Can a Texas attorney join a barter association that takes a join-up fee, dues, and a percentage of trades, and guarantees members a level of business?

Plain-English summary

The inquiry asked whether an attorney may join a barter association in which he is paid in "trade dollars" or "units" usable for goods or services from other members, where members pay a join-up fee, annual dues, and a percentage on all purchases, and the association promises to refund the membership fee and dues if it fails to bring the member a certain level of units in the first year. A second question asked whether, if membership were allowed, the lawyer could pay court costs himself and take units for them.

The Committee explained that one-on-one bartering has long been ethically permissible, but the barter-association form presents several problems. The association's promise to provide a certain level of business or refund fees violates DR 2-103(E), which bars a lawyer from assisting an organization that recommends, furnishes, or pays for legal services to promote the use of his services, and the association did not meet any exception; one association rule even paid a bonus for sponsoring new members. Participation also violates DR 2-103(C), which bars giving anything of value to an organization to recommend or secure employment, because the join-up fee, dues, and percentage charge all amount to giving value to secure employment. The Committee added that the percentage charge on each transaction may involve impermissible fee sharing with a non-lawyer under DR 3-102, and noted further problems flagged in ABA Informal Opinion 1430 concerning a lawyer's freedom to refuse cases, withdrawal duties, and conflicts among members.

Because the answer to the first question was no, the Committee did not reach the court-costs question. It held, 9-0, that participation in such a barter association is ethically improper, while declining to address whether a barter organization could be designed to satisfy the Code.

Currency note

This opinion was issued in 1984, 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 current Texas rules are Rule 7.03 and Rule 7.06 (solicitation and prohibited payments for recommendations) and Rule 5.04 (sharing fees with non-lawyers), with closest ABA analogs Model Rules 7.2 and 5.4. 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 Texas lawyer barter legal services for goods?

A: Per the opinion, yes, on a one-on-one basis. The Committee said bartering in a one-on-one situation has been and remains ethically permissible for attorneys.

Q: Can a lawyer join a barter association that guarantees business?

A: No. The Committee concluded that the association's promise to provide a level of business or refund fees has the lawyer assist an organization promoting his services in violation of DR 2-103(E).

Q: Why do the fees and dues create a problem?

A: The Committee concluded the join-up fee, annual dues, and percentage on each transaction all amount to giving value to an organization to secure employment, which violates DR 2-103(C), and that the percentage charge may also be impermissible fee sharing with a non-lawyer under DR 3-102.

Background and rules framework

The opinion interprets DR 2-103(E) (assisting an organization that promotes the lawyer's services), DR 2-103(C) (giving value to secure employment), and DR 3-102 (sharing fees with a non-lawyer) of the former Texas Code of Professional Responsibility, drawing on ABA Informal Opinion 1430. The closest current concepts are Texas Rules 7.03, 7.06, and 5.04 and Model Rules 7.2 and 5.4. The analysis turns on the association profiting from promoting members' services and taking a cut of each transaction.

Citations and references

Rules of Professional Conduct:

• MR 7.2 (recommendation of a lawyer's services; payment for recommendations)
• MR 5.4 (professional independence; sharing fees with non-lawyers)
• DR 2-103(E), DR 2-103(C), DR 3-102, EC 2-30, DR 2-109, Texas Code of Professional Responsibility

Other opinions cited:

• ABA Committee on Ethics and Professional Responsibility, Informal Opinion 1430 (1979): additional problems with a barter exchange, including refusing cases, withdrawal, and member conflicts

See also

• TX Ethics Op. 435: Attorney Participation in a Barter Exchange Arrangement
• TX Ethics Op. 446: Referrals and Fee Payment From a Financial-Planning Organization
• TX Ethics Op. 417: Lawyer Representing and Owning a Collection Agency

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-410/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_410.pdf

Original opinion text

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

QUESTION PRESENTED

An attorney inquires whether his belonging to a barter association would comport with the Code of Professional Responsibility. In payment for his services he would receive "trade dollars" or "units" that could then be used to obtain goods or services from other members of the association. Members pay a join-up fee, annual dues, and a percentage on all "purchases" to the association. The organization promises that if it is not successful in bringing the new member a certain level of "units" during the first year, the membership fee and dues will be refunded.
If an attorney may properly belong to a barter association, can he pay court costs himself and receive barter units in payment for those costs?

DISCUSSION

Bartering in a one-on-one situation has been practiced throughout history and has been and remains ethically permissible for attorneys. The new form of barter associations, however, presents a number of ethical problems. The barter association promises to provide its attorney members with a certain level of business or refund their fees and dues. This guarantee violates DR 2-103(E): "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 . . . ." The barter association does not meet the requirements of any of the exceptions to this disciplinary rule. In fact, one of the association's rules and regulations provides for a bonus to members who introduce and sponsor new members.

Participation in the barter association also violates DR 2-103 (C) which bars a lawyer from giving anything of value to an organization to recommend or secure his employment. The entire thrust of the barter group here is to promote the use of its members services. The more business generated among its members, the more profit the barter organization makes. The membership fee, annual dues, and percentage fee on each transaction, which an attorney member would be required to pay, must all be considered as the giving of value to secure employment.

Additionally, the percentage charge on each transaction may involve an impermissible sharing of legal fees with a non-lawyer. DR 3-102.

ABA Informal Opinion 1430 mentioned several other problems with a bartering exchange organization, including: (1) The rules of the exchange do not contemplate the duty of an attorney to refuse employment in some circumstances as expressed in EC 2-30 and DR 2-109. Since fees paid to the exchange by a lawyer member are based upon the employment of the lawyer by other exchange members and since the lawyer's membership is subject to cancellation or recall by the exchange . . . the lawyer may not have sufficient freedom in refusing a member's case. (2) Another possible problem could arise in the termination of a lawyer as a member of the exchange. e.g., does the lawyer have a duty to continue with the representation of an exchange member/client or can he withdraw? (3) There are also potential conflict of interest problems depending upon the definition of the lawyer's relationship with the exchange and its members. e.g., can the lawyer represent an exchange member against the exchange, a member against another member, or a nonmember against a member? ABA Comm. on Ethics and Professional Responsibility, Informal Op. 1430 (1979).

Since the answer to the initial question is no, the Committee does not address the second question.

Bartering on a one-to-one basis is ethically permissible. However, participation in a barter association in which the attorney would exchange his services for barter units that would then be used to obtain goods or services from other members of the association, with a percentage on all purchases being paid to the association, is ethically improper. The committee does not address whether a bartering organization may be devised that would satisfy the requirements of the Code of Professional Responsibility. (9-0.)

CONCLUSION

Bartering on a one-to-one basis is ethically permissible. However, participation in a barter association in which the attorney would exchange his services for barter units that would then be used to obtain goods or services from other members of the association, with a percentage on all purchases being paid to the association, is ethically improper. The committee does not address whether a bartering organization may be devised that would satisfy the requirements of the Code of Professional Responsibility. (9-0.)

Tex. Comm. On Professional Ethics, Op. 410 (1984)