Can a lawyer take work through a membership association that promises to furnish and pay for its members' legal services?

Plain-English summary

The inquiry described an automobile association, a private Texas corporation, whose membership certificate promised to pay a member's attorney capped amounts ($25 to $100) for accident-related legal work, with the association reserving the right to approve the member's choice of attorney. The member contacted and counseled with the attorney directly, each case was handled on its own merits, and the attorney had no financial interest in the association. The Committee was asked whether a lawyer accepting such employment, and other member work, violates Canon 32 or any other Canon.

The Committee concluded there is a violation of Canons 24, 32, and 43, both for the certificate matters and for the lawyer's accepting other member work (8-1). It reasoned that the lawyers were employed to advise individual members on their individual affairs, in return for the membership fee, so the association in effect held itself out to furnish legal services to its members. Accepting such employment lets the lawyer's professional services be used in aid of the practice of law by a lay intermediary (Canon 43), and Canon 32 forbids a lawyer's services from being controlled or exploited by a lay agency. The Committee added that an attorney is forbidden by Canon 24 to solicit business and cannot do so through the association, and noted that a similar situation was condemned in ABA Opinion No. 8.

Currency note

This opinion was issued in 1958, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. Group and prepaid legal-services arrangements were later addressed by the U.S. Supreme Court and by rule amendments. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer be paid by a membership organization to handle its members' individual legal matters?

A: The Committee concluded that doing so through an association that holds itself out to furnish legal services to members violates Canons 24, 32, and 43, because the lawyer's services aid the lay intermediary's practice of law.

Q: Did it matter that the lawyer had no financial stake in the association?

A: The Committee still found a violation; its reasoning rested on the association holding itself out to furnish legal services and on the lay agency's control over the lawyer's services, not on the lawyer's ownership.

Q: What about other legal work the members brought the lawyer beyond the certificate matters?

A: The Committee concluded that accepting that other member work was likewise a violation of Canons 24, 32, and 43.

Background and rules framework

The opinion interprets former Texas Canon 43 (aiding the practice of law by lay agencies), Canon 32 (professional services not to be controlled or exploited by a lay agency), and Canon 24 (solicitation). The modern analog is ABA Model Rule 5.4 (professional independence of a lawyer), which restricts a nonlawyer's direction of a lawyer's professional judgment and the sharing of legal-services delivery with lay agencies.

Citations and references

Rules of Professional Conduct:

• MR 5.4 (professional independence of a lawyer), as the modern analog
• Texas Canons 24, 32, and 43 (former canons on solicitation, lay control of professional services, and aiding lay practice of law)

Other opinions cited:

• ABA Committee on Professional Ethics and Grievances, Opinion No. 8

See also

• TX Ethics Op. 177: Bank Trust-Officer Lawyer Drafting Wills
• TX Ethics Op. 205: Bar Group's Referral Service and Radio Advertising
• TX Ethics Op. 196: Solicitation and "Feeding" of Law Business

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-178/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_178.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

QUESTION PRESENTED

The following provisions are contained in the certificate of membership issued by an Automobile Association, which is a private Texas corporation, to its members:

"Legal Expenses. In the event it is necessary for the member to employ legal counsel in connection with an accident involving the automobile belonging to the member, the Association will pay his Attorney, except where the member is under the influence of intoxicating beverage or narcotics or leaving the scene of an accident or any felony of any kind, as follows:
(a) An amount not to exceed $25.00 which may be necessary to be paid by the member to an attorney for the purpose of recovering damages for injury to the person of the member.

(b) An amount not to exceed $100.00 which may be necessary to be paid by the member to an attorney in connection with a charge of assault by motor vehicle which may be made against the member arising out of an accident involving the automobile belonging to the member.

(c) An amount not to exceed $25.00 which may become necessary to be paid by the member to an attorney to defend the member for the violation of traffic ordinances, involving the use of the automobile belonging to the member.

(d) An amount not to exceed $50.00 which may become necessary to be paid by the member to an attorney for defending the member in any civil suit which may be filed against him for damages as a result of an accident involving the automobile belonging to the member.
"Legal Aid. In reference to moneys paid to the Member's attorney as stated under General Services, the Association reserves the right to approve selection of said attorney. Without the approval the Association shall not be obliged to render any benefit or service set out herein."

The member of the Association who needs representation contacts the attorney and counsels with him in the attorney's office, and each case is handled on its own merits. The Association does not charge the members for the fees paid to the attorney for his services. The attorney has no financial interest in the Association. The member pays a membership fee to the Association.
Will an attorney by accepting employment by such Automobile Association to perform the services mentioned in the certificate referred to above violate Canon 32 or any other Canons of Ethics?
If the answer to (1) is "no," then would there be any violation by the attorney of Canon 32 or any other Canon, if he accepted employment in connection with other legal work than that covered by the provisions of the certificate issued by the Automobile Association which might be tendered to him by members of the Association?

18 Baylor L. Rev. 274 (1966)

INTERMEDIARIES
Attorney's acceptance of employment from lay intermediary and members thereof to perform legal services offered to its members by the intermediary is improper.

INTERMEDIARIES
Attorney's acceptance of employment where lay intermediary profits on lawyer's professional services is improper.

SOLICITATION
Attorney's acceptance of employment from lay intermediary to perform legal services to its members by the intermediary is improper.

Canons 24, 32, 43.

It is the opinion of the Committee that there is a violation of Canons 24, 32 and 43 of the Canons of Ethics of the State Bar by reason of the attorney accepting the employment from the Automobile Association to represent its members in connection with matters referred to in the certificate issued by the Automobile Association to its members and by reason of his accepting employment from the members of the Automobile Association in other matters.

The attorneys are not employed by the Automobile Association for the purpose of advising it on matters affecting its interest or of advising it or its members on matters of collective interest to its members as a whole. The attorneys are employed for the purpose of advising the members of the Association in respect of their individual affairs and of handling matters affecting only the individual member. This is done in return for the payment by the member to the Association of a membership fee. The Association holds itself out to pay attorneys selected by it to perform legal services to its individual members. It in effect holds itself out to furnish legal services to its members. By reason thereof attorneys accepting employment through such Association to perform such services are permitting their professional services to be used in aid of the practice of law by a lay intermediary in violation of Canon 43. Further, Canon 32 states that the professional services of a member shall not be controlled or exploited by any lay agency and that an attorney shall avoid all relations which direct the performance of his duties by or in the interest of such intermediary. The acceptance of employment by an attorney through the said Automobile Agency to perform the services mentioned would violate such Canon.

An attorney is forbidden to solicit business by Canon 24. He cannot do so by entering into the relationship discussed above with the Automobile Association.

A similar situation was condemned in Opinion No. 8 of the Opinions of the Committee on Professional Ethics and Grievances of the American Bar Association. (8-1.)

Tex. Comm. On Professional Ethics, Op. 178 (1958)