Can a lawyer participate in or recommend that a client sign a contingent-fee contract with a medical-legal consulting firm that supplies expert witnesses?
Texas Ethics Opinion 458: Contingent-Fee Agreement With a Medical-Legal Consulting Firm
Short answer: The Committee concluded that an attorney who aids, assists, or permits a client to enter a contingent-fee contract with a medical-legal consulting firm that provides expert testimony violates DR 7-109(C), because paying a percentage of the recovery to a firm supplying expert witnesses is in essence paying a contingent fee for testimony.
Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the Texas Disciplinary Rules of Professional Conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.
About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. The opinion text is reproduced at the bottom; the official source (linked) controls.
Plain-English summary
A medical-legal consulting firm advertised contingent-fee contracts under which it would contract directly with a plaintiff and, in return for a percentage of the recovery, provide various services including expert testimony. The Committee was asked whether an attorney could participate in or recommend such a contract. The Committee framed four concerns under the Code: whether the contingent fee is a subterfuge for fee splitting with non-lawyers, whether the attorney gives up control of the case, whether the contract produces excessive fees, and whether it pays a contingent fee to a witness for testimony.
Surveying other jurisdictions, the Committee noted a slight majority allow such contracts but only hesitantly, citing ABA Informal Opinion 1375 (1976), which permits the arrangement so long as the lay agency does not engage in unauthorized practice (DR 3-101(A)), the lawyer does not share legal fees with the lay agency (DR 3-102(A)), and the contingent fee is not payable for the lay agency's testimony (DR 7-109(C)). Other authorities, including New York State Bar Opinion 5-72 and Idaho Formal Opinion 104, treated the arrangements as raising ethical problems too serious to avoid; Idaho found paying a contingent fee to a "finder" of witnesses to be the functional equivalent of paying a contingent fee to the witness.
The Committee adopted that stricter view as to the lawyer's own conduct. The central problem is DR 7-109(C), which bars a lawyer from paying or acquiescing in compensation to a witness contingent on the content of testimony or the outcome of the case (while allowing reasonable expenses, compensation for lost time, and a reasonable expert fee). The Committee concluded that paying a percentage of the recovery to a consulting firm that provides expert witnesses is in essence paying for testimony, because the better the testimony, the larger the recovery and the larger the witness's fee. It therefore concluded that an attorney who aids, assists, or permits a client to enter such a contract violates DR 7-109(C). The Committee expressly declined to opine on the legitimacy or enforceability of the contract between the client and the consulting firm, addressing only the attorney's participation.
Currency note
This opinion was issued in 1988, 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, including the comprehensive 2021 revisions adopted by Texas Supreme Court order, and Texas never adopted the ABA's Ethics 2000 framework. 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 lawyer recommend that a client sign a contingent-fee contract with a firm that supplies expert witnesses?
A: The Committee concluded no. An attorney who aids, assists, or permits a client to enter such a contract violates DR 7-109(C), because a percentage-of-recovery fee for a firm providing expert testimony is in essence paying a contingent fee for testimony.
Q: Why does paying the consulting firm count as paying a witness for testimony?
A: Per the opinion, the better the testimony, the larger the recovery and the larger the firm's fee, so the contingent payment creates a financial incentive tied to the content of the testimony, which DR 7-109(C) forbids.
Q: Did the Committee rule on whether the client's contract with the firm is valid?
A: No. The Committee expressly declined to opine on the legitimacy or enforceability of the contract between the client and the consulting firm, addressing only the attorney's participation and its ethical implications.
Background and rules framework
The opinion interprets DR 7-109(C) of the former Texas Code of Professional Responsibility (no compensation to a witness contingent on the content of testimony or the case outcome; analogous to ABA Model Rule 3.4(b)), along with DR 3-101(A) (unauthorized practice) and DR 3-102(A) (sharing legal fees with non-lawyers; analogous to ABA Model Rule 5.4(a)). The analysis treats a percentage-of-recovery payment to a firm supplying expert witnesses as functionally a contingent fee for testimony.
Citations and references
Rules of Professional Conduct:
- MR 3.4(b) (no offering an inducement to a witness prohibited by law)
- MR 5.4(a) (sharing legal fees with a non-lawyer)
- DR 7-109(C), Texas Code of Professional Responsibility (no witness compensation contingent on testimony or outcome)
- DR 3-101(A), Texas Code of Professional Responsibility (unauthorized practice)
- DR 3-102(A), Texas Code of Professional Responsibility (sharing fees with non-lawyers)
Other opinions cited:
- ABA Informal Opinion 1375 (1976): conditions for permitting such consulting-firm arrangements
- New York State Bar Opinion 5-72: ethical problems with the added contingent fee
- Idaho Formal Opinion 104: contingent fee to a witness "finder" equates to paying the witness
- Indiana Opinion 1 of 1981; Arizona Opinion 84-9; Connecticut Informal Opinion 82-7
See also
- TX Ethics Op. 553: Expert Witness Whose Employer Has a Contingent-Fee Interest
- TX Ethics Op. 621: Paying a Client's Former Lawyer to Serve as a Witness
- ABA Formal Op. 508: Ethics of Witness Preparation
Source
- Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-458/
- Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_458.pdf
Original opinion text
Reproduced from the official source for research purposes. The linked source is authoritative.
QUESTION PRESENTED
Does the Texas Code of Professional Responsibility, specifically DR 7-109(C), prohibit an attorney from participating in or recommending that a client enter into a contingency fee agreement with a medical-legal consulting firm?
STATEMENT OF FACTS
A medical-legal consulting firm has engaged in substantial advertising involving the use of contingent fee contracts wherein the firm enters into a contingent contract with a particular plaintiff and in return provides various services including the providing of expert testimony.
DISCUSSION
There are four basic issues which must be considered in light of the Texas Code of Professional Responsibility. First, is the contingent fee agreement a mere subterfuge for fee splitting with non-lawyers? Second, is the attorney giving up complete or partial control of the case? Third, does the contingency contract result in the payment of excessive fees by the client? And fourth, does the contract result in the payment of a contingent fee to a witness in exchange for his or her testimony?
Opinions from various jurisdictions, while showing that a slight majority of states allow such contracts, tend to fall on two sides of a very narrow line. Those jurisdictions allowing such contracts do so hesitantly, expressing concern over possible violations of the Code of Professional Responsibility. Such seems to be the rule in Indiana (Opinion 1 of 1981); Arizona (Opinion 84- 9), and Connecticut, (Informal Opinion 82-7). The ABA Informal Opinion 1375 (1976) is fairly representative in this area. The ABA would allow such an arrangement so long as:
"(1) the lay person or agency (medical-legal consulting service and experts provided by the same) is not to engage in the unauthorized practice of law, DR 3-101(A); (2) the lawyer does not share legal fees with the lay person or agency, DR 3-102(A)(1)(3); and (3) the contingent fee is not payable for the testimony of the lay person or agency, DR 7-109(C)."
All of the jurisdictions which allow such fee arrangements have expressed similar reservations for attorneys who recommend or participate in such arrangements. These states see these as potential violations and not as violations per se. These states seem to have come to the conclusion that with careful contracting and diligence on behalf of the attorney in maintaining control of the case, ethical violations can be avoided.
Other states, however, have seen these problems as too serious to be completely avoided. In Opinion 5-72 of the New York State Bar Association Committee on Professional Ethics, the Committee concluded that there were serious ethical problems in relation to the 20%-30% contingent fee in addition to the attorneys contingent fee. This was especially true in light of the fact that the consulting firm performs many of the functions normally done by the attorney for his or her fee alone.
But the most troubling problem in this area comes in light of DR 7-109(C) which states:
"A lawyer shall not pay, offer to pay, or acquiesce in the payment of compensation to a witness contingent upon the content of his testimony or the outcome of the case. But a lawyer may advance, guarantee, or acquiesce in the payment of:
(1) Expenses reasonably incurred by a witness in attending or testifying;
(2) Reasonable compensation to a witness for his loss of time in attending or testifying;
(3) A reasonable fee for the professional services of an expert."
In Idaho Formal Opinion 104, the ethics committee found that the paying of a contingent fee to a "finder" was the functional equivalent of paying a contingent fee to a witness. There does exist a financial incentive to influence the testimony of the witnesses provided. Idaho found these contingent fee contracts to violate DR 7-109(C) and therefore prohibited attorneys from participating in or recommending such contracts.
CONCLUSION
Several states have heeded the warnings of other states and have held such contingent fee arrangements to be unethical. Beyond the problem presented in the areas of (1) fee splitting, (2) excessive fees, (3) loss of attorney control, (4) preventing the unauthorized practice of law (not dealt with by this committee), and (5) payment of contingent fees in exchange for expert testimony, the entire arrangement gives the appearance of impropriety.
Thus, an attorney who aids, assists, or permits a client to enter into such a contract violates DR 7-109(C). It would seem to be the only logical conclusion available, that when you pay a fee based on a percentage of the recovery to a consulting firm providing expert witnesses, in essence you are paying for testimony. Theoretically, the better the testimony, the larger the recovery and hence, the larger the fee to the witness. Under 7-28, "witnesses should always testify truthfully and should be free from any financial inducements that might tempt them to do otherwise."
This Committee does not offer an opinion on the legitimacy or enforceability of a contract between a client and a medical-legal consulting firm. It merely addresses the issue of an attorney's participation in such an agreement and the ethical implications arising therefrom.
Tex. Comm. On Professional Ethics, Op. 458 (1988)