exhibit B – Attorney Fee [Long form] Contract

ATTORNEY FEE CONTRACT

STATE OF TEXAS §

§

COUNTY OF HARRIS §

I. Identification of Client:

A. The name(s) of the persons to be designated in this agreement as “Client” are as

follows:

____________________________

____________________________

____________________________

Client desires to be contacted at the address indicated at the bottom of this contract.

B. Any limitations on the contact to the client as far as time or place will be as

designated by the client at the end of this Agreement.

C. In the event Attorney is unable to contact Client, Attorney may contact those persons

indicated at the end of this Agreement.

II. Identification of Attorneys:

Client understands that the following attorneys (“Attorney”) may be working on this case:

_______________________________________________________________________________.

Attorney may be contacted at the addresses and phone numbers indicated at the end of this contract.

Client is authorized to contact Attorney either by telephone, by mail, or by electronic mail at the

following electronic mail address: ___________________________________________________.

Client may also contact Attorney through the Attorney’s legal support staff, primarily the following

person(s): ______________________________________________________________________.

The office hours of Attorney for purposes of normal contact are normal business hours days

per week, typical State of Federal holidays excluded.

III. Client Matter and Subject of Representation:

A. New Matter - Client retains attorney to represent Client in any and all claims,

defenses to which the Client may be entitled in connection with the following:

________________________________________________________________

B. Referred Matter - Client acknowledges that Attorney is handling this matter as a

result of a referral from the _________________________, attorney, and the fee

arrangements shall remain the same as the Client’s contract with said attorney dated

_________________.



18

IV. Additional Legal Matters:

Incident to the pursuit of the above referenced claim outlined in paragraph 3A above, Client

acknowledges that Attorney may have to pursue the following additional matters, including:

A. A probate matter to establish the right of client to proceed on behalf of a decedent or

other party;

B. The following additional ancillary matter: _______________________________

_________________________________________________________________

As to any of the additional matters discussed above, Client and Attorney agree as follows as

to Attorney’s responsibility:

A. Attorney’s fee will be subsumed within the overall fee subject to reimbursement for

costs as outlined hereinafter; OR

B. The following additional attorney shall handle ancillary matters as follows:

_________________________________________________________________-

V. Fee Basis:

A. Matters referred to Attorney - Parties acknowledge that the above referenced matter is

subject to the original contract between Client and [referring attorney’s name] and

the fee as stated therein shall be the same fee to be charged by Attorney to Client, to

wit: ____________

B. New matter fee:

____________ Client hereby agrees to compensate Attorney by paying _______ % of

all amounts recovered on behalf of Client: OR

____________ Hourly fees at the rate of $________ per hour, which may be

reviewed and adjusted every 12 months.

C. Attorneys will charge lesser rates for work performed by Legal Assistants and/or Law

Clerks at the rate of $________ per hour.

D. Client understands that in the event of appeal, the percentage shall increase to ______

% on all amounts recovered. The parties agree that an appeal is defined as damages

received either by collection or settlement after a docketing statement has been filed

in the appropriate court of appeals following the entry of a Final Judgment in the

underlying case.

VI. Calculation of Attorney’s Fees:

The amount of Attorney’s fees under this contract shall be calculated based upon the gross

amount recovered. Any expenses paid on behalf of the Client will be deducted from the Client’s

percentage/share of the gross recovery. Any fee owing to the referring attorney shall come from



19

Attorney’s share of fees authorized by this contract, unless Client has specifically retained other

counsel on a different fee basis.

VII. Expenses:

A. Client agrees to reimburse Attorney for any and all out of pocket expenses incurred

by attorney in connection with the prosecution and settlement of claims, including but

not limited to, court costs, filing fees, deposition fee, transcript fees, reproduction

fees, expert witness fees, travel expenses, investigative expenses, long distance

telephone expenses, and other expenses which Attorney determines to be necessary in

the pursuit of Client’s claims.

B. Deduction of Expenses: All such expenses will be deducted from the gross recovery

after the calculation of Attorney’s fees.

C. Disclaimer of Non-litigation Expenses: The Attorney’s responsibility to prepay any

and all expenses associated with the legal matter do not include any of the following:

i. Normal day-to-day living expenses of the Client and/or Client’s family;

ii. Payment of medical bills for services provided, except upon the financial

distribution of settlement proceeds, or other damages recovered in resolution of

the Client’s claims; and

iii. The Client’s legal fees incurred for matters not associated with the matters for

which Attorney has been retained, or for any other expense incurred by the Client

including tuition, fines or other expenses not directly incurred in the pursuit of

Client’s claims or as directed by the Attorney.

D. Expenses Absorbed by Client: In the event there is no recovery made on behalf of

Client, or insufficient recovery to result in a net payment to client if Attorneys fees

are paid first, Attorney agrees to change the calculation of attorney fees so that such

proceeds will be applied as follows:

i. First to the payment of all outstanding costs; then

ii. Any balance to the payment of Attorney’s fees as agreed above; then

iii. Any remainder to the client.

iv. In no event will Client be liable for costs incurred which are not covered by

the damages recovered. Such excess costs will be borne directly by Attorney.

VIII. Medical Subrogation and Use of Attorney Trust Account:

With regard to the payment of medical bills from the settlement or recovery, Client

understands that such funds are drawn from the Client’s portion of the recovery always after the

calculation of attorney’s fees. Client further understands that any of Client’s funds that may come

into Attorney’s possession must be deposited or held in a “IOLTA” account, as designated by the

State Bar of Texas. No funds placed in the Attorney’s “IOLTA” trust account, maintained pursuant



20

to State Bar Rules, will earn interest recoverable by the client.

IX. Attorney’s Representations and Warranties:

Client understands Attorney(s) have made no representations, promises or warranties

concerning the likelihood of a favorable outcome on any action filed or to be filed. Any statements

by Attorneys in this regard are statements of opinion only.

X. Attorney Duties:

Attorney agrees to represent Client at all hearings, trials, mediations, or settlement

conferences in the above referenced matter and any related matter necessary to the resolution to the

pending controversy. Attorney will communicate all settlement offers with Client and will not settle

or compromise any of Client’s claims without Client’s authorization.

XI. Client’s Rights:

A. You have the right to be kept informed on the progress of this case;

B. You have the right to expect our office to collaborate with you to seek a resolution of

your legal matter with dignity and integrity;

C. You have a right to an accounting of all funds or property coming into our possession

and a complete explanation of attorney’s fees;

D. You have the right to expect the respect and courtesy of our staff.

XII. Client Responsibilities:

Attorney and Client agree that the Client will have the following duties in pursuit of a

resolution of Client’s claims:

A. To cooperate fully with reasonable requests of Attorneys in furtherance of their

claims and causes of action;

B. Appearing at court hearings, trials, depositions, mediations and attorney/client

conferences. In this regard, Attorneys agree to attempt to schedule any of the above

events at times convenient to Client whenever possible. Client acknowledges,

however, it may not be possible to schedule trial dates or other events on dates that

are convenient to Client’s schedule.

C. Not communicating with any opposing parties except as authorized by Attorney.

Client agrees not to contact an opposing party or that party’s attorney, agents,

employees or insurers without the knowledge, permission and supervision of

Attorney.

XIII. Termination by Client:

A. Termination by Client: You will have the right to terminate this firm “for cause” in

the event the attorneys insist on pursuing a course of conduct which is unethical or



21

contrary to law.

B. IF YOU DESIRE TO DISMISS ATTORNEY AND RETAIN OTHER COUNSEL

AFTER THE SIGNING OF THIS CONTRACT FOR REASONS OTHER THAN

“FOR CAUSE,” IT IS UNDERSTOOD THAT THE TERMS OF THIS CONTRACT

PERTAINING TO THE ATTORNEY’S FEES PERCENTAGE SHALL REMAIN

IN FULL FORCE AND EFFECT AND THE UNDERSIGNED ATTORNEYS

RETAIN A LIEN ON ALL PROCEEDS TO THE FULL EXTENT OF THIS

AGREEMENT.

XIV. Termination/Withdrawal by Attorney:

Attorney may withdraw from Client’s representation if the Client insists on pursuing a course

of conduct in which, in the Attorney’s opinion, is illegal or unethical; or if client insists on pursuing

a course of conduct which is contrary to the attorney’s advice even if not illegal; or Client disregards

the obligation to pay attorney’s fees and expenses when due and payable under this contract.

XV. Employment of Other Counsel:

In the event of termination or withdrawal from employment, Attorney will take reasonable

steps to avoid foreseeable prejudice to Client, including giving notice, allowing time for employment

of other counsel, and returning to Client all papers and properties to which the Client is entitled.

If Client discharges Attorney, such notice shall be in writing.

In the event Client chooses another attorney without cause, a responsibility to honor the

terms of this Agreement remain intact and Client hereby grants Attorney a lien on such recovery.

XVI. Venue:

This Agreement shall be construed in accordance with the laws of the State of Texas and all

obligations of the parties are performable and fees to be paid in _________________ County, Texas.

XVII. Merger Clause:

All previous conversations concerning the basis of the fee are hereby merged into this

document as the one representation of the agreements and duties of the parties concerning

representation and fees. Any modification to the Agreement must likewise be in writing. Client

specifically authorizes Attorney to collaborate with and share fees with the referring attorney,

__________________________________.

XVIII. Rejection of Settlement Offers:

Attorney agrees that no claim or portion of a claim will be compromised or settled without

the express authorization of Client. If Attorney has formed a reasonable conclusion that a settlement

offer is valid and reasonable under the facts then existing and Client rejects such offer, Attorney



22

reserves the right to withdraw from representing Client under the following procedure:

A. Notification of settlement offer and opinion letter - Attorney shall send an opinion

letter describing:

i. The state of the facts;

ii. The amount of any offer or offers to settle the case then in existence and the

time limitations by the offering party;

iii. The financial status of the parties and an estimated financial result under the

existing offers; and

iv. Attorney’s opinion concerning the reasonableness of the offer.

B. Upon receipt of the letter, Client may obtain a second opinion from another attorney

with a similar practice and experience authorizing that attorney to discuss this case

with the undersigned counsel of record. The cost of any second opinion shall be

borne by Client.

C. Unless the second opinion materially differs from the opinion of the undersigned

counsel, counsel may withdrawal under the withdrawal section of this contract if the

client fails and refuses to follow Attorney’s advice concerning the existing settlement

offers. If the second opinion materially differs, Attorney will have the option of

continuing to represent Client unless the parties agree otherwise in writing.

XVIX. State Bar Rule Notice:

Client further has been instructed by attorneys that the attorneys are bound by the Texas

Rules of Disciplinary Procedure. Client may contact the State Bar of Texas at www.texasbar.com or

toll free at 1-800-932-1900 to obtain information on filing any grievance.

In witness hereof the parties have assigned their names as follows:

____________________________________ ______________________

ATTORNEY NAME/ADDRESS Date

_____________________________________ ______________________

CLIENT NAME/ADDRESS Date



23

COMMUNICATION INFORMATION

Client hereby designates the following number or numbers for purposes of contact:

__________________________________

__________________________________

Client hereby designates the following electronic mail address for contact:

__________________________________

Client hereby designates the following alternate person for attorney to contact on behalf of

Client [to include][not to include] confidential information:

__________________________________ ______________________________

Name Telephone



24

Exhibit C

Notes Concerning the Proposed Amendments to

the Texas Disciplinary Rules of Professional Conduct

Pursuant to Texas Supreme Court’s Order of October 20, 2009 in Misc. Docket No. 09-

9175, the Court put out proposed changes and amendments to the Texas Disciplinary Rules.

Numerous attorneys commented, but the most complete comments were contained in a

28-page letter submitted by Charles Herring, Jr., Jim McCormack, and Amon Burton (Burton

was actually on the Court’s task force and filed a dissenting report).

Chief among their concerns is the following:

The proposed amendments to the Conflict of Interest Rules, Rule 1.06 and 1.07, would

result in a radical restructuring of the existing of conflict of interest standards. Unfortunately, in

many instances the proposed rules are vague, ambiguous and confusing. Not only that, they

appear to reduce the existing protections afforded for clients as follows:

1. Proposed Rule 1.06 does not even define the term “conflict of interest.” The task force

recommended including standard ABA Model Rule language, but the State Bar

Committee did not and its recommendation prevailed. The Herring letter states that the

rule should include a definition of conflict of interest.

2. Secondly, the new rule prohibits certain representations even with informed consent.

This prohibition is a fundamental change that would have a major impact on lawyers and

law firms. Thus, even when the client and the lawyer acknowledge a continuing duty to a

different client, and all persons waive that conflict, this new rule would seem to impose

an ethical inability to continue representation. They way the new rule is written it would

also require a prudent lawyer to obtain many more consent letters than is required under

existing current client rule to avoid the risk of disciplinary complaints.

3. Proposed Rule 1.07 perpetuates a problem in the existing Texas Disciplinary Rules by

having general “current client” Rule 1.06 and a separate lawyer as intermediary Rule

1.07, but they cross reference each other. The Herring letter proposes that the ABA

Model Rules were recently amended to eliminate the intermediary rule and avoid this

confusion. Proposed Rule 1.07 permits a lawyer to undertake conflicted representation if

the lawyer “reasonably believes” that certain conditions are met - - but then fails to

explain adequately what those conditions are.

Further, the new proposed Rule 1.07(b)(2) sets out various written disclosures that a

lawyer is to make whenever he/she represents multiple clients. Some are vague and are

susceptible to simply boilerplate disclosure. An example is a disclosure that “the client

might gain or lose some advantages if represented by separate counsel.” That is

remarkably uninformative.



25

It is best to read for each lawyer to read these proposed disclosures of the proposed Rule

1.07 including a requirement under 1.07(b)(viii) which provides: “that the representation

of all clients by a single lawyer or firm will not necessarily expedite the handling of the

matter or reduce associated attorneys’ fees and expenses. . .” Again, that language is

quite vague.

4. Another problem is the proposed Rule 1.09. The existing Rule 1.09 now governing the

conduct of Texas lawyers generally follows the widely accepted national standard that

prohibits a lawyer or law firm from representing another person in the same or

substantially related matter in which that person’s interests are adverse to the interests of

a former client, unless the former client consents after consultation.

The language of proposed Rule 1.09 initially modifies the existing former client rule by

providing that a lawyer who personally represented a former client must not “knowingly”

represent a new client in the same or substantially related matter. It also provides that the

new client’s interest must be more than “adverse.” It must be “materially adverse.” It is

not clear why a “knowingly” requirement would ever be relevant to a lawyer who has

personally represented a former client. A lawyer should be deemed to have “actual

knowledge” when he had personally had an attorney/client relationship.

5. One of the most important changes in proposed Rule 1.09 is that it now includes a

definition of when two matters are “substantially related.” Proposed Rule 1.09(e)

provides that two matters are substantially related: “if they involve the same transaction

or legal dispute or if there is otherwise a substantial risk that confidential factual

information as would normally have been obtained in the prior representation would

materially advance the new client’s position.”

This proposed definition would create several problems. First, it is a subjective rather

than an objective fact-based standard that Texas courts currently use to determine when

two matters are “substantially related.”

When deciding to accept a new representation how will a lawyer or law firm determine if

the confidential information they “normally would have obtained” from their former

client will “materially advance the new client’s position?”

Further, if the proposed definition were adopted it could result in two different standards

for litigators and transactional lawyers. If Texas courts follow the existing fact-based

standard for deciding when matters are “substantially related” for purposes of deciding a

Motion to Disqualify in cases arising out of litigation, the standard will be different from

the standard that would apply to transactional lawyers under proposed Rule 1.09(e).

Litigators would be subject to irrebuttable presumptions that they possess confidential

information. That would create further practical problems for law firms when deciding if

they could accept new representation whereas transactional lawyers are subject to inquiry

of what facts they “actually know” or came into possession of during the representation.



26

Further, proposed Rule 1.09 creates confusion as to whether the knowledge of one law

firm employee or partner who has specific knowledge would impute to the other

members of the firm. Proposed Rule 1.09 creates a bizarre result that a law firm may

accept substantially related representation that is materially adverse to one of its former

clients so long as the lawyer in the firm who has a prohibitive conflict remains employed

by the firm, but just the opposite results apply once a lawyer leaves a firm. This makes

no sense.

6. Another troubling proposed rule is Rule 1.12 dealing with representing entities or

organizations. The proposed rule changes dilute the lawyer’s obligations to the entity

client.

In short Rules 1.06, 1.07, 1.09 and 1.12 are laced with ambiguities and inconsistencies.

They create entirely new conflicts standards and principles for Texas lawyers that deviate

dramatically from the existing Texas Disciplinary Rules, as well as from the national standards.

7. Proposed Rule 1.04 changes the rules regarding unreasonable fees and actually does not

even prohibit unreasonable expenses, by failure to address such expenses. It also does no

longer flatly prohibits contingency fees in domestic relations matters. The ABA Model

Rules continue to prohibit them in that contingency fees may provide incentive to

discourage reconciliation.

Further, proposed Rule 1.04(d) requires only that the contingency fee contract be signed

by the client rather than by both the client and the lawyer as provided under the Texas

Government Code.

8. Among the other criticized rules proposed Rule 1.05 adds an exception to what

constitutes confidential information. Under proposed Rule 1.05(a)(i) client information

that is “readily obtainable from sources generally available to the public” will not be

considered confidential. That would include the Internet. Making confidentiality depend

on what is on the Internet on a particular day seems far too uncertain and unknowable as

a practical matter. This is an unreliable standard especially if a client’s information

reaches the Internet as a result of some sort of illegal hacking or other illegal disclosure

that makes its way onto the Internet. A lawyer should not be able to take advantage of

such an impropriety.

9. Also criticized is proposed Rule 1.08 which lowers the fiduciary standards for entering

into a business transaction with a client requiring only that the lawyer “reasonably

believe” that the terms are fair and reasonable. In other words, doing a business

transaction which your own client to whom you owe a fiduciary has become an arm’s

length review.

Proposed Rule 1.08(g) addresses when a lawyer may have a client enter into an

agreement requiring binding arbitration concerning disputes between a lawyer and a

client. This proposed rule would eliminate many of the client protections afforded by

Professional Ethics Committee Opinion 586 issued in 2009. That Opinion set out certain



27

disclosures which would have to be made. The proposed rule, however, provides only

two of the disclosures required by Opinion 586: that of a jury waiver and the limited

appeal.

10. One of the most difficult changes to understand is proposed Rule 1.15 addressing the

lawyer’s duties concerning client property. In particular it addresses the issues of

safeguarding property, however, it creates great ambiguity when the lawyer receives

property (including funds) that belong to a client or third person. What does “belong”

mean? The rule does not define the term.

Proposed Rule 1.15(d) requires the lawyer to give a full accounting to the client and to

the third person “who requests the accounting and who the lawyer reasonably believes

has a right to any portion of such funds . . .” The rule gives no guidance concerning what

type of investigation or inquiry is not “reasonable” in these general circumstances. The

fear is that third persons who have a grudge against the client will notify the client’s

lawyer that they own or have an interest in some portion of the funds. This rule seems to

authorize a private garnishment action through the ethical obligations of the attorney.

This is unworkable.

That rule should be revised to permit a lawyer to fulfill all of the rules prescribed duties

based upon reasonable belief standard. The Rule should permit a lawyer to ignore a

frivolous “claim” asserted by a third person and the rule should require the lawyer to hold

funds in the face of a “dispute” only if the lawyer “reasonably believes” that the third

person is asserting a “non-frivolous claim” that applies to the specific funds or property

being held.

There are additional rules discussed in the Herring letter which include proposed Rule

1.17 (“The Duties Owed to Prospective Clients”); proposed Rule 5.01 (“When a Law Firm

Manager or Partner can be Disciplined”); and proposed Rule 5.04, which omits any language

which would authorize the lawyer to share fees with a non-profit entity. By contrast, ABA

Model Rule 5.4 permits a lawyer to share court awarded legal fees with non-profit organization

that employed, retained or recommended employment of the lawyer. Texas should follow the

ABA Model Rule on this issue.

Every lawyer is invited and encouraged to review these proposed rules which are

available on the website. We can only hope the Supreme Court fixes these problems prior to

consideration of adopting any of them.

conflicts, contracts, and costs: a quick ...conflicts, contracts and costs: a quick ethics update on...

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