Can a lawyer's power of attorney include a clause where the lawyer agrees to bear all costs and expenses of any investigation and litigation?

Plain-English summary

The inquiry asked whether it violated any law or Canon for a Texas lawyer to include in a power of attorney executed in his favor the provision: "It is further understood and agreed that our said attorney assumes full responsibility and liability for all costs and expenses incident to any investigation and litigation that may be necessary."

The Committee was of the opinion that including the quoted clause in a power of attorney violates the Barratry Statute, Article 430 of the Penal Code, and Canons 24 and 25 of the Texas Canons of Ethics, as well as Canon 42 of the American Bar Association. The vote was 8-1.

Currency note

This opinion was issued in 1952, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. The solicitation and stirring-up-litigation restrictions the opinion applies predate Bates v. State Bar of Arizona, 433 U.S. 350 (1977), which held that categorical bans on lawyer advertising violate the First Amendment, so the Canon framework used here has since been substantially narrowed; the advancing of litigation costs is now addressed by ABA Model Rule 1.8(e) and solicitation by Model Rule 7.3, and the cited barratry statute has been recodified. Treat this page as historical context, not current guidance.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: Could a lawyer agree in writing to pay all costs and expenses of the litigation?

A: No. The Committee found a power-of-attorney clause where the lawyer assumes all costs and expenses to be barratry and a violation of Canons 24 and 25 (8-1).

Q: What made the cost-assumption clause improper?

A: The Committee treated the lawyer's agreement to bear all investigation and litigation costs as stirring up litigation, contrary to the Barratry Statute and the solicitation Canons.

Background and rules framework

The opinion interprets former Texas Canons 24 (solicitation) and 25 (stirring up litigation), together with the Barratry Statute (Penal Code Article 430) and ABA Canon 42, applied to a power-of-attorney clause shifting all litigation costs to the lawyer. The modern analogs are ABA Model Rule 1.8(e) (advancing litigation costs) and Model Rule 7.3 (solicitation of clients).

Citations and references

Rules of Professional Conduct:

• MR 1.8(e) (advancing litigation costs), as the modern analog
• MR 7.3 (solicitation of clients), as the modern analog
• Texas Canons 24 (solicitation), 25 (stirring up litigation)
• ABA Canon 42

Statutes:

• Barratry Statute, Article 430 of the Penal Code (as cited in the opinion)

See also

• TX Ethics Op. 106: Advancing Living Expenses to a Client
• TX Ethics Op. 95: Bar Association 'Call Your Lawyer' Ad
• TX Ethics Op. 58: Soliciting a City Tax-Collection Job

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-53/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_53.pdf

Original opinion text

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

QUESTION PRESENTED

Is it a violation of law or any Canon of Ethics for a Texas lawyer to include in a power of attorney executed in his favor the following provision: "It is further understood and agreed that our said attorney assumes full responsibility and liability for all costs and expenses incident to any investigation and litigation that may be necessary?"

18 Baylor L. Rev. 219 (1966)

SOLICITATION - STIRRING UP LITIGATION - POWER OF ATTORNEY
An attorney may not include in a power of attorney executed in his favor a provision by which the attorney assumes full responsibility and liability for all costs and expenses incident to any investigation and litigation that may be necessary.

Canons 24, 25. A.B.A. Canon 42.

The committee is of the opinion that the inclusion of the quoted clause in a power of attorney violates the Barratry Statute, Article 430 of the Penal Code and is in violation of Canons 24 and 25 of the Texas Canons of Ethics, as well as Canon 42 of the American Bar Association. (8-1)

Tex. Comm. On Professional Ethics, Op. 53 (1952)