Can a Texas firm keep a lawyer's name in the firm name when that lawyer takes an out-of-state job that bars private practice, and can the lawyer stay a member?
Texas Ethics Opinion 634: Keeping a Lawyer's Name in the Firm Name After Leaving Practice
Short answer: Per the Committee, a firm may not keep in its name the name of a lawyer who has moved out of state to a job that bars her from private practice, because the public would reasonably believe she can practice with the firm; she may, however, remain a member and keep a financial interest, so long as the firm does not mislead the public about her lack of participation.
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 considers a two-lawyer firm, "A B, PLLC," named for Lawyer A and Lawyer B. Lawyer A moves out of state to take a job as an assistant district attorney that prohibits the private practice of law, keeps her Texas license, and intends to return and resume practicing with the firm at an undetermined future time.
Rule 7.01(a) bars a misleading firm name, and Rule 7.01(d) bars holding lawyers out as partners or members unless they truly are; Rule 7.01(f) bars a firm name that violates Rule 7.02(a)'s prohibition on false or misleading communications. The Committee draws on its Opinion 605, where a lawyer who left a firm to open his own practice had not "retired" and so did not fit the Rule 7.01(a) exception for deceased or retired members, making continued use of his name a violation of 7.01(a) and (d). Here, although Lawyer A neither retired nor opened her own Texas practice, she ceased to be in a position to practice with the firm once she took a position barring private practice. Keeping her name in the firm name would lead the public to believe she can practice with the firm, so it would be misleading and violate Rule 7.01(a). The Committee notes the result would differ for a temporary sabbatical that still allowed her to provide legal services with the firm from time to time.
On membership, Rule 7.01(d) bars holding Lawyer A out as a member unless she is one, but chapter 301 of the Texas Business Organizations Code lets a Texas-licensed lawyer be a member of a professional limited liability company or professional corporation. So, as long as she keeps her Texas license, she may remain a member, and the firm should avoid misleading communications about her participation. Her continued financial interest violates no rule. If she ever ceases to be a member, any division of fees between the lawyers afterward would have to comply with Rule 1.04's limits on dividing fees between lawyers not in the same firm.
In practice
Under this opinion, and under the Texas rules as they stood at the time, a firm may not keep in its name the name of a lawyer who has taken an out-of-state position barring private practice, because the opinion holds that would mislead the public into thinking she can practice with the firm, in violation of Rule 7.01(a). The opinion holds that, so long as she keeps her Texas law license, she may remain a member of the firm (a professional limited liability company or professional corporation) under the Business Organizations Code and may keep a financial interest, provided the firm avoids misleading communications about her lack of participation. It notes a different result for a sabbatical that still permits her to provide legal services with the firm, and observes that any post-departure fee division would have to satisfy Rule 1.04.
Common questions
Q: Our partner took an out-of-state job that bars private practice. Can we keep her name in the firm name?
A: Per Opinion 634, no. The Committee concludes that keeping her name would lead the public to reasonably believe she can practice with the firm, making the name misleading in violation of Rule 7.01(a).
Q: Can she still remain a member of the firm and keep her ownership interest?
A: Yes. The opinion holds that, as long as she maintains her Texas law license, the Business Organizations Code permits her to remain a member of the PLLC or PC, and her continued financial interest violates no rule; the firm must avoid misleading communications about her participation.
Q: Would the answer change if she were just taking a sabbatical?
A: The Committee says the result would differ if she took a temporary sabbatical for reasons that did not prevent her from providing legal services as a member of the firm from time to time.
Q: What happens to fees if she later leaves the firm entirely?
A: The opinion notes that any division of fees between her and the remaining lawyer after she leaves would have to comply with Rule 1.04's limits on dividing fees between lawyers who are not in the same firm.
Background and rules framework
The opinion interprets Texas Disciplinary Rule 7.01(a) and 7.01(d) (firm names and holding out; ABA Model Rule 7.5), Rule 7.01(f) and Rule 7.02(a) (false or misleading communications about a lawyer or firm; ABA Model Rule 7.1), and Rule 1.04 (division of fees; ABA Model Rule 1.5). It also relies on chapter 301 of the Texas Business Organizations Code on who may be a member of a professional entity.
Citations and references
Rules of Professional Conduct:
- MR 7.5 (firm names and letterheads); MR 7.1 (communications about a lawyer's services); MR 1.5 (fees and fee division)
- Texas Disciplinary Rules 7.01(a), 7.01(d), 7.01(f), 7.02(a), 1.04
Statutes:
- Tex. Bus. Orgs. Code chapter 301 (professional entities; who may be a member)
Other opinions cited:
- Texas Professional Ethics Committee Opinion 605 (March 2011): a lawyer who left a firm to open his own practice was not "retired," so keeping his name in the firm name violated Rule 7.01(a) and (d)
See also
- TX Ethics Op. 640: Assumed Firm Name Including an Employed Lawyer
- TX Ethics Op. 639: Retired Judge on Firm Letterhead
- TX Ethics Op. 638: Combined Firm Name for an Out-of-State Joint Venture
Source
- Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-634/
- Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_634.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, is it permissible for a law firm to continue to include in the firm name the name of a lawyer who temporarily moves out of Texas and accepts a job that prohibits the lawyer from engaging in the private practice of law? Is it permissible for that lawyer to continue as a member of the Texas law firm and to maintain a financial interest in the Texas law firm?
STATEMENT OF FACTS
Lawyer A and Lawyer B establish a law firm (the "Law Firm"), formed as a professional limited liability company, with both names in the firm name, "A B, PLLC." Lawyer A moves out of state and accepts a job as an assistant district attorney in another state while Lawyer A's spouse works for a limited period in the other state. While serving as an assistant district attorney, Lawyer A is prohibited from engaging in the private practice of law. Lawyer A intends to return to Texas and resume practicing with the Law Firm at some undetermined time in the future. Lawyer A will maintain a law license in Texas at all times.
DISCUSSION
Rule 7.01 of the Texas Disciplinary Rules of Professional Conduct provides in pertinent part:
"(a) A lawyer in private practice shall not practice under a trade name, a name that is misleading as to the identity of the lawyer or lawyers practicing under such name, or a firm name containing names other than those of one or more of the lawyers in the firm, except that . . . if otherwise lawful a firm may use as, or continue to include in, its name the name or names of one or more deceased or retired members of the firm or of a predecessor firm in a continuing line of succession. . . . (d) A lawyer shall not hold himself or herself out as being a partner, shareholder, or associate with one or more other lawyers unless they are in fact partners, shareholders, or associates. . . . (f) A lawyer shall not use a firm name, letterhead, or other professional designation that violates Rule 7.02(a)."
Rule 7.02(a) prohibits a lawyer from making or sponsoring "a false or misleading communication about the qualifications or the services of any lawyer or firm."
In Professional Ethics Committee Opinion 605 (March 2011), a lawyer left a firm to open his own practice. Because the lawyer who left the firm did not "retire" from the practice of law, he was not a "retired" member of the firm for purposes of the exception stated in Rule 7.01(a) for "retired members of the firm." Continuing to use that lawyer's name in the firm name was found to be in violation of paragraphs (a) and (d) of Rule 7.01.
In this situation, Lawyer A did not retire from practicing law and she did not leave the Law Firm to open her own practice in Texas. She did, however, cease to be in a position to practice law with the Law Firm when she moved to a different state and accepted a position as an assistant district attorney that prohibited her from practicing law outside her employment. The fact that the new position is expected to have limited duration and that she intends to return to Texas does not change the result. Continuing to use Lawyer A's name in the firm name would lead the public reasonably to believe that Lawyer A is in a position that would allow her to practice law with the Law Firm. Because Lawyer A's new employment arrangement prohibits Lawyer A from practicing law with any private law firm, the continued use of Lawyer A's name in the Law Firm's name would be misleading and would violate Rule 7.01(a). The result would be different if Lawyer A were to take a temporary sabbatical for other reasons that did not prevent her from providing legal services as a member of the Law Firm from time to time during the sabbatical.
Rule 7.01(d) prohibits Lawyer A from holding herself out as being a member of the Law Firm unless she is in fact a member. The provisions of chapter 301 of the Texas Business Organizations Code applicable to Texas law firms formed as professional limited liability companies and professional corporations permit a lawyer to be a member of a law firm that is a professional limited liability company or a professional corporation so long as she is a licensed lawyer in Texas. Assuming Lawyer A continues to maintain her Texas law license, she is permitted to continue as a member of the Law Firm. If Lawyer A retains a position as a member of the Law Firm, the firm should avoid any misleading communications regarding Lawyer A's participation in the firm's law practice during the period in which Lawyer A's employment arrangement in the other state prohibits her from practicing law with the firm.
Lawyer A's continued financial interest in the Law Firm does not violate any provision of the Texas Disciplinary Rules of Professional Conduct. If for any reason Lawyer A ceases to be a member of the Law Firm, any division of fees between Lawyer A and Lawyer B after Lawyer A leaves the firm would have to comply with the provisions of Rule 1.04 that set limits on the division of legal fees between lawyers who are not in the same firm.
CONCLUSION
Under the Texas Disciplinary Rules of Professional Conduct, it is not permissible for a law firm to continue to include in the firm name the name of a lawyer who temporarily moves out of Texas and accepts a job that prohibits the lawyer from engaging in the private practice of law. Nothing in the Texas Disciplinary Rules of Professional Conduct prohibits the lawyer from remaining as a member of the law firm or maintaining a financial interest in the firm so long as no action is taken to mislead the public about the lawyer's lack of participation in the firm's law practice during the time the lawyer's employment outside of Texas prohibits the lawyer from practicing law with the firm.
Tex. Comm. On Professional Ethics, Op. 634 (2013)