Did a lawyer violate the fee-division rule by splitting pay with a county auditor for bond-transcript work done before he practiced law?

Plain-English summary

The person in question was both an attorney and a certified public accountant. From 1936 to 1942, while he was an assistant county auditor (and before he was licensed as an attorney in 1942), he assisted the county auditor in preparing transcripts of proceedings for the issuing and refunding of bonds by a Commissioners Court, and divided the compensation for that work with the county auditor. That work was not part of the auditor's official duties, was done outside regular office hours for extra pay, and the practice continued from 1942 to 1949 while he was an executive at a manufacturing concern. None of it was performed while he held himself out as practicing law, and he discontinued it when he opened his law office in 1949. When he later applied to appear before the Treasury Department and other federal agencies, the question arose whether dividing those fees with the county auditor, a layman, had violated the Canons.

The Committee described the matter as very troublesome, with a wide variety of views. A majority concluded that the conduct did not constitute a violation of the Canons; some members felt there were extenuating circumstances, that Canon 31 should be liberally construed here, and that preparing the transcripts was not strictly legal work. The vote was 7-5.

Currency note

This opinion was issued in 1953, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. Subsequent rule amendments or later opinions may have changed the analysis; the sharing of legal fees with non-lawyers is now addressed by ABA Model Rule 5.4. Treat this page as historical context, not current guidance.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: Was splitting the compensation with the county auditor a fee-division violation?

A: No, by a 7-5 vote. The majority found no violation of the Canons on these facts.

Q: Why did the majority excuse the fee division here?

A: Some members viewed the transcript work as not strictly legal work and thought Canon 31 should be liberally construed given the extenuating circumstances, including that none of the work was done while the person held himself out as practicing law.

Background and rules framework

The opinion interprets former Texas Canon 31 (division of fees), applied to compensation split with a non-lawyer county auditor for transcript preparation that the majority did not regard as strictly legal work. The modern analog is ABA Model Rule 5.4 (professional independence; sharing fees with non-lawyers).

Citations and references

Rules of Professional Conduct:

• MR 5.4 (professional independence; sharing fees with non-lawyers), as the modern analog
• Texas Canon 31 (division of fees)

See also

• TX Ethics Op. 63: Sharing a Fee With a Non-Lawyer Firm
• TX Ethics Op. 128: Lawyer on an Accounting Firm's Staff
• TX Ethics Op. 293: Splitting Executor Commission

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-61/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_61.pdf

Original opinion text

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

QUESTION PRESENTED

The party in question is both an attorney and a certified public accountant. Prior to the receipt of his license as an attorney in 1942, he was employed as an assistant county auditor. From 1942 to 1949 he was employed as an executive with a manufacturing concern. In May, 1949, he resigned that position, and opened his own law office.

The Commissioners Court of one of the large counties in Texas, for a number of years, has been issuing and refunding bonds for various purposes. In connection with such issues, it is necessary to have a transcript of all the proceedings prepared and filed with the Attorney General for his approval, as well as with the market attorneys. The Commissioners Court under the law, was permitted to employ the county auditor or any other qualified person to prepare such transcripts, and had made a practice of employing the county auditor to do so and he was authorized to employ such assistants as he deemed necessary. The work of preparing these transcripts was not part of the official duties of the county auditor, was performed outside of regular office hours, and he was paid extra compensation for such work.

During the period from 1936 to 1942, while the attorney in question was assistant county auditor, he had assisted the county auditor in the preparation of such transcripts, and divided the compensation for such work with the county auditor. This practice continued during the period from 1942 to 1949, while the attorney in question was an executive of the manufacturing concern. None of this work was performed while the attorney was holding himself out as being engaged in the practice of law, and was discontinued when he opened his law office in 1949.

In 1950, the attorney in question applied for a license to the Committee on Practice to appear as an attorney before the Treasury Department and other federal agencies, and that committee has requested a ruling from the Committee on Interpretation of Canons of Ethics as to whether or not this division of fees between the county auditor, a layman, and the attorney in question constituted a violation of the Canons of Ethics.

This matter was submitted to our predecessor committee in a seven-page single-spaced letter. That committee called upon the person submitting the question for further data particularly as to the nature of the services which had been performed, and a second letter of some five and one-half pages, single spaced, was submitted.

18 Baylor L. Rev. 222 (1966)

DIVISION OF FEES
An attorney who assisted the county auditor in the preparation of transcripts of proceedings in connection with the issuing and refunding of bonds by a Commissioners Court, none of the work being performed while the attorney was holding himself out as engaged in the practice of law, and who divided the compensation for the work with the county auditor, has not violated the Canons.

Canon 31.

The matter thus presented has proved to be very troublesome, and a wide variety of views have been expressed, with varying reasons being assigned for such views.

A majority of the members of the committee have reached the conclusion that such conduct did not constitute a violation of the Canons. Some members felt that there were extenuating circumstances present, that Canon 31 should be liberally construed in this instance, and that the services of preparing these transcripts were not strictly legal work. (7-5)

Tex. Comm. On Professional Ethics, Op. 61 (1953)