Texas Ethics Opinion May Have Gone Too Far in New Restrictions of Non-Lawyer Job Titles

According to Ethics Opinion No. 642 issued by the Texas Supreme Court Ethics Committee in May, law firms operating in Texas are no longer able to use “officer” or “principal” in job titles of non-lawyers. According to the opinion, the word “officer indicates that the person holding the title has the power to control the entire law firm (in the case of chief executive officer) or significant areas of the firm’s operations,” and “use of the term ‘principal’ for non-lawyer employees implies that the employees have an interest in the firm involving control, ownership, or both.”

According to the Texas Disciplinary Rules of Professional Conduct Rule 5.04, non-lawyers are prohibited from running a law firm or having control over the “professional judgment of a lawyer.”  However, according to the Ethics Opinion, even firms that follow Rule 5.04 are still in violation of Rule 7.02 which states, “A lawyer shall not make or sponsor a false or misleading communication about the qualifications or the services of any lawyer or firm,” because the title of “principal” or officer” misleads the general public.

In response to this opinion, fifty-three of Texas’ largest law firms have signed a letter asking for a reversal of this opinion. Many Texas firms have non-lawyers working in positions such as “chief financial officer, chief technology officer and chief marketing officer.” The firms fear this opinion will have a detrimental effect on their ability to adequately serve the community. Many law firms attract people with top educational backgrounds and give them job titles reflecting their role: “A well-regarded firm searching for a CFO will attract candidates with excellent credentials and qualifications. That same firm searching for a Head Accountant will not. A firm searching for a Chief Technology Officer will be competing with other companies-not just law firms-for the best candidates. Those candidates seek the right title-CTO or CIO-and will understandably turn up their noses at lesser-titled positions. Ultimately, the Committee’s decision will degrade the quality of nonlegal professionals that are available to Texas law firms.” In addition, not having these titles would mean lawyers would have to serve in these roles, taking away time needed to adequately serve their clients

The letter signed by the fifty-three law firms discusses how the Ethics Opinion analyzed Rules 5.04 and 7.02 incorrectly. According to the letter, Rule 5.04 was meant, “to prevent nonlawyers form owning law firms or exercising professional control over the lawyers,” not for delegating job titles. The people hired with the title “officer” are not the kinds of officers the rule intends to prohibit. In response to violating 7.02, the letter states that the public is not being misled because there is a difference “between nonlawyer employees who interact with the firm’s clients (e.g paralegals, investigators, tax preparers), and those who do not because they are involved in the back-office management of the firm.”

The Texas Disciplinary Rules of Professional Conduct in addition to the ethics rules from many other states have restrictions designed to promote the accurate portrayal of lawyers such as the new Florida rules dealing with LinkedIn and Texas Rules 7.04(a) and (b) which discuss when lawyers can call themselves specialists. The purpose of these restrictions is for accurate information of the lawyers’ qualifications to be relayed. However, the issue of calling oneself a specialist when one is not seems more black and white than calling a non-lawyer an officer and principal. Specialists in in the legal field have specific meanings unlike “officers” or principals.” Calling a non-lawyer an “officer” does not necessarily mean the firm is inaccurately portraying the non-lawyer’s position because “courts have recognized, the term officer’ does not, by itself answer the question of whether an individual has management control over the company.” Courts have come to the conclusion “that the term ‘officer’ must be interpreted functionally, not mechanically.” As the letter recommends, the purpose behind the rules is what matters rather than a possible interpretation of the title “officer” or “principal.”

The detrimental effect of removing the terms “officer” or “principal” in the titles of non-lawyers far outweighs the slight possibility the public is misled about these job titles. The Texas Supreme Court Ethics Committee will reconsider Ethics Opinion No.642 at their next meeting this fall.

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