Is it unethical for a lawyer to habitually charge less than the county or state minimum fee schedule?

Plain-English summary

The question was whether it is a violation of ethics to habitually charge below the county or state minimum fee schedule. The Committee traced the history of the fee canons: ABA Canon 12 (1908) and its 1937 amendment treating a bar association's minimum fee schedule as one proper factor, ABA Opinion 190 (1939), and ABA Opinion 302 (1961), which partly overruled Opinion 190 and described minimum fee schedules as advisory while calling habitual under-fee advertising objectionable.

The Committee explained that Texas Canon 11, adopted in 1940, was copied almost verbatim from ABA Canon 12 but deliberately omitted both the ABA provision against charges that "undervalue" a lawyer's services and the ABA paragraph on minimum fee schedules, consistent with the State Bar Act's provision that nothing authorized the Supreme Court to prescribe fees. Because of those omissions, the Committee declined to adopt ABA Opinion 302 as its reading of the Texas canons.

The Committee held that habitually charging fees below a recommended minimum fee schedule would not violate Texas Canon 11 and would not be evidence of a violation of Canon 11; it simply does not make habitual undercharging unethical. The Committee noted that the State Bar's 1961 Recommended Minimum Fee Schedule was, by its foreword, advisory only, and that it did not pass on the validity of any schedule that purported to be obligatory.

Turning to the other canons, the Committee found that only Canons 24 and 25, prohibiting solicitation and seeking out clients, could reach the conduct. Habitually charging less than customary fees could conceivably be used as a method of soliciting clients, but it would not necessarily constitute or even evidence solicitation (for example, where most lawyers in a community customarily charge below the scheduled fees). The Committee said its role was to interpret the existing canons, not to legislate. The ruling was 9-0.

Currency note

This opinion was issued in 1966, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. It also predates Bates v. State Bar of Arizona, 433 U.S. 350 (1977), which loosened categorical advertising restrictions, though prohibitions on misleading or solicitous communications were not eliminated. 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: Is it unethical to habitually charge below a minimum fee schedule?

A: The Committee held it does not violate Texas Canon 11 on fixing fees, because the Texas canon omitted the ABA's minimum-fee and "undervaluation" language. It is not unethical on that ground alone.

Q: Could low fees ever be an ethics problem under this opinion?

A: Yes. The Committee said that, depending on the facts, habitually charging below customary fees could be evidence of solicitation under Canons 24 and 25, though it would not necessarily be solicitation.

Q: Are minimum fee schedules binding under this opinion?

A: No. The Committee said the State Bar's Recommended Minimum Fee Schedule was advisory only by its own foreword, and it did not pass on the validity of any schedule purporting to be obligatory.

Q: Did this opinion change any earlier ruling?

A: As to the ABA canons, the Committee overruled anything contrary in ABA Opinion 190; as to the Texas canons, it declined to adopt ABA Opinion 302's approach given the deliberate omissions from Texas Canon 11.

Background and rules framework

The opinion interprets former Texas Canon 11 (fixing fees) and Canons 24 and 25 (solicitation and seeking out clients), in light of ABA Canon 12 and ABA Opinions 190 and 302. The modern analogs are ABA Model Rule 1.5 (fees) and Model Rule 7.3 (solicitation of clients).

Citations and references

Rules of Professional Conduct:

• MR 1.5 (fees), as the modern analog
• MR 7.3 (solicitation of clients), as the modern analog
• Texas Canons 11, 24, and 25 (former canons); ABA Canon 12

Statutes:

• State Bar Act of Texas, Article 320a-1, Section 4 (the Court is not authorized to prescribe fees for legal services)

Other opinions cited:

• ABA Opinion 190 (February 17, 1939): discipline only for clearly excessive fees (overruled in part)
• ABA Opinion 302 (November 27, 1961): minimum fee schedules advisory; under-fee advertising objectionable
• Texas Opinions 28: minimum fee schedules can only be suggested or recommended

See also

• TX Ethics Op. 316: Gifts and Entertainment for Insurance Claims Adjusters
• TX Ethics Op. 351: Bond-Premium Referral Fee From a Bonding Company
• TX Ethics Op. 348: Appointed Counsel Taking a Partial Fee From Family and County

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-311/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_311.pdf

Original opinion text

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

QUESTION PRESENTED

Is it a violation of ethics to habitually undercharge below the county or state minimum fee schedule?

23 Baylor L. Rev. 832 (1972)

Canon 12 of the American Bar Association, adopted in 1908, provides that "in fixing fees, lawyers should avoid charges which overestimate their advice and services, as well as those which undervalue them," but recognizes that a client's "poverty may require a less charge, or even none at all." One guide or factor that may properly be considered under this Canon is "the customary charges of the Bar for similar services." The following paragraph was added to Canon 12 in 1937:

"In determining the customary charges of the Bar for similar services, it is proper for a lawyer to consider a schedule of minimum fees adopted by a Bar Association, but no lawyer should permit himself to be controlled thereby or to follow it as his sole guide in determining the amount of his fee."

ABA Opinion 190 (February 17, 1939) held that it is only when the fees fixed by a lawyer are clearly excessive that the profession has a right to discipline him, and that, although voluntary minimum fee schedules are desirable, "a lawyer has the right to contract for any fee he chooses so long as it is not clearly excessive."

Section 4 of the State Bar Act of Texas, Article 320a-1, which was adopted in 1939, and which directed the Supreme Court of Texas to propose rules for the State Bar and to promulgate those rules approved by majority vote of the Bar, specifically provides:

"Nothing herein shall be construed as authorizing the Court to prescribe fees to be charged for legal services by any attorney."

Pursuant to such Act, the State Bar Rules, including the Canons of Ethics, were approved in 1940 by the Supreme Court, submitted to and approved by the Bar, and duly promulgated by the Supreme Court. Canon 11 of the Canons of Ethics so adopted appears to have been copied almost verbatim from ABA Canon 12, but modified to conform to ABA Opinion 190 and to the above quoted provision of the State Bar Act in that it omits the ABA provision regarding charges which "undervalue" a lawyer's services and omits the ABA paragraph pertaining to minimum fee schedules.

In 1961, ABA Opinion 190 was partially overruled and modified by ABA Opinion 302 (November 27, 1961), reading as follows:
"The establishment of suggested or recommended minimum fee schedules by bar associations is a thoroughly laudable activity. The evils of fee cutting ought to be apparent to all members of the Bar. Ordinarily fees should be arrived at by consideration of the factors enumerated in Canon 12, which, among other things, admonishes lawyers not to overestimate or to undervalue their services. When members of the Bar are induced to render legal services for inadequate compensation, as a consequence the quality of the service rendered may be lowered, the welfare of the profession injured and the administration of justice made less efficient. For example, no lawyer should be put in the position of bidding competitively for clients. It is proper for the profession to combat such evils by suggested or recommended minimum fee schedules and other practices which have a tendency to discourage the rendering of services for inadequate compensation. Such schedules represent the judgment of the local or state bar association as to what constitutes the minimum for reasonable charges for legal services, and should be so regarded by lawyers and the public in the community. Direct or indirect advertising by whatever means that a lawyer habitually charges less than reasonable or minimum fees would, of course, be objectionable."
Canon 12 provides that in fixing his fees, it is proper for a lawyer to consider a schedule of minimum fees adopted by a bar association, not alone but along with other considerations; however, it also provides that "no lawyer should permit himself to be controlled thereby or to follow it as his sole guide in determining the amount of the fee." While under the latter clause this Committee has consistently held that minimum fee schedules can only be suggested or recommended and cannot be made obligatory (Opinion 28), it is equally true that the habitual charging of fees less than those established in suggested or recommended minimum fee schedules, or the charging of such fees without proper justification, may be evidence of unethical conduct, and the Committee accordingly so holds, anything to the contrary in Opinion 190 being hereby overruled.

The State Bar of Texas has never adopted a mandatory minimum fee schedule. However, it published and distributed to members of the Bar a Recommended Minimum Fee Schedule in the early part of 1961, prior to release of ABA Opinion 302. The introduction to such schedule was later revised to include the following:
"If any lawyer in other than charity cases habitually charges less than the applicable minimum fee (of the local or district bar association) he may be guilty of solicitation of business on the basis of price. This is a violation of the canons of ethics."
This committee has not previously rendered an opinion on the question here presented. We believe that, insofar as it pertains to the American Bar Canons, the inquiry is answered by ABA Opinion 302 quoted above. However, we cannot adopt that Opinion as our interpretation of the Texas Canons in view of the obvious, and apparently intentional, omission from Texas Canon 11 of the provision against "undervaluation" of lawyer's services found in ABA Canon 12 and the lack of any reference in Texas Canon 11 to minimum fee schedules.

In the first place, ABA Opinion 302 holds that "minimum fee schedules can only be suggested or recommended and cannot be made obligatory." Although this committee's duties include interpretation of the Canons and rendering opinions concerning proper professional conduct, any quest on as to the validity of an obligatory minimum fee schedule "can" or "cannot" be made obligatory would be beyond the scope of our proper functions. It is clear to us, however, that the State Bar of Texas has not purported to promulgate an obligatory, minimum fee schedule; it has published a Recommended Minimum Fee Schedule, stating in the Foreword that it is "advisory" only. We believe that the various minimum fee schedules adopted by local and district bar associations in this State are also advisory only; but if there are some which appear to be obligatory, we do not pass upon their validity.

ABA Opinion 302 holds further that "the habitual charging of fees less than those established in suggested or recommended minimum fee schedules . . . may be evidence of unethical conduct." But, we must ask, evidence of violation of which Canon? The Canon pertaining to fixing fees, or some other Canon? We do not find in Texas Canon 11 any prohibited conduct which would be evidenced by habitual undercharging. In our opinion, the habitual charging of fees less than those established in suggested or recommended minimum fee schedules would not violate Texas Canon 11 and would not be evidence of violation of any provision of Texas Canon 11. It simply does not make habitual undercharging unethical.

Turning, then, to the other Texas Canons for possible prohibitions of habitual undercharging, we find none except Canons 24 and 25 which prohibit solicitation of professional employment and seeking out clients. Conceivably, the habitual charging of fees less than the customary charges could be used as a method of soliciting and seeking out clients. It is also conceivable, however, that the habitual charging of fees less than those set forth in a recommended minimum fee schedule would not constitute, or even be evidence of, solicitation, as, for example, in a community where all or most lawyers customarily charge less than the scheduled fees.

Perhaps some lawyers will feel that, if the above is a correct interpretation, revision of our Texas Canons is in order. Others may be opposed to revision in general, or to minimum fee schedules in particular. As for this committee, we must interpret the language we find in the present Canons, and refrain from attempting to legislate. (9-0.)

FIXING FEES - MINIMUM FEE SCHEDULES - SOLICITATION
Habitual charging of fees less than those established in a recommended minimum fee schedule does not violate the Canon regarding fixing fees but might be evidence of unethical solicitation.

Canons 11, 24, 25; ABA Canon 12.

Tex. Comm. On Professional Ethics, Op. 311 (1966)