Referendum 2011 - Timeline of development of proposed rules

The process leading up to the Referendum included numerous opportunities for those who had concerns with the proposed rules to make their voices known. This process has taken a long time, debate has been invited and ongoing throughout, and the debate and input by lawyers and the public has benefited the proposed rules that are under consideration. Every Texas lawyer is encouraged to read the proposed rules and decide for him or her self whether these rules reflect the way they practice in 2011. Then, vote responsibly.

A brief overview of the process:

  • The committee began developing these proposed rules in 2003. The Supreme Court appointed an independent task force to look at the rules and review the committee’s work. There were many differences that led to multiple reports and joint hearings before the Court.
  • In October 2009, the Supreme Court published the proposed rules for comment. It received more than 500 comments. The Court went through those comments and made numerous changes based on the input it received.
  • In April, the Court asked the State Bar Board of Directors to consider the revised rules and report back by Oct. 6, 2010. The Board sought written input both through the mail and electronically and held hearings throughout the state. A member of the Court attended each of the hearings that were conducted. The Board compiled and considered all the comments received and made changes to the proposed rules for recommendation to the Court.
  • Shortly before the October deadline, the Bar Board began to receive strong concerns about the proposed rules concerning conflicts. The Board voted to send all its proposals to the Court with the exception of the Conflicts rules which the Board asked for more time to consider and consult with those who had expressed strong concern with those proposals.
  • The Court allowed the Bar to continue the debate on the Comments portions of the proposed rules, to hold another public meeting with ethics counsel and others from throughout the state, to ensure those concerns were heard and addressed.
  • On November 5, the Board adopted the remainder of the proposed rules and sent them to the Court with a petition for referendum.
  • The December 2010 issue of the Texas Bar Journal included the proposed rules to be voted on. The January issue included commentary and asked numerous people whether they would advise support of the rules. An educational webcast explained the new rules and advised viewers of some of the concerns expressed by those who did not support specific rules.
     

Referendum 2011: By the Ballot - An Improvement to the Current Rules

Referendum 2011 started on Tuesday, January 18. Please take the time to understand the proposed disciplinary rules. This post explains by ballot item how the proposed rules improve the current rules. To read the proposed rules, please click here [PDF]. Again, please take the time to study the issues before you vote.

 

Ballot Question A.Terminology, Competent and Diligent Representation, Scope of Representation and Allocation of Authority, Communication, Fees, Confidentiality, Safekeeping Property, and Declining or Terminating Representation:

Do you favor the adoption of Proposed Rules 1.00–1.05 and 1.15–1.16 of the Texas Disciplinary Rules of Professional Conduct, as published in the December 2010 issue of the Texas Bar Journal?

  • Proposed Rule 1.00, which replaces the current Terminology section, adds terms that reflect the modern-day practice of law (for example, see "affiliated," "confirmed in writing," and "writing") and that should help Texas lawyers understand when they may be violating a Rule (for example, see "personally prohibited" and "represents").
  • These and other proposed Rules require a client's "informed consent" to otherwise prohibited activity.  Other proposed Rules, such as the conflicts-of-interest rules, require further that the "informed consent" be "confirmed in writing"; oral consent would no longer suffice. But a lawyer could generally comply with this new requirement by sending a written confirmation (such as an e-mail) of the client's oral informed consent.
  • Proposed Rules 1.03, 1.04, and 1.15 require lawyers to communicate more with their clients. These requirements respond to the large number of grievances that are filed based on lawyers' alleged failure to communicate sufficiently with clients.
  • Proposed Rule 1.05 simplifies the definition of "confidential information" by removing the burdensome distinction between "privileged information" and "unprivileged client information." The definition remains broad to protect clients, but the Rule would no longer subject a lawyer to discipline for using or disclosing information that is generally known or readily obtainable from sources generally available to the public. The revised Rule would also allow a lawyer to use or disclose confidential information when seeking legal advice about the lawyer's compliance with the Rules.
  • Proposed Rule 1.15 distinguishes between a lawyer's obligations to a client and to a third person when safekeeping property. The proposed Rule was revised substantially in response to concerns that were raised in the public comment period and now makes clear that the lawyer's duty to third persons generally arises only when the lawyer "knows" that property belongs to third persons. The proposed Rule also adds a defense for lawyers dealing with claims to the property that the lawyer reasonably believes are not valid, and it contains more explicit guidance about client trust accounts.
  • A list of defined terms in each proposed Rule appears before the comments to each Rule.


Ballot Question B. Conflicts of Interest: Multiple Clients in the Same Matter:

Do you favor the adoption of Proposed Rule 1.07 of the Texas Disciplinary Rules of Professional Conduct, as published in the December 2010 issue of the Texas Bar Journal?

  • Texas would follow the ABA’s lead in abolishing current Rule 1.07, which addresses a lawyer’s often misunderstood role as an “intermediary.” While proposed Rule 1.07 is unique, it gathers requirements that lawyers in Texas and elsewhere have to tease out of other rules. The proposed Rule mandates certain disclosures to clients before, or as soon as reasonably practicable after, a lawyer undertakes the representation of more than one client in the same matter. The proposed Rule lists three specific, reasonable things that lawyers must tell clients to comply with the disciplinary rules and, thus, provides far more certainty to lawyers than the current Rules governing multiple-client representations (Rules 1.06(c)(2) and 1.07) in what they must disclose to avoid discipline.


Ballot Question C. Other Conflicts of Interest:

Do you favor the adoption of Proposed Rules 1.06 and 1.08 - 1.12 of the Texas Disciplinary Rules of Professional Conduct, as published in the December 2010 issue of the Texas Bar Journal?

  • Proposed Rule 1.06 aligns Texas with every other state by defining conflicts of interest so that a conflict exists if a lawyer is adverse to a current client in any matter, not just in substantially related matters. The elimination of the substantial relationship test is not as significant as some lawyers seem to believe.  There are actually two prongs to the current Texas conflicts rule.  One is the substantial relationship test; the other prong provides that a lawyer shall not represent a person if the representation of that person “reasonably appears to be or become adversely limited by the lawyer’s or law firm’s responsibilities to another client or to a third person or by the lawyer’s or law firm’s own interests.” Additionally, because the federal courts in Texas adopt the 49-state rule, and because so many lawyers are also admitted elsewhere, many lawyers currently follow the 49-state rule, which provides that a lawyer or law firm may not be adverse to a current client on any matter without consent from their clients.
  • Proposed Rules 1.06 and 1.08–1.11 contain imputation provisions that do not subject a lawyer to discipline for engaging in a conflicted representation unless the lawyer either knew or reasonably should have known of the conflict. Proposed Rule 1.08(a) also contains new scienter standards that should protect against a lawyer being disciplined despite having acted reasonably. Finally, like other proposed Rules, proposed Rule 1.08 contains more specific guidance for lawyer-client communications.
  • Proposed Rules 1.09 and 1.12 have been reorganized and clarified. Proposed Rule 1.12 also provides enhanced guidance for lawyers facing reporting requirements imposed by Federal law.


Ballot Question D. Prohibited Sexual Relations, Diminished Capacity, and Prospective Clients:

Do you favor the adoption of new Proposed Rules 1.13, 1.14, and 1.17 of the Texas Disciplinary Rules of Professional Conduct, as published in the December 2010 issue of the Texas Bar Journal?

  • Proposed Rule 1.13 generally prohibits a lawyer from representing a client with whom the lawyer has sexual relations. But there are exceptions for a lawyer and client who are married to one another or were engaged in an ongoing, consensual sexual relationship that predates the lawyer-client relationship. The proposed Rule is a workable articulation of a requirement that has been discussed for over a quarter of a century by the Texas Bar.
  • Proposed Rule 1.14 addresses a lawyer's options and obligations when the lawyer is dealing with clients who have diminished capacity. It replaces current Rule 1.02(g), which lawyers have said exposes them to fiduciary duty claims for their roles in initiating allegedly unnecessary guardianships. The proposed Rule provides several options aside from guardianships and permits a lawyer to disclose a client's confidences when the lawyer is seeking to protect the client's interests.
  • Proposed Rule 1.17 concerns conflicts created by prospective clients. The proposed Rule defines a "prospective client" in a manner that excludes individuals who seek solely to conflict out lawyers who might otherwise represent the individuals' adversaries. The proposed Rule also contains a waiver provision that permits the lawyer to condition a conversation with a prospective client so that the conversation will not prohibit any future representations.


Ballot Question E. Advocate, Law Firms and Associations, Public Service, and Maintaining the Integrity of the Profession:

Do you favor the adoption of Proposed Rules 3.01-3.10, 5.01-5.07, 6.01-6.03, and 8.01-8.05 of the Texas Disciplinary Rules of Professional Conduct, as published in the December 2010 issue of the Texas Bar Journal?

  • Several changes to these proposed Rules are not substantive. But proposed Rule 3.03 has been revised substantively to clarify a lawyer's obligation of candor toward a tribunal. For example, with an exception for criminal matters, the Rule now permits a lawyer to refuse to offer or use evidence that the lawyer reasonably believes, but does not know, is false. Proposed Rule 3.07, which relates to trial publicity, has also been revised substantively. As revised, it gives a lawyer more leeway in responding to allegations of misconduct against the lawyer and in making statements to protect a client from the prejudice of publicity that neither the lawyer nor client initiated.
  • The substantive changes to the Section 5 Rules, which address supervised lawyers and nonlawyer assistants, reflect the changes in partnership designations and responsibilities since the current Rules were drafted. The changes place responsibility where it belongs (i.e., on lawyers with managerial or supervisory authority), not on lawyers based purely on their titles. The proposed Rules also make clear, however, that lawyers are not expected to take remedial action beyond the scope of their authority.
  • Proposed Rule 6.03 is new and addresses a lawyer's obligations when the lawyer participates in law-reform activities that may affect the interests of the lawyer's client. In light of this new Rule, references to law-reform activities in current Rule 6.02 have been deleted.


Ballot Question F. Counselor, Non-Client Relationship, Information About Legal Services, and Severability of Rules:

Do you favor the adoption of Proposed Rules 2.01–2.02, 4.01–4.04, 7.01–7.07, and 9.01 of the Texas Disciplinary Rules of Professional Conduct, as published in the December 2010 issue of the Texas Bar Journal?

  • Proposed Rule 2.01 is substantively the same as current Rule 2.01. Consistent with other proposed Rules, proposed Rule 2.02 now requires a client's "informed consent" rather than "consent[] after consultation." The changes to proposed Rules 4.01–4.04 are generally stylistic; however, the current Rule 4.04 requirement for a lawyer not to use means that have no substantial purpose other than to "embarrass" a third person has been modified for constitutional reasons. No substantive changes were made to Rules 7.01–7.07, which were modified in 2005 after going through a referendum in 2004. Proposed Rule 9.01 also contains no substantive changes.
     

This email was prepared with assistance from members of the Texas Disciplinary Rules of Professional Conduct Committee. For more information about Referendum 2011 and to vote, visit www.texasbar.com/rulesupdate.

 

Referendum 2011 started on Tuesday, January 18. Please take the time to understand the proposed disciplinary rules. This post explains by ballot item how the proposed rules improve the current rules.

Referendum 2011: Letter from Chief Justice Wallace B. Jefferson

Texas Supreme Court Chief Justice Wallace B. Jefferson has written the below open letter to Texas lawyers. The letter was published in the January issue of the Texas Bar Journal. For more information about Referendum 2011, please visit www.texasbar.com/rulesupdate.

Dear Texas Lawyers,

You have the privilege to help establish the ethical standards that govern our profession. I encourage you to exercise that privilege by analyzing the proposed amendments to the Texas Disciplinary Rules of Professional Conduct; making educated, independent decisions regarding the amendments; and voting on them in the referendum.   

The Court proposed these amendments after engaging in a collaborative exchange with members of the State Bar of Texas and the general public. In 2003, the Court appointed a task force to analyze extensive changes made to the ABA Model Rules of Professional Conduct in 2002, compare the changes with the current Texas rules and other states’ rules, and make recommendations for improvements to the Texas rules. Between 2003 and 2008, the Court oversaw the work of not only the task force but also the State Bar Committee on the Texas Disciplinary Rules of Professional Conduct, which also submitted recommendations. Between 2008 and 2009, the Court devoted multiple administrative conferences to considering the task force’s and committee’s recommendations. We studied their proposals in conjunction with comparable ABA language, existing Texas rules, and applicable law, among other things.

Because these amendments affect all of you and the clients you serve, the Court and State Bar leadership felt the revisions should be vetted by lawyers with diverse backgrounds and expertise. To that end, the Court task force and State Bar committee included, among others, lawyers from small, mid-sized, and large firms; in-house counsel; government lawyers; academics; and representatives of disciplinary authorities. To obtain additional perspectives, we also sought feedback from all Texas lawyers and members of the general public in a public-comment period between 2009 and 2010.

The Court listened. We made many changes in response to helpful suggestions we received from lawyers in multiple practice areas, members of the general public, and academics specializing in professional responsibility. As a result, the initial version of the proposed amendments (issued in October 2009) differs substantially from the current one (issued in November 2010). This impressive collaboration among the bench, the bar, and the public has generated amendments that enhance the profession’s role as the guardian of rights and liberties under law.

If you adopt these amendments, our rules will be more consistent overall with the ABA rules. Some of them may also serve as a model for other states and the ABA in crafting ethical standards for the legal profession.

I am proud of the process that resulted in the proposed amendments. I urge you to study them carefully and exercise your right to vote. I think you will conclude, as the Court has, that the proposed amendments will serve you and your clients well.

Sincerely,

Wallace B. Jefferson

Chief Justice, Supreme Court of Texas

 

Referendum 2011: Clarifying the Issues

Voting in Referendum 2011 starts next Tuesday, January 18, and continues through February 17. Some have suggested vote “No” on everything; some have suggested vote “Yes.” It is up to each Texas lawyer to vote responsibly by studying the proposed rules independently before casting a vote. This post is in response to many requests for information about statements circulated among members of the Bar. Below are six statements you may have heard or read and some clarifying information. Additional statements will be addressed soon. 

YOU MAY HAVE HEARD/READ: “Proposed Rule 1.07 requires lawyers to give clients what are in effect ‘Miranda warnings.’ And some of the Miranda warnings make no sense. For example, if co-clients disagree on an issue, the required warning says that they must resolve the issues themselves ‘without the lawyers advice,’ even if the clients want the lawyer to tell them what the controlling law is on the issue or provide other simple advice that they both request.”

CLARIFICATION: Aside from the fact that the disclosures in Proposed Rule 1.07 are intended to enlighten the listener, they have nothing in common with Miranda warnings. The disclosures in the proposed rule are intended to make clients aware of the implications of a lawyer representing multiple clients in the same matter. Under the proposed rule, the lawyer must tell clients that they “must be willing” to make independent decisions without the lawyer’s advice to resolve issues that arise among them. This is because the lawyer cannot advocate for one client against any other client in the matter. See the full text of proposed Rule 1.07(a)(2)(ii) and comment 8.



YOU MAY HAVE HEARD/READ: “Proposed Comment 8 to Rule 1.07 says lawyers must make several ‘determinations’ before agreeing to represent multiple clients in a case or matter.”

CLARIFICATION: Comment 8, like other comments to the proposed rules, does not require lawyers to take any action. Instead, the comment explains determinations a lawyer “should” make. As paragraph 7 in the Preamble states, the comments do not add obligations to the rules, and no disciplinary action may be taken solely for a lawyer’s failure to conform to comments.



YOU MAY HAVE HEARD/READ: “Comment 7 to Rule 1.09 misstates the long-standing definition of when two matters are ‘substantially-related’ as defined by Texas courts. This point is critical in determining conflicts-of-interest. The 20+ year Coker precedent, repeatedly reaffirmed by the Texas Supreme Court, defined ‘substantially related’ as whether the facts of two matters are so related that they create a genuine risk that the confidential information of a former client will be violated. Inexplicably Comment 7 declares that the test is whether the facts and issues are similar. The Comment attempts to change longstanding, substantive law declared by the Texas Supreme Court.”

CLARIFICATION: Comment 7 to proposed Rule 1.09 is consistent with precedent. In an opinion that postdates and cites NCNB Texas National Bank v. Coker, 765 S.W.2d 398 (Tex. 1989), the Supreme Court of Texas asserted: “We have held that two matters are ‘substantially related’ within the meaning of Rule 1.09 when a genuine threat exists that a lawyer may divulge in one matter confidential information obtained in the other because the facts and issues involved in both are so similar.” In re Epic Holdings, Inc., 985 S.W.2d 41, 51 (Tex. 1998) (emphasis added) (citing Texaco, Inc. v. Garcia, 891 S.W.2d 255, 256–257 (Tex. 1995) (per curiam); Coker, 765 S.W.2d at 400; Metropolitan Life Ins. Co. v. Syntek Finance Corp., 881 S.W.2d 319, 320–321 (Tex. 1994) (per curiam); Tex. Disciplinary R. Prof’l Conduct 1.09, cmt. 4B, reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G app. A (1998) (Tex. State Bar R. art. X, § 9)), quoted in Landers v. State, 229 S.W.3d 532, 535 (Tex. App.—Texarkana 2007), aff’d 256 S.W.3d 295 (Tex. Crim. App. 2008); see also Nat’l Med. Enters., Inc. v. Godbey, 924 S.W.2d 123, 129 (Tex. 1996) (“The pending action is substantially related to the prior investigations and lawsuits involving NME and Cronen, as the district court found. The allegations throughout are identical in all material respects. See Texaco, Inc. v. Garcia, 891 S.W.2d 255, 257 (Tex. 1995) (holding two distinct claims were substantially related due to the existence of similar liability issues, scientific issues, and defenses).”). 



YOU MAY HAVE HEARD/READ: “The proposed rules will turn fee collection in the criminal defense world on its head.”

CLARIFICATION: This concern may be a reference to proposed Rule 1.15 (regarding safekeeping of property). Comment 12 to that rule says, “Applicable law, not these Rules, determines when a fee is earned.” Criminal defense counsel should review the law on commingling client and lawyer funds when the lawyer has possession of unearned fees. The proposed rule does not (and could not) change this law, and it does not change how the existing rule handles a flat fee.



YOU MAY HAVE HEARD/READ: “Proposed Rule 1.08 contains standards that are inconsistent with a lawyer's fiduciary duties. Rule 1.08(a) would permit a lawyer-client business transaction if ‘the lawyer reasonably believes that the terms of the transactions ... are fair and reasonable to the client.’ But the fiduciary standard requires that the transaction be objectively fair and reasonable to the client.”

CLARIFICATION: Proposed Rule 1.08(a) does nothing to undermine when lawyers may be sued for breach of fiduciary duty by specific clients they have harmed. The “reasonably believes” standard recognizes that a lawyer defending against a disciplinary complaint that he or she had entered into a transaction with a client that was not “fair and reasonable” would necessarily present the objective view of a “reasonable” lawyer in the same circumstance. The “reasonably believes” standard is implicit in the existing rule. Making the standard explicit will provide a clear defense for a lawyer who acted reasonably when entering into a business transaction with a client.



YOU MAY HAVE HEARD/READ: “The Bar Board asked the Supreme Court for more time to address the conflict of interest rules, but the Court refused to grant that extension.”

CLARIFICATION: In a letter dated October 1, 2010, State Bar President Terry Tottenham conveyed to the Court the State Bar Board of Directors’ recommendation that the Court allow the Board more time to consider proposed Rules 1.06 through 1.09. The Court allowed the Board until November 8, 2010 to collect more information and to provide final recommendations. During the extended review period, Bar leaders re-opened the public-comment period, hosted a meeting of ethics counsel to discuss proposed Rules 1.06 through 1.09, and held a special Board meeting during which directors took final votes on the proposed rules. Proposed Rules 1.06 and 1.07 were modified further in response to the input received in the extended review period.


Patricia D. Chamblin
Chair, Texas Disciplinary Rules of Professional Conduct Committee

Linda S. Eads
Past Chair, Texas Disciplinary Rules of Professional Conduct Committee

Lillian B. Hardwick
Past Chair, Texas Disciplinary Rules of Professional Conduct Committee

Additional information regarding the proposed rules is posted at www.texasbar.com/rulesupdate. Exercise your right to vote responsibly by taking the time necessary to understand the issues and options yourself before casting your vote on the proposed rules.

December Texas Bar Journal covers proposed amendments to disciplinary rules

This month's Texas Bar Journal features information about proposed amendments to the Texas Disciplinary Rules of Professional Conduct, including the proposed amendments and the referendum on the proposed amendments.

To find additional information on the proposed amendments and the referendum, you may visit www.texasbar.com/rulesupdate.

The cover of the December Bar Journal features the State of Texas Christmas ornament. Fifteenth in a series of collectible ornaments, the 2010 edition combines architectural and decorative elements featured in past ornaments and reflects a rich tradition of historic preservation.