If a lawyer is appointed by a court as a receiver, can the lawyer pay part of the receiver fee to the lawyers for the parties?
Texas Ethics Opinion 566: A Lawyer/Receiver Paying Part of the Fee to the Parties' Lawyers
Short answer: Per the Committee, a lawyer appointed by a court as a receiver may not pay any part of the earned receiver fee to the lawyers representing the parties.
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 lawyer is appointed receiver by court order in a family law case to sell land the parties own. After selling the property, the lawyer/receiver wants to pay a portion of his receiver fee to the lawyers for the parties. The court order appointing the receiver says nothing about such payments, and a receiver's fee is typically paid from sale proceeds, so the parties effectively pay it.
The Committee concludes the payment is not permitted. Receivers are often appointed on the recommendation of the parties' lawyers, and the prospect of sharing in the receiver's fee could impair a lawyer's impartial judgment in assessing potential receivers and create bias toward one who shares fees. A lawyer who accepted a share of the receiver fee would violate Rule 1.08(e), which bars accepting compensation for representing a client from someone other than the client unless the client consents, there is no interference with the lawyer's independent judgment, and confidential information is protected. Because the lawyer/receiver's payment would assist or induce the parties' lawyers in violating Rule 1.08(e), the receiver would violate Rule 8.04(a)(1).
The Committee adds a second, independent ground: if the lawyer/receiver had performed legal services in connection with the appointment, paying a portion of the receiver fee to the parties' lawyers would not satisfy Rule 1.04(f)'s requirements for dividing a fee among lawyers, so it would be impermissible on that basis as well.
In practice
Under this opinion, and under the Texas rules as they stood at the time, a lawyer serving as a court-appointed receiver may not split the receiver fee with the lawyers for the parties. The Committee frames the problem on both sides of the payment: the receiving lawyers would breach Rule 1.08(e) (compensation from a third party), and the paying lawyer/receiver would breach Rule 8.04(a)(1) by inducing that breach. The opinion notes that if the receiver's role involved legal services, a payment would separately fail Rule 1.04(f)'s fee-division requirements.
Common questions
Q: I am a lawyer appointed as a receiver; can I pay the parties' attorneys a cut of my receiver fee?
A: No. The Committee says a lawyer/receiver may not pay any part of the earned receiver fee to the lawyers representing the parties.
Q: Why is sharing the receiver fee a problem?
A: Because receivers are often appointed on the parties' lawyers' recommendation, and the Committee says the expectation of a share could impair those lawyers' impartial judgment about who should serve and bias them toward a receiver who shares fees. Accepting a share would violate Rule 1.08(e), and paying it would violate Rule 8.04(a)(1).
Q: Does it matter whether the receiver also did legal work?
A: Yes, as a second ground. The Committee says if the lawyer/receiver performed legal services in connection with the appointment, a payment to the parties' lawyers would also fail Rule 1.04(f)'s requirements for dividing a fee among lawyers.
Background and rules framework
The opinion interprets Texas Disciplinary Rule 1.08(e) (a lawyer shall not accept compensation for representing a client from someone other than the client absent client consent, no interference with independent judgment, and protection of confidential information), corresponding to ABA Model Rule 1.8(f); Rule 8.04(a)(1) (a lawyer shall not violate the rules or knowingly assist or induce another to do so), corresponding to ABA Model Rule 8.4(a); and Rule 1.04(f) (division of a fee between lawyers not in the same firm), corresponding to ABA Model Rule 1.5(e). The opinion notes a lawyer/receiver's duties are ordinarily governed by sections 64.001 et seq. of the Texas Civil Practice and Remedies Code and the appointing court order.
Citations and references
Rules of Professional Conduct:
- MR 8.4(a) (assisting or inducing a violation of the rules)
- MR 1.8(f) (compensation from one other than the client)
- MR 1.5(e) (division of fees between lawyers)
- Texas Disciplinary Rule 8.04(a)(1)
- Texas Disciplinary Rule 1.08(e)
- Texas Disciplinary Rule 1.04(f)
Statutes:
- Tex. Civ. Prac. & Rem. Code §§ 64.001 et seq. (receiverships)
See also
- TX Ethics Op. 568: Sharing a Contingent Fee With a Suspended or Disbarred Lawyer
- TX Ethics Op. 592: Sharing Legal Fees With a Suspended Lawyer
Source
- Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-566/
- Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_566.pdf
Original opinion text
Reproduced from the official source for research purposes. The linked source is authoritative.
QUESTION PRESENTED
May a lawyer, acting as a receiver, ethically pay a portion of his fee to the parties’ lawyers?
STATEMENT OF FACTS
A lawyer is appointed receiver by court order in a family law case to sell land owned by the parties in the case. The lawyer/receiver sells the property and wishes to pay a portion of his fee to the parties’ lawyers. The court order appointing the receiver does not address such payments.
DISCUSSION
The duties of a lawyer/receiver will ordinarily be governed by sections 64.001 et seq. of the Texas Civil Practice and Remedies Code and the particular court order specifying the lawyer/receiver’s role and assignment. The court order commonly provides for the manner of payment of a receiver’s fee. Typically a receiver’s fee is paid from proceeds of a sale and reduces the net amount received by the parties. In effect, the parties pay the receiver’s fee. In this fact situation, the lawyer/receiver desires to pay, after the receivership is concluded, a portion of his fee to the lawyers representing the parties.
Rule 8.04(a)(1) provides:
“(a) A lawyer shall not:(1) violate these rules, knowingly assist or induce another to do so, or do so through the acts of another, whether or not such violation occurred in the course of a client-lawyer relationship[.]”
Receivers are often appointed by the court on the recommendation of the parties’ lawyers. The Committee believes that the sharing of the receiver’s fee may be perceived as an inducement to the parties’ lawyers to recommend the appointment of that receiver. The expectation of receipt of a portion of the receiver’s fee could impair the impartial exercise of a lawyer’s judgment in assessing the qualifications of potential receivers and result in bias toward a receiver who shares fees. By accepting a portion of the receiver’s fee, the parties’ lawyers would violate Rule 1.08(e), which provides: “(e) A lawyer shall not accept compensation for representing a client from other than the client unless:
(1) the client consents;
(2) there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship; and
(3) information relating to representation of a client is protected as required by Rule 1.05.”
Consequently, the lawyer/receiver’s payment to the parties’ lawyers of a portion of his fee as receiver would constitute assisting or inducing another lawyer to violate Rule 1.08(e) and thus would involve a violation by the lawyer/receiver of Rule 8.04(a)(1).
Moreover, if the lawyer/receiver performed legal services in connection with such appointment as receiver, payment of a portion of the receiver’s fee to the parties’ lawyers would not be permitted because the payment would not be made in accordance with the requirements of Rule 1.04(f) for division of a fee between or among lawyers.
CONCLUSION
A lawyer who is appointed by a court to serve as a receiver may not pay a part of the receiver fees earned to lawyers representing the parties.
Tex. Comm. On Professional Ethics, Op. 566 (2006)