The 2024 Disciplinary Rules Referendum: Fulfilling Our Duty of Self-Governance
Ethics, Legal MalpracticeFrom April 1 to April 30, 2024, Texas lawyers can vote on 12 ballot items presented by the legislatively-created Committee on Disciplinary Rules & Referenda. Texas lawyers are very fortunate to self-govern, and one of the ways that they can continue to ensure their freedom to do so is to participate in that self-governance by voting on these Proposals. TLIE does not take a position on the Proposals, but it encourages its members to vote and to otherwise be engaged. This article summarizes each Proposal and provides additional resources for more information.
BACKGROUND
In 2017, the Texas Legislature enacted legislation, signed by the Governor, creating the Committee on Disciplinary Rules & Referenda (“Committee”) and tasked it to review and update the Texas Disciplinary Rules of Professional Conduct (“TDRPC”) and the Texas Rules of Disciplinary Procedure (“TRDP”). The Committee is a partnership of sorts between the Texas Supreme Court and the State Bar, where the Court nominates 5 members, the Bar nominates 4, and each must nominate a non-lawyer as part of their total nominees. The Committee first proposed 8 ballot items in 2021, which were approved by Texas lawyers that year. The 12 Proposals coming before Texas lawyers in April are the Committee’s second tranche of proposed updates and additions. The Committee meets monthly, receives and reviews rule proposals submitted by Texas lawyers and others, receives briefs and comments from varied sources, like law professors and lawyers, and reviews the ABA Model Rules and the rules in other states. By the time the ballot is proposed, each proposed change or addition has been extensively vetted. It’s also worth noting that each Texas lawyer has the opportunity to vote on each Proposal individually; it’s not an all-or-nothing ballot.
THE PROPOSALS
The Proposals update and add terms, address conflicts, provide clarity to a prosecutor’s ongoing duty regarding exculpatory evidence, update the duties of supervising lawyers, refresh the rules regarding jurisdiction and choice of law along with unauthorized practice of law, and guide lawyers acting as custodians on the termination of the custodianship. The article will consider each Proposal in ballot order and follow the ballot nomenclature where possible. The article uses “New” (with quotation marks) to indicate that the Proposal enumerates, substantially adds to, or rewrites an existing rule and New (without quotation marks) to indicate a new rule.
1. Terminology – New Rule 1.00
“New” Rule 1.00 takes the “Terminology” section following the Preamble and moves it into its own Rule, which aligns the TDRPC with the American Bar Association Model Rules of Professional Conduct and more traditional statutes and regulations which often include a “definitions” section at the beginning.
New Rule 1.00 includes the existing defined terms and adds a few new ones. Of the new terms below, all except 1.00(q) are taken almost verbatim from ABA Model Rule 1.0 “Terminology.” The new terms are:
- 1.00(f) “Confirmed in writing”-this addition relates to informed consent and allows it to be given orally if the lawyer “promptly” transmits a writing to the other person confirming the oral informed consent. The writing must be transmitted within a reasonable time if it cannot be given at the same time the oral consent is given.
- 1.00(j) “Informed consent”-for consent to be informed, it must be given after the lawyer has communicated adequate information and explanation about risks and alternatives, and, if disclosures are required under the TDRPC or other rules, consent cannot be informed until those disclosures are given.
- 1.00(q) “Represent,” “Represents,” or “Representation”-a representation occurs when a person becomes a lawyer’s client and ends when the lawyer’s representation of the client ends.
- 1.00(s) “Screened”-this definition aids several Conflicts rules discussed below. A lawyer is screened when a firm timely imposes reasonably adequate procedures to protect information.
- 1.00(v) “Writing” or “written”-this definition is updated to include modern communication tools like electronic communications, video recording, and even electronic sounds used, attached to, or accompanying a traditional writing when used with the intent to sign the writing.
2. Conflict of Interest – Doing Business with a Client – Rule 1.08
Rule 1.08 expands the rules against entering into a business transaction with a client but also clarifies when such a transaction is permissible. The Rule keeps the existing no “business transactions” with a client prohibition and adds that a lawyer shall not “knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client[.]” However, these transactions with a client are permitted when three boxes are checked:
The terms are reasonable, fair to the client, and fully disclosed and transmitted to the client in a writing in plain English;
The client is represented by an “independent lawyer” (e.g., not the lawyer’s law partner or associate) or the lawyer has advised the client in writing to get his own lawyer and has given the client enough time to do so; and
The client provides written informed consent both as to the terms and as to the lawyer’s role in the deal, including whether the lawyer is representing the client in the transaction.
3. Conflict of Interest – Former Client – Rule 1.09
Rule 1.09 is a verbatim adoption of ABA Model Rule 1.9 and most of the accompanying comments regarding duties owed by lawyers to former clients. The proposal clarifies that a lawyer shall not knowingly represent a person in the same or substantially related matter where the lawyer formerly represented the client. Similarly, if a lawyer, while with one firm, acquired no knowledge relating to a particular client of the firm and later joined another firm, neither the lawyer nor the firm is disqualified from representing another client in the same or substantially related matters. The lawyer cannot use information against the former client that she gained from her representation of the former client.
ABA Model Rule 1.9 (a) & (b) and existing TDRPC Rule 1.09 both recognize that a lawyer, with prior consent, may, under certain circumstances, represent a client in a matter adverse to a former client. However, it is unclear whether a former client can waive confidentiality under ABA Model Rule 1.9(c) and proposed Rule 1.09 (c). These subsections do not contain an express exception permitting a former client’s confidences to be used to his disadvantage with his informed consent. Several courts have held that a former client can never consent to his former lawyer’s use of confidences against his interests. If passed, Texas courts will have to address whether confidentiality can be waived under the revised rule.
The comments also give targeted assistance for lawyers moving between firms, and, when accompanied by Rule 1.10 (discussed next), the Proposals should make the parameters of subsequent representations following a firm switch clearer. When a lawyer creates a former client by switching firms, several considerations arise: (1) loyalty to the former client is paramount; (2) the rule shouldn’t be so broad as to keep other persons from their own choice of lawyers; and (3) lawyers should be able to make career choices without being unreasonably hampered by former representations, particularly as practices become more and more specialized. At the risk of oversimplifying, a lawyer is disqualified from a representation at his new firm when he obtained confidential information about the client at his former firm, but he is not disqualified when he did not obtain confidential information. If a lawyer had access to all of the former firm’s files or participated in the former firm’s discussions about all clients, the lawyer is presumed to have obtained confidential information; otherwise, no presumption arises.
4. Imputation of Conflict of Interest – “New” Rule 1.10
“New” Rule 1.10 is a massively upgraded and renumbered former Rule 1.09(c). The Proposal brings Texas into the majority of states that allow for lawyers to be screened so that lawyers can move more freely between firms without disqualifying themselves or the new firm. Proper screening requires the new firm to timely impose reasonably adequate procedures to protect the former client’s confidential information. The screening is generally accommodated by most practice management software (friendly reminder, lawyers are also required to maintain appropriate technological knowledge under Rule 1.01 & comment 8).
However, merely locking the lawyer out of a client’s file isn’t sufficient to comply with Rule 1.10. The firm must also promptly provide written notice to any potentially-affected former client “to enable the former client to ascertain compliance,” and the notice shall describe the screening procedures, a statement of the firm’s and lawyer’s compliance with the Rules, and the firm’s agreement to respond promptly to the former’s client’s inquiries or objections about the screening procedures. If these procedures are followed, the firm may represent an adverse client, but the lawyer cannot.
Rule 1.10 also applies when a lawyer leaves the firm. It allows the firm to represent a client adverse to the client served by the now-departed lawyer, but not when the matter is the same or substantially similar and any lawyer still at the firm has confidential information related to the matter. This may be a harder needle to thread unless each lawyer is regularly siloed off from the others, and the others do not have access to all client files.
5. Duties to Prospective Client – New Rule 1.18
This new Rule clearly sets out who is a prospective client and when the interaction with that prospect creates a potentially-disqualifying relationship. A “prospective client” is one who consults with the lawyer in good faith about the possibility of forming a lawyer-client relationship. A prospect attempting to disqualify a lawyer is not acting in good faith.
Rule 1.18 disqualifies a lawyer who learns information from a prospective client from using that information against the prospective client, or representing a different party who is adverse to that prospect, even if the prospective client doesn’t become an actual client. Once a lawyer in a firm receives this disqualifying information, all lawyers in the firm are disqualified, unless, (1) both the prospect and the adverse client have given written informed consent, or (2) the lawyer receiving the information did not receive more than was required to determine whether to represent the client and proper screening and written notice of screening occurs (see “New” Rule 1.10).
6. Special Duties of a Prosecutor – Rule 3.09
The Proposal for Rule 3.09 adds new subsections regarding a prosecutor’s responsibility to disclose exculpatory information following a conviction. The new subsections clarify that the prosecutor’s responsibility continues even after the prosecution is complete. The prosecutor’s duties arise if the prosecutor “knows of new and credible information creating a reasonable likelihood” that the convicted defendant did not commit an offense for which he was convicted. The subsections dictate to whom the disclosure must be made based on where the prosecutor works and whether the defendant has counsel. However, if a prosecutor reaches a conclusion in good faith that the information doesn’t meet the requirements for disclosure (e.g., it isn’t credible), the prosecutor’s non-disclosure doesn’t violate Rule 3.09 even if a later determination is made that the prosecutor should have made the disclosure.
7. Dealing with Unrepresented Persons – Rule 4.03
The Committee proposes clarifying language for existing Rule 4.03 to reiterate that a lawyer should not give legal advice to an unrepresented person the lawyer knows or should know has adverse interests to, or has a reasonable possibility of being adverse, to a client. The goal of the Proposal appears two-fold: (1) remind lawyers to not give legal advice to adverse persons and to simply advise them to get a lawyer, and (2) guide lawyers about when it is okay to explain a legal document to, or negotiate with, an unrepresented party. A proposed new comment reminds that no legal advice should be given to an adverse, unrepresented person, but the lawyer may, for example, negotiate with, create documents for signature by, or explain the lawyer’s view about terms or the underlying legal obligations, so long as the lawyer has already explained that he does not represent the person and that his client is adverse.
8. Responsibility of a Partner or Supervisory Lawyer – “New” Rule 5.01
Proposed Rule 5.01 is a rewrite of old Rule 5.01 and should be a welcome breath of fresh air for partners who do not have managerial authority or supervisory duties. The new Rule requires lawyers with managerial authority to ensure that the firm has practices in place that give reasonable assurance the rules are being followed by all lawyers in the firm. Managerial lawyers must establish policies and procedures to ensure compliance, including detecting and resolving conflicts, identifying deadlines and dates, accounting for client property and funds, and ensuring that inexperienced lawyers are properly supervised. A supervisory lawyer’s duties are similar because they are required to make reasonable efforts to ensure that the lawyers they are supervising are complying with the rules.
Managerial and supervising lawyers become responsible for another lawyer’s rules violation when they order it, or when they ratify it. They will also be responsible if they knew of the violation when the consequences could be avoided or mitigated but failed to take reasonable remedial action.
9. Unauthorized Practice of Law – Rule 5.05
The Committee proposes additions to Rule 5.05 that account for the prevalence of remote practice. The Proposal reiterates that only lawyers admitted to the Texas bar can hold out to the public that they are admitted to the Texas bar. It also speaks to non-Texas-licensed lawyers (i.e. those licensed in, and not disbarred in, other states) who wish to practice in or from Texas. A non-Texas-licensed lawyer may give legal advice to his employer. He may also live temporarily or permanently in Texas and work in other States so long as he doesn’t hold himself out as a Texas-licensed lawyer or as having an office in Texas. Importantly, if the lawyer knows or should know that he’s being mistaken by a client as a Texas-licensed lawyer, he must promptly disabuse the client of that notion.
10. Jurisdiction – “New” Rule 8.05
The proposed rewrite of Rule 8.05 follows ABA Model Rule 8.5(a) and clarifies that Texas-licensed lawyers are subject to the Rules regardless of where the lawyer’s conduct occurs. It also covers non-Texas-licensed lawyers who provide or offer to provide legal services in Texas and notes that it’s possible for a lawyer to be subject to discipline under two states’ authority.
11. Choice of Law – New Rule 8.06
Proposed Rule 8.06 is new and is designed to eliminate the potential double whammy of a lawyer being subject to discipline under two sets of disciplinary rules.
Subsection (a) follows ABA Model Rule 8.5(b). This subsection declares the applicable rules based on whether the conduct occurs in connection with a matter pending in a tribunal. If it does, then the rules of the jurisdiction where the tribunal sits will apply, unless the tribunal’s own rules state otherwise. If it’s not arising from a matter pending before a tribunal, then the rules of the jurisdiction where the conduct occurred apply, unless the predominant effect of the conduct is in a different jurisdiction, in which case that jurisdiction’s rules will apply.
Subsection (b) addresses specific circumstances arising from advertising and written communications. A Texas-licensed lawyer whose advertisement is broadcast in another state is subject to the Texas rules when the intent is for the ad to be received by Texas residents and to lead to work performed in Texas–even if the advertisement complies with the other state’s rules. A Texas-licensed lawyer is also subject to Texas’ rules for written and mailed communications that violate Texas’ rules when the addressee is in Texas or the communication is to solicit work to be done in Texas–even when mailed from another jurisdiction and even if compliant with that jurisdiction’s rules.
12. Termination of Custodianship – New TRDP § 13.05
This new rule of procedure establishes the process to terminate a custodianship. Texas lawyers can appoint a custodian to serve in the event of incapacitation or death. New section 13.05 explains that the custodianship ends on one or more of several events: the transfer of all active files and other client property per TDRPC (e.g., TDRPC 1.15(d)) either to lawyers assuming responsibility for them or to the client or client’s authorized representative; by entry of an order terminating the custodianship by a court with jurisdiction; or the return of the appointing lawyer. Notably, the custodian or the appointing lawyer may seek a determination regarding the appointing lawyer’s return by petitioning a court, and the custodian may also seek a court order concerning the proper distribution of files and funds, including IOLTA funds.
ADDITIONAL RESOURCES
The State Bar of Texas Podcast hosted a roundtable with several members of the Committee. Their discussion informed this article and provides an even deeper dive into the Proposals.
The State Bar also posted redlined and clean versions of the rules along with a summary of each proposal. The Bar’s overview page provides additional helpful information and links to important pages, including an introductory video and a copy of the ballot.
FINAL REMARKS
Writing about the privilege of self-governance, State Bar Executive Director and former State Bar President, Trey Apfel, stated, “New developments in methods of communication, technology, and laws governing society in general require we review and refine the rules governing our profession where and when appropriate . . . It is self-governance at its best when standards of conduct for the profession are well developed and informed by input from Texas lawyers and the public.” TLIE agrees with Executive Director Apfel and encourages Texas lawyers to review the Proposals and cast their votes between April 1 and April 30, 2024.
