Can a Texas law firm make a member agree that, if he leaves, he won't solicit the firm's clients and will pay the firm a percentage of fees he later earns from them?
Texas Ethics Opinion 590: Restrictions on a Departing Lawyer's Practice and Fees
Short answer: Per the Committee, a firm may not require a member to agree that, on leaving, he will not solicit the firm's clients and will pay the firm a percentage of fees later collected from those clients; the agreement restricts the right to practice under Rule 5.06(a), and the fee term independently violates Rule 1.04(f).
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
The opinion addresses a firm that offers membership conditioned on a lawyer signing an agreement with two terms: if the lawyer leaves, he will not solicit the firm's clients, and he will pay the firm a percentage of all fees he collects after leaving for services to clients who had been the firm's clients.
The Committee concludes both halves of the agreement are prohibited. The no-solicitation term restricts the lawyer's right to practice after the relationship ends, which Rule 5.06(a) forbids. The Committee relies on its prior Opinions 422 (1984) and 459 (1988), which read the predecessor of Rule 5.06(a) the same way, and on Opinion 505 (1994), which treated soliciting clients as an appropriate part of practicing law.
The fee-payback term draws a second, independent violation. Rule 1.04(f) allows a division of fees between lawyers not in the same firm only if the division is proportional to each lawyer's services or the lawyers assume joint responsibility, and only if the client consents in writing. Because the agreement requires the departing lawyer to pay the firm a set percentage with no firm services, no joint responsibility, and no client consent, the Committee finds it clearly violates Rule 1.04(f).
In practice
Under this opinion, and under the Texas rules as they stood at the time, a firm cannot condition membership on a covenant that bars a departing lawyer from soliciting firm clients or that requires him to remit part of fees later earned from those clients. The Committee treats client solicitation, to the extent otherwise permitted, as part of the practice of law, so a contract limiting it runs into Rule 5.06(a). It separately reads the fee-remittance term as a fee division that cannot satisfy Rule 1.04(f).
Common questions
Q: Can my firm make associates sign a non-solicitation clause covering firm clients if they leave?
A: Not in this form. Per Opinion 590, an agreement restricting a departed lawyer from soliciting the firm's clients restricts the right to practice and violates Rule 5.06(a).
Q: Can the agreement make a departing lawyer pay the firm a percentage of fees he later earns from former firm clients?
A: No. The Committee holds that term is a fee division that fails Rule 1.04(f), because the firm performs no services, assumes no joint responsibility, and the client does not consent in writing.
Q: Does Rule 5.06(a) allow any post-departure restriction?
A: The Committee notes Rule 5.06(a)'s only stated exception is an agreement concerning benefits upon retirement; the covenant here is not a retirement-benefit arrangement.
Background and rules framework
The opinion interprets Texas Disciplinary Rule 5.06(a) (a lawyer shall not make a partnership or employment agreement restricting the right to practice after the relationship ends, except a retirement-benefits agreement), corresponding to ABA Model Rule 5.6; and Rule 1.04(f) (the conditions for dividing a fee between lawyers not in the same firm), corresponding to ABA Model Rule 1.5(e).
Citations and references
Rules of Professional Conduct:
- MR 5.6 (restrictions on a lawyer's right to practice)
- MR 1.5 (fees, including division of fees among lawyers at MR 1.5(e))
- Texas Disciplinary Rule 5.06(a)
- Texas Disciplinary Rule 1.04(f)
Other opinions cited:
- Texas Ethics Opinion 422 (1984): agreement barring a departed lawyer from soliciting firm clients violates the predecessor of Rule 5.06(a)
- Texas Ethics Opinion 459 (1988): agreement requiring a departed lawyer to pay the firm part of later fees violates the predecessor of Rule 5.06(a)
- Texas Ethics Opinion 505 (1994): Rule 5.06(b) bars settlement agreements limiting future solicitation of clients
See also
- TX Ethics Op. 605: Use of a Departed Lawyer's Name in the Firm Name
- TX Ethics Op. 592: Sharing Legal Fees With a Suspended Lawyer
Source
- Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-590/
- Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_590.pdf
Original opinion text
Reproduced from the official source for research purposes. The linked source is authoritative.
QUESTION PRESENTED
Under the Texas Disciplinary Rules of Professional Conduct, may a law firm seek to enter into an agreement with a member of the firm that would require, if the lawyer later left the firm, that the lawyer would not solicit the firm's clients and would pay to the firm a percentage of any fees collected by the lawyer from the firm's clients for work after the lawyer left the firm?
STATEMENT OF FACTS
A law firm offers membership in the firm to a lawyer conditioned upon the lawyer's signing an agreement providing that: (1) if the lawyer leaves the firm, the lawyer will not solicit the firm's clients to become the lawyer's clients; and (2) after the termination of the lawyer's membership in the firm, the lawyer will pay to the firm a percentage of all fees collected by the lawyer for services after the lawyer leaves the firm to clients that had been clients of the firm.
DISCUSSION
Rule 5.06(a) of the Texas Disciplinary Rules of Professional Conduct provides:
“A lawyer shall not participate in offering or making:
(a) a partnership or employment agreement that restricts the rights of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement . . . .”
Professional Ethics Committee Opinion 422 (November 1984) and Opinion 459 (October 1988), interpreting the disciplinary rules applicable to Texas lawyers before 1990, concluded that agreements very much like the agreement considered in this opinion violated the explicit prohibition of what is now Rule 5.06(a) against agreements that restrict an attorney's right to practice law. Opinion 422 specifically addressed an agreement prohibiting a lawyer, after leaving a firm, from soliciting clients of the firm for a period of time and held that such a prohibition was in violation of the predecessor of Rule 5.06(a). The conclusion that solicitation of clients, to the extent permitted by applicable disciplinary rules and other law, is an appropriate part of the practice of law was affirmed in Opinion 505 (August 1994) (prohibition of Rule 5.06(b) against agreements restricting a lawyer’s right to practice law as part of the settlement of a suit or controversy applies to agreements limiting future solicitation of clients). With respect to agreements requiring a lawyer to pay to an employing law firm a portion of fees earned by a lawyer after leaving the firm, Opinion 459 (October 1988) specifically held that such an agreement violated the predecessor of Rule 5.06(a) as a prohibited agreement restricting the right of a lawyer to practice law.
Thus, under the plain language of Rule 5.06(a) and under opinions interpreting the prior version of this Rule, the proposed agreement limiting solicitation of clients and requiring a sharing of fees with the former law firm is prohibited.
Furthermore, an agreement requiring a lawyer to pay to a law firm a percentage of fees received by the lawyer from former firm clients for the lawyer’s legal services after the lawyer leaves the firm would also violate Rule 1.04(f), which provides in relevant part:
“(f) A division or arrangement for division of a fee between lawyers who are not in the same firm may be made only if:
(1) the division is:
(i) in proportion to the professional services performed by each lawyer; or
(ii) made between lawyers who assume joint responsibility for the representation; and
(2) the client consents in writing to the terms of the arrangement prior to the time of the association or referral proposed, including:
(i) the identity of all lawyers or law firms who will participate in the fee- sharing arrangement, and
(ii) whether fees will be divided based on the proportion of services performed or by lawyers agreeing to assume joint responsibility for the representation, and
(iii) the share of the fee that each lawyer or law firm will receive or, if the division is based on the proportion of services performed, the basis on which the division will be made . . . .”
Because the proposed agreement between the lawyer and the law firm provides for payment by the lawyer to the firm of a specified percentage of fees collected from former firm clients without any requirement that the law firm perform any services or assume joint responsibility and without any requirement for client consent, the proposed agreement would clearly be in violation of Rule 1.04(f).
CONCLUSION
Under the Texas Disciplinary Rules of Professional Conduct, a law firm may not seek to enter into an agreement with a member of the firm that would require, if the lawyer later left the firm, that the lawyer would not solicit the firm's clients and would pay to the firm a percentage of any fees collected by the lawyer from the firm's clients for work after the lawyer left the firm.
Tex. Comm. On Professional Ethics, Op. 590 (2009)