Can a lawyer serving as executor take a referral fee or split the fee of a law firm he hired to defend a will contest?

Plain-English summary

A practicing attorney was serving as independent executor of an estate. He and the devisees hired a law firm to defend a contest of the will. The question was whether the attorney-executor could accept from that firm a division of the fee paid for handling the will-contest case, or a "referral" fee for forwarding the case to the firm.

The Committee explained that Canon 31 prohibits division of fees between attorneys unless based on a division of services or responsibilities, and Canon 35 prohibits an attorney's acceptance of compensation or rebates without the client's knowledge and consent after full disclosure. In hiring the firm, the executor acted in his capacity as executor, not as an attorney under Canon 31. Division of attorney's fees is authorized only between attorneys acting as attorneys, and then only on the basis of legal services and legal responsibilities; the sharing of "forwarding" fees applies only to liquidated commercial claims. Both the firm and the attorney-executor would violate Canon 31 by paying or accepting any referral fee or division of the firm's fee. The Committee added that Canon 35 would not apply unless the attorney-executor acted in his capacity as attorney. The ruling was 8-0.

Currency note

This opinion was issued in 1965, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance.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-executor take a referral fee from the firm he hires for the estate?

A: No. The Committee said both the firm and the attorney-executor would violate Canon 31 by paying or accepting any referral fee or division of the firm's fee, because he hired the firm as executor, not as an attorney.

Q: Why does it matter that he acted as executor rather than as an attorney?

A: Canon 31 authorizes fee division only between attorneys acting in their capacity as attorneys, and only for legal services and responsibilities. Because the executor was not acting as an attorney, no division of the firm's fee was permitted.

Q: When does the "forwarding fee" exception apply?

A: The Committee said the sharing of forwarding fees applies only to liquidated commercial claims, which this will-contest matter was not.

Background and rules framework

The opinion interprets former Texas Canon 31 (division of fees between attorneys) and Canon 35 (acceptance of compensation or rebates without the client's consent). The modern analog is ABA Model Rule 1.5 (fees), whose subsection on the division of a fee between lawyers not in the same firm carries forward the same limits.

Citations and references

Rules of Professional Conduct:

• MR 1.5 (fees, including division of fees between lawyers), as the modern analog
• Texas Canons 31 and 35 (former canons)

See also

• TX Ethics Op. 309: County Attorney Soliciting Private Work and Taking Referral Fees
• TX Ethics Op. 311: Habitual Undercharging Below a Minimum Fee Schedule
• TX Ethics Op. 310: Contingent Fee on the Hospital-Bill Portion of a Comp Settlement

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-301/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_301.pdf

Original opinion text

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

QUESTION PRESENTED

May a practicing attorney, who is serving as independent executor of an estate, accept, from a law firm employed by him and the devisees to defend a contest of the will, a division of the fee paid by the executor and devisees to the firm for handling and settling the will-contest case, or a "referral" fee for forwarding the case to the firm?

18 Baylor L. Rev. 366 (1966)

Canon 31 prohibits division of fees between attorneys unless based upon a division of services or responsibilities. Canon 35 prohibits acceptance of compensation or rebates by an attorney without the knowledge and consent of his client after full disclosure.

Presumably, the executor was compensated, or not compensated, for his services as executor in accordance with the terms of the will and the law. In employing a law firm to defend the will, he acted in his capacity as executor, not as an attorney under Canon 31. Division of attorney's fees is authorized only between attorneys acting in their capacity as attorneys, and then only on the basis of legal services and legal responsibilities; and the sharing of "forwarding" fees is applicable only to liquidated commercial claims. Both the law firm and the attorney-executor would violate Canon 31 by payment and acceptance of any fee for "referral" or any division of the firm's fee. (8-0.) (Canon 35 would not be applicable unless the attorney-executor acted in his capacity as attorney.)

DIVISION OF FEES - REFERRAL FEE
It is unethical for an attorney, who is executor of an estate, to accept a fee for employing a law firm to represent the estate.

Tex. Comm. On Professional Ethics, Op. 301 (1965)