Can a non-profit association arrange for a law firm to offer optional legal services to its members where members pay the lawyers directly?

Plain-English summary

The inquiry asked whether a non-profit association may enter an agreement with a law firm to provide optional legal services to the association's members and their families, where all charges for the services are paid by the members directly to the attorneys. The Committee answered that, although a similar arrangement had been expressly prohibited in Opinion 346 (1969), the current Texas Code of Professional Responsibility permits it.

The Committee quoted DR 2-103(D), which bars a lawyer from knowingly assisting an organization that recommends, furnishes, or pays for legal services to promote his services, but allows the lawyer to cooperate in a dignified manner with the legal-service activities of a non-profit organization that recommends, furnishes, or pays for legal services to its members, so long as the lawyer's independent judgment is exercised free of interference. That cooperation is limited by constitutional interpretations in force at the time and by four conditions: the organization's primary purposes do not include rendering legal services; the legal-services activity is incidental and reasonably related to those primary purposes; the organization derives no financial benefit from the lawyer's services; and the member, not the organization, is recognized as the client. The Committee noted that controlling constitutional decisions require allowing an association to recommend specific attorneys to its members.

The Committee added that the facts did not show whether the arrangement violated the additional requirements of DR 2-103(A) (a lawyer shall not recommend his own employment to a non-lawyer who has not sought his advice) and DR 2-103(B) (a lawyer shall not give anything of value to secure employment), and cautioned that direct solicitation of clients for pecuniary gain may subject an attorney to discipline, citing Ohralik v. Ohio State Bar Association.

Currency note

This opinion was issued in 1979, under the former Texas Code of Professional Responsibility, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. The Disciplinary Rules have since been amended, and Texas never adopted the ABA's Ethics 2000 framework. The closest current provisions on group and prepaid legal services and on solicitation are Texas Rules 7.03 and 7.06, with ABA analogs Model Rules 7.2 and 7.3. Subsequent rule changes 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 non-profit association set up legal services for its members in Texas?

A: Per the opinion, yes, under the current Code. The Committee concluded that DR 2-103(D)(5) permits a lawyer to cooperate with such a non-profit arrangement, subject to its conditions, even though an earlier opinion had prohibited it.

Q: What conditions must the arrangement satisfy?

A: The association's primary purposes must not include rendering legal services; the legal-services activity must be incidental and reasonably related to those purposes; the association must derive no financial benefit from the lawyer's services; and the member, not the association, must be the client.

Q: What additional cautions did the Committee raise?

A: It noted that the facts did not show whether DR 2-103(A) (recommending one's own employment to someone who has not sought advice) and DR 2-103(B) (giving value to secure employment) were satisfied, and warned that direct solicitation for pecuniary gain may lead to discipline under Ohralik.

Background and rules framework

The opinion interprets DR 2-103(D)(5) (cooperating with a non-profit organization's legal-service activities) and DR 2-103(A) and (B) (limits on soliciting and paying for employment) of the former Texas Code of Professional Responsibility, read against the constitutional decisions protecting associational provision of legal services. The closest current provisions are Texas Rules 7.03 and 7.06, with ABA analogs Model Rules 7.2 and 7.3. The analysis turns on the member being the client and the association deriving no financial benefit.

Citations and references

Rules of Professional Conduct:

• MR 7.2 (recommendation of a lawyer's services); MR 7.3 (solicitation of clients), as the modern analogs
• DR 2-103(D), DR 2-103(A), DR 2-103(B) (former Texas Code of Professional Responsibility)

Cases:

• United Transportation Union v. Michigan, 401 U.S. 576 (1971), associational right to recommend attorneys to members
• United Mine Workers v. Illinois Bar Association, 389 U.S. 217, associational provision of legal services
• Brotherhood of Railroad Trainmen v. Virginia, 377 U.S. 1 (1964), associational referral of members to counsel
• NAACP v. Button, 371 U.S. 415 (1963), associational litigation activity as protected expression
• Ohralik v. Ohio State Bar Association, 436 U.S. 447 (1978), discipline for in-person solicitation for pecuniary gain

Other opinions cited:

• Tex. Comm. on Interpretation of the Canons of Ethics, Op. 346 (1969): earlier arrangement prohibited

See also

• TX Ethics Op. 443: County Bar Referral Service Limited to University Students
• TX Ethics Op. 446: Referrals and Fee Payment From a Financial-Planning Organization
• TX Ethics Op. 414: Mail Advertising and Personalized Direct-Mail Solicitation

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-397/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_397.pdf

Original opinion text

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

QUESTION PRESENTED

May a non-profit association enter into an agreement with a law firm whereby the firm will provide optional legal services to the association members and their families, provided that all charges for the legal services are paid by the members directly to the attorneys?

DISCUSSION

While an arrangement similar to the one described above was expressly prohibited in State Bar of Texas, Commission on Interpretation of the Canons of Ethics, Opinion No. 346 (1969), the present State Bar of Texas, Rules and Code of Professional Responsibility permits such an arrangement.

DR 2-103 provides in pertinent part: "D. A lawyer shall not knowingly assist a person or organization that recommends, furnishes, or pays for legal services to promote the use of his services or those of his partners or associates. However, he may cooperate in a dignified manner with the legal service activities of any of the following, provided that his independent professional judgment is exercised on behalf of his client without interference or control by any organization or other person. . . . . 5. Any other non-profit organization that recommends, furnishes, or pays for legal services to its members or beneficiaries, but only in those instances and to the extent that controlling constitutional interpretations at the time of such rendition of the services requires the allowance of such legal service activities, and only if the following conditions, unless prohibited by such interpretation, are met: (a) The primary purposes of such organization do not include the rendition of legal services. (b) The recommending, furnishing, or paying for legal services to its members is incidental and reasonably related to the primary purposes of such organization. (c) Such organization does not derive a financial benefit from the rendition of legal services by the lawyer. (d) The member or beneficiary for whom the legal services are rendered, and not such organization, is recognized as the client of the lawyer in that matter."

Constitutional interpretations controlling at the time the services are rendered require that an association be allowed to recommend specific attorneys to its members. United Transportation Union v. Michigan, 401 U.S. 576 (1971); United Mine Worker's v. Illinois Bar Association, 389 U.S. 217(1976); Brotherhood of Railroad Trainment v. Virginia, 377 U.S. 1 (1964); N.A.A.C.P. v. Button, 371 U.S. 415(1963).

The facts do not indicate whether the proposed arrangement violated the following additional requirements of DR 2-103: "(1) A lawyer shall not recommend employment of himself, his partner, or associate to a non-lawyer who has not sought his advice regarding employment of a lawyer. DR 2-103(A). (2) A lawyer shall not compensate or give anything of value to a person or organization to recommend or secure his employment by a client or as a reward for his having made a recommendation resulting in his employment by a client. DR 2-103(b).

Pursuant to Disciplinary Rule 2-103, quoted above, direct solicitation of clients for pecuniary gain may subject an attorney to discipline. Ohralik v. Ohio State Bar Assn., 56 L.Ed.2d 444, _U.S._(1978).

Tex. Comm. On Professional Ethics, Op. 397 (1979)