Can a lawyer take a power of attorney from a personal injury client that gives the lawyer full control to settle or dispose of the case?

Plain-English summary

The inquiry asked whether an attorney could ethically use a particular power of attorney in a personal injury case. The instrument appointed the lawyer as the client's "true and lawful attorney" to carry the claim to final consummation or compromise on whatever terms the lawyer thought expedient, and to receive and receipt for all money, with full power to do everything the client could do if personally present.

Two members thought the power did not per se violate any canon, though ethical violations would arise if the lawyer procured it through misrepresentation or concealment or used it to make a settlement disadvantageous to the client. The majority held the power should be prohibited. Under Canon 6 a lawyer must advise the client of conflicts affecting employment, and under Canon 8 he must obtain full knowledge of the case and give candid opinions so the client can exercise his own judgment on the merits and disposition. Although a lawyer has wide discretion in conducting litigation, the Committee said it is implicit that the ultimate decision on disposition is reserved to the client, so it is unethical to take a power of attorney vesting absolute and unrestricted power of disposition in the lawyer.

The Committee added that personal injury cases are customarily handled on a contingent fee, so the lawyer essentially becomes a party in interest and there is always a potential conflict between lawyer and client over whether to settle or try the case. That makes it particularly important that the client be fully advised and given a full opportunity to decide the disposition; the power of attorney in question would not safeguard those minimum requirements, so its use is unethical. The vote was 6-2.

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. 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 Treat this page as historical context, not current guidance.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 personal injury lawyer take a power of attorney to settle the case on the client's behalf?

A: The majority said no, to the extent the power vests absolute and unrestricted control in the lawyer. The Committee held the ultimate decision on disposition is reserved to the client.

Q: Why did the contingent fee matter to the analysis?

A: Because on a contingent fee the lawyer becomes a party in interest, the Committee said there is always a potential conflict between lawyer and client over whether to settle or try the case, making the client's informed control especially important.

Q: Was the Committee unanimous?

A: No. The vote was 6-2. Two members thought the power did not violate the canons by itself, absent misrepresentation, concealment, or use to the client's disadvantage.

Background and rules framework

The opinion interprets former Texas Canon 6 (advising the client of conflicts of interest) and Canon 8 (obtaining full knowledge and giving candid advice so the client can decide). The modern analogs are ABA Model Rule 1.2 (allocation of authority, reserving the settlement decision to the client) and Model Rule 1.7 (conflicts of interest).

Citations and references

Rules of Professional Conduct:

• MR 1.2 (scope of representation; client decides whether to settle), as the modern analog
• MR 1.7 (conflicts of interest), as the modern analog
• Texas Canons 6 and 8, with reference to Canons 15, 21, 27, 28, and 38 (former canons)

See also

• TX Ethics Op. 336: Lawyer Serving as a Bank's Trust Officer
• TX Ethics Op. 348: Appointed Counsel Taking a Partial Fee From Family and County

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-330/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_330.pdf

Original opinion text

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

QUESTION PRESENTED

May an attorney ethically use the following power of attorney in a personal injury case?

THE STATE OF TEXAS
COUNTY OF [ ]
Know all men by these presents, that [ ] of said State and County, have made, constituted and appointed, and by these present do make, constitute and appoint, [ ] of [ ] County, Texas, my true and lawful attorney, for me and in my name, place and stead to in my name carry on and conduct to final consummation or compromise my claim against [ ] and all claims, demands or damages therein claimed or mentioned, in such manner and on such terms as to my said attorney may seem expedient; also to receive and receipt for all money in any manner accruing from or out of the same giving and granting unto my said attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises, as fully, to all intents and purposes, as I might or could do if personally present, hereby ratifying and confirming whatsoever my said attorney shall and may do by virtue hereof in the premises.

In witness whereof I have hereunto set my hand this [ ] day of [ ], 19[ ].

Before me, the undersigned authority, on this day, personally appeared [ ], known to me to be the person(s) whose name(s) is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed.

Given under my hand and seal of office this [ ] day of [ ], 19[ ].

Notary Public in and for [ ]County, Texas

23 Baylor L. Rev. 860 (1972)

POWER OF ATTORNEY IN PERSONAL INJURY CASES - DUTY OF FULL DISCLOSURE - CONTROL OF LITIGATION - CONFLICT OF INTEREST
An attorney may not ethically take from his client in a personal injury case a power of attorney which vests in him absolute control of the case.

Canons 6, 8.

Two members of the Committee are of the opinion that use of the above power of attorney in personal injury cases does not per se violate any of the canons although ethical violations would be involved if the attorney procured such power through misrepresentation or concealment or if the power were used by the attorney to make a settlement disadvantageous to his client. The majority of the members feel, however, that use of the power of attorney in question in personal injury cases should be prohibited. Under Canon 6 an attorney is obligated to advise his client as to any conflicts of interest which might affect his initial employment or his continued employment. Under Canon 8 he is cautioned to obtain full knowledge of his client's case before advising thereon and he is bound to give candid opinions so that the client may exercise his judgment as to the merits of his case and the disposition thereof. While the attorney is given wide discretion of litigation and in determining his ultimate positionΧfor example see Canons 15, 21, 27, 28 and 38Χwe believe it is implicit that ultimate decision upon the disposition of a case is reserved to the client. Therefore, it is unethical for an attorney to take from his client a power of attorney which vests in him absolute and unrestricted power of disposition.

Personal injury cases are customarily handled upon a contingent fee basis whereby the attorney essentially becomes a party in interest. Thus there always exists a potential conflict between the attorney and his client as to whether the case should be settled or tried. It is particularly appropriate, therefore, that the client be fully advised and afforded a full opportunity to decide upon the disposition of his case. The power of attorney in question would not safeguard these minimum requirements and its use is unethical. (6-2.)

Tex. Comm. On Professional Ethics, Op. 330 (1966)