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STATE BAR OF TEXAS TASK FORCE
RECOMMENDATION OF A NEW STATUTORY DEFINITION
FOR THE UNAUTHORIZED PRACTICE OF LAW
April 2001
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Table of Contents
The Task Force and Its Objective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Rationale for Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Current Regulation in Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5§ 81.101 Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5§ 81.102 State Bar Membership Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5§ 83.001 Prohibited Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6§ 38.122 Falsely Holding Oneself Out as a Lawyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6§ 38.123 Unauthorized Practice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Evaluating the Need to Revise Texas’s Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Structure of the Proposed Statutory Revision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 81.101 - Defining the Practice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10§ 81.101 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
A. The “practice of law” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10B. “Legal representation” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10C. “Legal advice” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12D. “In a professional capacity” . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14E. “Individual” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16F. “Person” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16G. “Attorney” or “lawyer” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16H. The definition of the practice of law . . . . . . . . . . . . . . . . . . . . . . 17
Section 81.102 - Who Can Practice Law and Under What Circumstances . . . . . . . . . . . . . . . . 17§ 81.102 Qualifications for the Practice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Sections 81.107 and 81.108 - Enhanced Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26§ 81.107 Attorney General as Special Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27§ 81.108 Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Epilogue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Text of Proposed Statutory Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
§ 81.101 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 81.102 - Who Can Practice Law and Under What Circumstances . . . . . . . . . . . . . . . . 32
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§ 81.102 Qualifications for the Practice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
§ 81.107 Attorney General as Special Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35§ 81.108 Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36Changes from Preliminary Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36Section 81.101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36Former Section 81.102(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Originally-proposed Section 81.102.B.12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
1 See State Bar of Texas Task Force, Preliminary Report on the ABA Commission’sMultidisciplinary Practice Proposal (October 1999), reprinted in 63 TEX. B. J. ff. 150 (Feb.2000).
2 See State Bar of Texas Task Force, Preliminary Recommendation of a New StatutoryDefinition for the Practice of Law (May 2000), reprinted in 63 TEX. B. J. 543 (June 2000).
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STATE BAR OF TEXAS TASK FORCE
RECOMMENDATION OF A NEW STATUTORY DEFINITION
FOR THE UNAUTHORIZED PRACTICE OF LAW
April 2001
Presidents Peña, Aycock, and Liberato, at the request of the Supreme Court, have appointed
this task force to evaluate the State’s regulation of the unauthorized practice of law. For the past two
years, the task force has been in the process of performing a wide-ranging study on that topic. In
October 1999, the task force issued a preliminary report concerning the ABA Commission’s proposal
to allow nonlawyers to participate as owners in entities (multidisciplinary practice groups or “MDPs”)
in which lawyers practice law.1 In May of 2000, the task force put out for public comment a
preliminary report on a different subject – what persons other than lawyers licensed by the Texas
Supreme Court should be allowed to perform services in Texas which constitute the practice of law.2
Numerous comments on that preliminary report have now been received from members of the State
3 The written comments are available as an appendix from the State Bar of Texas (attn: SharonLey), P. O. Box 12487, Austin, Texas 78711 ([email protected]).
4 This report is being disseminated in print and on the State Bar’s website to members of theState Bar and other interested persons. The Task Force recognizes the difficulty of thisproject and invites continuing comments on its proposal. Comments may be submitted to theUPL Task Force, State Bar of Texas, P.O. Box 12487, Capitol Station, Austin, Texas 78711-2847 ([email protected]).
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Bar and from the public.3 The Task Force, having carefully reviewed the received comments, now
issues this report to recommend new statutory language to regulate the unauthorized practice of law
(hereinafter sometimes referred to as “UPL”) in the State of Texas.4
The Task Force and Its Objective
One of the goals in the selection of the Task Force has been to obtain a cross-section of
perspective from the State Bar’s membership. The Task Force is comprised of sixteen members. Two
are solo practitioners, four are from firms of less than twenty lawyers, five are from firms of more
than twenty lawyers, and five are in public interest, corporate, or governmental positions. More than
half of the members have office practices and the rest are litigators. The Task Force also includes the
chair of the Supreme Court’s Board of Law Examiners, the chair of the State Bar board of directors,
the General Counsel of the Texas State Board of Public Accountancy, four persons who have chaired
the Supreme Court’s Unauthorized Practice of Law Committee, as well as on an ex officio, non-
voting basis the State Bar’s Executive Director and current President and President-elect.
Implicit in the request of the Supreme Court for the appointment of the Task Force was an
expectation that the Task Force members would approach their work from the standpoint of the
public interest, and not from the standpoint of economic self-interest. The Task Force has accepted
that charge. For that reason, this report is not intended to express the political will of either the
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members or leadership of the State Bar; it is only the opinion of the sixteen individuals who have
spent two years examining and weighing the many legal and policy issues inherent in the regulation
of the unauthorized practice of law.
During the course of its existence, the Task Force has come to understand all too well that
public and lawyer opinion on UPL issues is riven by deep-felt divisions, and that these differences
make impossible – in the short term – the forging of a consensus, even among lawyers, as to how,
or even whether, the regulation of the unauthorized practice of law should be changed. These
divisions of opinion are made even more problematic by the rapid changes now resulting from the
computerization and internationalization of American life and business, which changes will necessarily
occur as well in American legal practice. The goal of the Task Force is to illuminate where the legal
profession is heading and should head, and trust to the rapid pace of change the reconciliation of
lawyers’, judges’, and the public’s views on how the unauthorized practice of law should be
regulated.
The Rationale for Regulation
There is a consensus that the public receives a higher quality of legal service to the extent
practitioners are educated, trained and honest. Prohibiting the practice of law by unqualified persons
is designed to protect the public from those who lack the ability and integrity needed to represent
clients in legal matters.
While some issues within the definition of the practice of law may be capable of resolution
by those without formal legal training, many are not. Some situations are simple and may be handled
easily with forms, while other situations may involve highly complex and individualized legal
concepts. In some instances, only a highly capable practitioner can identify which situation is which.
5 See Roger Blair & David Kaserman, Preservation of Quality and Sanctions Within theProfessions, in REGULATING THE PROFESSIONS 185, 186 (Roger Blair & Stephen Rubin eds.,1980).
The quality of professional services is generally difficult to evaluate on an ex antebasis and is often hard to gauge ex post. . . . Uncertainty about the quality ofprofessional services has an adverse impact on the entire occupational group. Consumers are forced to rely on some market statistic to judge the quality ofprospective purchases of services. Each professional will have an individualincentive to reduce quality to save on costs because the returns to high qualitymainly accrue to the entire group rather than to the individual seller. There aretwo consequences: (1) the average quality of professional services will fall, and (2)the size of the market is reduced.
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There are also skills and knowledge required for some parts of law practice which go beyond
knowledge of substantive law. A trial under applicable rules of evidence and procedure can require
very sophisticated interpersonal communication within a construct of highly technical rules.
Successful regulation of the practice of law depends in large part on licensure. The state
limits licensure to those who take steps to meet specified criteria in three areas: education,
examination and character. Once licensed, the state strives to ensure minimum competency with
ongoing education and conduct standards. These standards also seek to protect clients and society
from the potential for abuse of the power the attorney-client relationship gives an attorney.
If the market were the only regulator of those providing legal services, economic theory
teaches that competency and ethics would be haphazard, and controlled principally on the basis of
cost.5 Licensure establishes a uniform set of minimum continuing standards and eliminates the
diseconomies which would be present if each client had to ascertain and deal individually with these
questions.
In some instances, however, licensure requirements may need to be relaxed – where the legal
service being provided can be readily determined to be of a simple nature and/or where others have
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skills, training, and ethical standards which provide adequate assurance of protection to the public.
One goal of the task force has been to determine those areas where the public can be effectively
served by persons other than lawyers licensed by the State of Texas.
Current Regulation in Texas
There are several statutes currently regulating who can practice law in the State of Texas.
Chapter 81 of the Texas Government Code is the most comprehensive statute defining and
regulating the practice of law in Texas.
§ 81.101 Definition(a) In this chapter, the “practice of law” means the preparation of a
pleading or other document incident to an action or special proceedingor the management of the action or proceeding on behalf of a clientbefore a judge in court as well as a service rendered out of court,including the giving of advice or the rendering of any service requiringthe use of legal skill or knowledge, such as preparing a will, contract,or other instrument, the legal effect of which under the facts andconclusions involved must be carefully determined.
(b) The definition in this section is not exclusive and does not deprive thejudicial branch of the power and authority under both this chapter andthe adjudicated cases to determine whether other services and acts notenumerated may constitute the practice of law.
(c) In this chapter, the “practice of law” does not include the design,creation, publication, distribution, display, or sale, includingpublication, distribution, display, or sale by means of an Internet website, of written materials, books, forms, computer software, or similarproducts if the products clearly and conspicuously state that theproducts are not a substitute for the advice of an attorney. Thissubsection does not authorize the use of the products or similar mediain violation of Chapter 83 and does not affect the applicability orenforceability of that chapter.
TEX. GOV’T CODE § 81.101 (as amended 1999).
§ 81.102 State Bar Membership Required(a) Except as provided by Subsection (b), a person may not practice law
in this state unless the person is a member of the state bar.
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(b) The supreme court may promulgate rules prescribing the procedurefor limited practice of law by:(1) attorneys licensed in another jurisdiction;(2) bona fide law students; and(3) unlicensed graduate students who are attending or haveattended a law school approved by the supreme court.
TEX. GOV’T CODE § 81.102.
A suite of other statutes overlap Chapter 81's basic framework for determining who may
practice law in Texas. Some of these other statutes are penal.
§ 83.001 Prohibited Acts(a) A person, other than a person described in Subsection (b), may not
charge or receive, either directly or indirectly, any compensation forall or any part of the preparation of a legal instrument affecting title toreal property, including a deed, deed or trust, mortgage, and transferor release of lien.
(b) This section does not apply to:(1) an attorney licensed in this state;(2) a licensed real estate broker or salesman performing the acts
of a real estate broker pursuant to The Real Estate LicenseAct (Article 6573a, Vernon’s Texas Civil Statutes); or
(3) a person performing acts relating to a transaction for the lease,sale, or transfer of any mineral or mining interest in realproperty.
(c) This section does not prevent a person from seeking reimbursement for costsincurred by the person to retain a licensed attorney to prepare an instrument.
TEX. GOV’T CODE § 83.001.
§ 38.122 Falsely Holding Oneself Out as a Lawyer(a) A person commits an offense if, with intent to obtain an economic benefitfor himself or herself, the person holds himself or herself out as a lawyer,unless he or she is currently licensed to practice law in this state, anotherstate, or a foreign country and is in good standing with the State Bar of Texasand the state bar or licensing authority of any and all other states and foreigncountries where licensed.
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TEX. PENAL CODE § 38.122(a).
§ 38.123 Unauthorized Practice of Law(a) A person commits an offense if, with intent to obtain an economic
benefit for himself or herself, the person:(1) contracts with any person to represent that person with regard
to personal causes of action for property damages or personalinjury;
(2) advises any person as to the person’s rights and theadvisability of making claims for personal injuries or propertydamages;
(3) advises any person as to whether or not to accept an offeredsum of money in settlement of claims for personal injuries orproperty damages;
(4) enters into any contract with another person to represent thatperson in personal injury or property damage matters on acontingent fee basis with an attempted assignment of a portionof the person’s cause of action; or
(5) enters into any contract with a third person which purports togrant the exclusive right to select and retain legal counsel torepresent the individual in any legal proceeding.
(b) This section does not apply to a person currently licensed to practicelaw in this state, another state, or a foreign country and in goodstanding with the State Bar of Texas and the state bar or licensingauthority of any and all other states and foreign countries wherelicensed.
TEX. PENAL CODE §38.123(a)-(b).
Evaluating the Need to Revise Texas’s Statutes
The current Texas statutes on their face are overbroad and unrealistic in certain respects. For
example, laypersons who gratuitously comment on legal matters and in-house lawyers licensed in
other states who advise their employers can be in violation of the statutes, literally-read. The statutes
also do not reflect significant exceptions which have been read into the application of the statutes.
Individuals have the right to represent themselves pro se and non-lawyers often are allowed to
represent clients in federal and state agency proceedings. Fortunately, the problematic nature of the
6 See American Bar Association Center for Professional Responsibility, 1994 Survey andRelated Materials on the Unauthorized Practice of Law/Nonlawyer Practice (1996)(summarizing the UPL laws and decisions of the fifty states). See also Washington State BarAss’n Committee to Define the Practice of Law, Report (July 30, 1999) (suggesting a newUPL statute for the State of Washington) <http://www.wasba.org/c/cdpl/report.htm>.
7 RESTATEMENT OF THE LAW GOVERNING LAWYERS 36 (2000).
8 Chapter 83, which is directed at the preparation of legal instruments “affecting title to realproperty,” has two purposes. In addition to regulating the practice of law, that chapter isdirected at prohibiting one party to a real estate transaction from charging the other party for
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UPL statutes has been largely circumvented in practice by the prosecutorial discretion of the
Unauthorized Practice of Law Committee appointed by the Supreme Court, which has chosen to read
unwritten limitations into the statute’s explicit terms.
Texas’s current statutes are comparable to the UPL statutes of other states.6 All of the
statutes appear to suffer from similar problems of overbreadth and lack of precision. The difficulty
of defining the scope of the unauthorized and authorized practice of law has been noted by the
American Law Institute. “The definitions and tests employed by courts to delineate unauthorized
practice by nonlawyers have been vague and conclusory . . . .”7 In fact, the American Law Institute
does not even attempt to formulate a definition for the unauthorized practice of law.
The Task Force reviewed virtually all of the UPL statutes in the nation and reached essentially
the same conclusion as did the American Law Institute – there was none which provided a
satisfactory model for improving and modernizing the Texas statutes.
The Structure of the Proposed Statutory Revision
The Task Force’s proposed revision, attached as Appendix A and discussed in detail below,
would replace existing sections 81.10l and 81.102 of the Texas Government Code and necessitate
a revision of chapter 83 of the Texas Government Code.8 The revision has three major parts. New
preparation of legal instruments. That latter issue is different from the UPL issue of whether aperson can act as a “personal advisor” to another in a non-arms-length relationship in giving“legal advice.” The chapter 83 provisions accordingly would need to be revised to apply onlyto the issue of one party to a real estate transaction charging compensation to the other for thepreparation of legal instruments.
The present Texas Penal Code provisions would not be changed or moved, as they aredirected more at barratry than at regulating who can practice law.
9 The Task Force also recognizes that the Supreme Court has inherent constitutional power toregulate the practice of law, see Unauthorized Practice of Law Comm. v. Cortez, 692 S.W.2d47, 51 (Tex. 1985); State Bar v. Gomez, 891 S.W.2d 243, 245 (Tex. 1994), and hence canmake these and other changes if it chooses to do so.
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section 81.101 sets forth a general definition of the practice of law. New section 81.102 specifies
which persons, in addition to members of the State Bar of Texas, are entitled to engage in specific
conduct within the practice of law and the circumstances under which they can practice law. New
sections 81.107 and 81.108 respectively allow the Unauthorized Practice of Law Committee to call
on the Office of Attorney General for assistance in investigations and enforcement and provide for
a private cause of action against those who engage in the unauthorized practice of law.
The Task Force considered two alternative structural approaches in drafting the proposed
statute.9 The one eventually adopted uses general language to establish the baseline definition and
prohibition of the unauthorized practice of law, and then narrows the scope of the prohibition with
specific exceptions to the general rule. This approach maintains continuity with the current statutory
framework, which continuity was considered advantageous in a policy sense. An alternative approach
10 A variant of the two approaches could be to include both general and specific descriptions inthe definition of the practice of law.
11 As used in the Government Code, “‘Includes’ and ‘including’ are terms of enlargement andnot of limitation or exclusive enumeration, and use of the terms does not create a presumptionthat components not expressed are excluded.” TEX. GOV’T CODE § 311.005(13).
12 This language is derived from current section 81.101(a).
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which would define the practice of law initially with specifically-described categories of conduct was
considered and rejected because of the difficulty in enumerating all of the specific tasks which fall
within the practice of law.10
The proposed statute, and certain subsections within each, are discussed below. Discussion
in text usually relates to the major policy decisions faced by the Task Force. Explanatory information
as to the derivation or meaning of the statutory language is usually included in the footnotes.
Section 81.101 - Defining the Practice of Law
§ 81.101 Definitions
A. The “practice of law,” as used in this chapter, includes 11
1. Providing legal representation;
2. Providing legal advice;
3. Preparing or negotiating, in whole or in part, a will, trust, contract,
conveyance, pleading, or other instrument12 to the extent such
preparation or negotiation is performed or offered explicitly or
implicitly to provide legal advice or legal representation; or
4. Those activities described in section 81.102.B.
B. “Legal representation” means acting as an advocate in governmental
adjudicative proceedings in a court or administrative agency to determine the
specific rights or obligations of one or more persons.
The definition of legal representation is relatively straightforward because the conduct is
readily apparent – making an “appearance” in court or before an administrative agency by the filing
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of a pleading or entering within the bar to argue a case. “Legal representation” involves a detailed
knowledge of procedural and evidentiary rules which go beyond a substantive analysis of a client’s
specific legal situation, and hence is a concept different from but sometimes overlapping with the
concept “legal advice.” Legal representation is regulated without regard to compensation or
reliance due to the strong policy interest of the courts in having competent and ethical “officers
of the court” involved in adjudicative proceedings.
Policy questions arise as to advocacy situations other than before a court of law.
Administrative proceedings which “adjudicate” disputes call for the same skill sets as court
adjudication and are to be treated the same under the proposed statute. On the other hand,
legislative advocacy (lobbying) historically has been the province of citizens. Advocacy in
administrative rulemaking (non-adjudicative) proceedings resembles legislative lobbying and
should be similarly excepted from the definition of “legal representation.”
Another definitional issue involves arbitration and mediation, which historically have been
commercial procedures handled by citizens involved in the dispute, with or without legal counsel.
These procedures are popular because they allow for dispute resolution as an “alternative” to
assertedly more expensive and regulated judicial and administrative procedures. The definition of
“legal representation” accordingly is drawn to exclude non-governmental proceedings which do
not occur before judicial and administrative bodies.
13 See State Bar of Texas Ethical Guidelines for Mediators, § 11 (“A mediator should not givelegal or other professional advice to the parties”) and § 14 (“A mediator should encourage theparties to reduce all settlement agreements to writing”). The vast majority of states have norules or court decisions addressing UPL issues which arise in mediation. Supreme Court ofVirginia Dept. of Dispute Resolution, Guidelines on Mediation & the Unauthorized Practiceof Law, App. A, <http://www.courts.state.va.us/drs/upl/appendix_A.html>.
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Advocacy in lobbying, rulemaking, arbitration or mediation proceedings would still qualify
and be regulated as the “practice of law” if “legal advice” is given in the course of that conduct.13
C. “Legal advice” means acting in a professional capacity as a personal advisor
to another person as to the specific rights or obligations of one or more
persons through the interpretation and application of laws, regulations, and
other legal standards;
Section 81.101.C addresses a very serious definitional issue, not adequately confronted
before – how to delineate between not-to-be-regulated discussion of legal matters in ordinary
conversation and regulated advice on legal matters. Under the current statute, “the giving of
advice . . . requiring the use of legal skill or knowledge” is prohibited. Yet we know that persons
frequently discuss and opine about legal matters in ordinary, everyday conversation – conduct that
should not, and realistically cannot, be prohibited. If we are to be a nation of laws, then all citizens
must be able to discuss and opine about the meaning and application of laws to themselves, their
friends and relatives, and others. Politicians and their constituents must be able to discuss what
the laws mean, so that they can determine if the laws make sense in their application. Employers
and their employees must be able to discuss whether the employers are acting properly in their
14 Of course, the criterion of interpreting laws is quite important. Differentiating between legaladvice and business advice can be a difficult analysis in specific situations, e.g., the advice of aCPA to a client concerning shareholder versus general partner liability, the advice of a humanresources consultant to a business in structuring employment benefit plans, the advice of anenvironmental consultant on remediation of toxic sites. Because of the inherently fact-specificnature of the analysis, determining whether a person has gone beyond mere business advice isbest left to the courts for a case-by-case determination as is done now under the currentstatute.
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business dealings. We do not want to discourage the acquisition and passing on of “legal
knowledge”; to do so would frustrate the goal of achieving a broad and uniform compliance to
what the laws say.
There are three major qualifiers included in this new definition of legal advice, in addition
to merely interpreting laws:14 advising as to specific rights or obligations of another person, acting
in a professional capacity, and acting as a personal advisor.
The concept of advice as to specific rights or obligations of another person is designed to
exclude comments by politicians and commentators from being regulated. General discussions of
legal matters should be encouraged. Regulation of that type of speech has First Amendment
implications which should be avoided.
The concept of acting in a professional capacity is designed to exclude comments made
gratuitously by friends and acquaintances, as well as by politicians and commentators, from the
definition of the practice of law. Acting in a professional capacity is defined in section 81.101.G
as involving any one of the following criteria: compensation, waiver of compensation for pro bono
reasons by one who normally would be compensated, representing oneself as a lawyer or attorney,
and a course of conduct in holding oneself out as having expertise in legal matters. All of these
objective criteria share the same focus, which is conduct inducing reliance by a member of the
15 See, e.g., Hexter Title & Abstract Co. v. Grievance Committee, 179 S.W.2d 946 (Tex. 1944)(a title company is not justified in drawing real estate documents even where those documentswould have some impact on the title insurance policy to be issued and even where the titlecompany used licensed lawyers to draft the documents).
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public on the provider’s special competence. Conversely, discussions of legal matters in other
circumstances in which the person receiving the advice has no reasonable, objective reason to rely
on the expertise should not be treated as the practice of law.
The concept of acting as a personal advisor is designed to exclude comments by persons
in an arms-length relationship to the person receiving the “advice.” An example would be a
general contractor who advises the owner of what zoning, building code and related provisions
apply to a building being built or remodeled by the general contractor for the owner. In arms-
length dealings, useful discussions of legal matters would be chilled if the person opining on legal
matters were considered to be practicing law on behalf of the other party, even if the person
making the comments is receiving compensation in the transaction from the party to whom the
opinions are given. In applying this concept, the courts would need to distinguish between
situations in which the comments relate to work being properly done by the party and situations
in which the comments exceed that limited scope. For example, a title company could not use this
provision to advise a buyer or seller as to the drafting of legal instruments because that advice
would fall outside the title company’s role as an insurer.15
D. “In a professional capacity” means acting i) with the expectation that
compensation for such advice will be provided by or on behalf of the person
receiving the advice or that such compensation, although ordinarily expected
by the provider, will be waived for charitable or civic reasons, ii) with the
express or implied representation that the provider is an attorney or lawyer,
or iii) as part of a pattern of recurring conduct in which the provider holds
16 Compare TEX. OCC. CODE § 151.002(a)(13) (“practicing medicine” defined to include as onealternative criterion if the person “directly or indirectly charges money or othercompensation”), TEX. REV. CIV. STAT. ANN. art. 6573a (the definition of “real estate broker”includes the criterion “for a fee, commission, or other valuable consideration”)
17 Compare TEX. OCC. CODE § 901.002 (“practice of public accountancy” defined to include asa criterion if the person represents “to the public that the person is certified or registeredunder this chapter”); TEX. OCC. CODE § 151.002(a)(13) (“practicing medicine” defined toinclude as one alternative criterion if the person “publicly professes to be a physician orsurgeon”); TEX. OCC. CODE § 501.002 (practice of psychology defined to include as analternative criterion if the person “represents the person to the public by a title or descriptionof services that includes the word ‘psychological,’ ‘psychologist,’ or ‘psychology’ ”).
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himself or herself out as an advisor having special competence in the
interpretation and application of laws, regulations, and other legal standards.
The Task Force had difficulty in determining which criteria to use for the dividing line
between the practice of law to be regulated and the discussion of laws to be encouraged. Both
involve the same subject matter (giving of legal advice) and hence eliminates that criterion (which
is the basis for the current statute’s regulatory scheme) as a meaningful distinction. In the end, the
Task Force chose to use three objective criteria to describe those situations where a person should
be able to rely on the legal skill of the provider.
The first criterion was compensation provided as a quid pro quo for the advice. If a person
pays for legal advice, he or she should be entitled to an assured minimum level of competence and
ethics.16 A subset of the first criterion recognizes that lawyers often will waive compensation in
charitable or civic situations; if a provider normally charges for his or her services, services
provided on a pro bono basis should also be regulated.
The second criterion is whether the service is provided with a representation that the
provider is a lawyer. In that circumstance, the client should be entitled to that type of service.17
18 The definition is derived from Tex. Penal Code § 1.07(26) (“‘Individual’ means a human beingwho has been born and is alive”).
19 The definition is derived from Tex. Government Code § 311.005 (“‘Person’ includescorporation, organization, government or governmental subdivision or agency, business trust,estate, trust, partnership, association, and any other legal entity.”).
20 “State bar” is defined as the State Bar of Texas in Tex. Government Code § 81.002(1). Membership in the state bar is determined pursuant to Tex. Government Code § 81.051 etseq.
21 The term “state” is defined in the Government Code, when referring to a part of the UnitedStates, to include “any state, district, commonwealth, territory, and insular possession of theUnited States and area subject to the legislative authority of the United States of America.” TEX. GOV’T CODE § 311.005(7).
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The third criterion addresses a possible loophole -- where an organization provides
individualized advice to its members or others on a continuously gratuitous basis. If the provider
holds himself out as specially qualified, then the client should be entitled to the level of service as
would be provided by a lawyer. The Task Force was concerned, however, about the possible
breadth of the element of holding oneself out as having “special competence.” That type of
assertion could arise in normal conversation. For that reason, the Task Force chose to further
condition the third criterion with the requirement that such claims be part of a pattern of recurring
conduct as would arise where an organization was engaging in an ongoing practice of providing
legal advice.
E. “Individual” means a human being.18
F. “Person” means an individual, corporation, organization, government or
governmental subdivision or agency, business trust, estate, trust, partnership,
association, or any legal entity.19
G. “Attorney” or “lawyer” means an individual who is a member of the state
bar20 or is otherwise licensed and in good standing to practice law in another
state of the United States.21
22 Same as Tex. Government Code § 81.102(b). The judiciary retains primary governance overthe courts and interpretation of the laws, and the legislature’s power to regulate the practiceof law is only secondary and in aid of the judiciary’s power. See, e.g., Unauthorized Practiceof Law Comm. v. Cortez, 692 S.W.2d 47, 51 (Tex. 1985); State Bar v. Gomez, 891 S.W.2d243, 245 (Tex. 1994). See also TEX. GOV’T CODE § 82.021 (“Only the supreme court mayissue licenses to practice law in this state as provided by this chapter. The power may not bedelegated.”). The Texas Supreme Court exercised its constitutional power over the practiceof law by issuing its own order following the passage of the State Bar Act of 1979, ratifyingthat statute and thereby eliminating possible discrepancies between the court’s previous ordersand the new legislative statute. See Order, 583-584 S.W.2d (Texas Cases) XXXIII (Tex.1979). A Supreme Court order could be appropriate if the Legislature enacts any significantrevision of chapter 81 or if the Supreme Court chose to implement changes itself.
23 In addition to the categories of additional practitioners set forth below, one member of thetask force believes that Chapter 81 should be amended to allow any person to practice law onbehalf of a client if the client gives written consent after having been informed of the person’sbackground, experience, and lack of a license to practice law in this state. Such a provisionwould be a dramatic departure from the current regulatory scheme.
24 This subsection would carry forward current law allowing an individual to represent himself ingovernmental proceedings. See, e.g., Tex. Const. art. 1, §10 (criminal prosecutions); Tex. R.Civ. P. 7 (actions of a civil nature); 28 U.S.C. §1654 (all courts of the United States).
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H. The definition of the practice of law in this section is not exclusive and does
not deprive the judicial branch of the power and authority to determine
whether other services and acts not enumerated may constitute the practice
of law.22
Section 81.102 - Who Can Practice Law and Under What Circumstances
§ 81.102 Qualifications for the Practice of Law
A. Except as provided in subsection B, a person may not engage in the practice
of law in this state unless the person is a member of the state bar.
B. The following additional persons may engage in the practice of law to the
limited extents specified below:23
1. Individuals, to the extent they are acting pro se;24
25 A single individual’s or family’s homestead is defined in TEX. PROP. CODE § 41.002.
26 The Task Force had no readily-available, reliable way to determine how many corporatecounsel officing in Texas are not members of the State Bar. A superficial review was made ofthe individuals listed in the Texas Lawyer Directory of General Counsel 2001, andapproximately 15% of the more than 1000 listed individuals appeared not to be licensed by theState Bar of Texas.
27 RESTATEMENT OF THE LAW GOVERNING LAWYERS 38 (2000) (“Thus a nonlawyer officer of acorporation may permissibly draft legal documents, negotiate complex transactions, andperform other tasks for the employing organization, even if the task is typically performed bylawyers for organizations.”).
28 Id. at 37-38. (“in many jurisdictions . . . a corporation cannot represent itself in litigation andmust accordingly always be represented by counsel”).
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2. Individuals who are continuing employees of a person, to the extent
they are engaged in providing solely to their primary employer or any
entity controlled by or controlling such employer, and no one else,
legal advice, but not legal representation or the authorship of forms
or programs for use in preparing real estate transaction documents
for the creation, encumbrance, or release of a single individual’s or
family’s homestead rights;25
This subsection would legitimize the current, widespread use in Texas of inhouse counsel
licensed in other states as legal advisors to their corporate employers. Currently there are probably
hundreds of out-of-state lawyers employed by corporations in Texas as inhouse counsel.26 The
general rule in the United States appears to be that not only out-of-state lawyers but other non-
lawyer corporate officers are allowed to advise their corporate employer internally on legal
matters.27 That general rule, however, does not extend in many jurisdictions to such persons being
allowed to represent their employers in courts.28
Out-of-state lawyers and other employees would not be allowed by this provision to use
this exception for more than one employer at a time, unless they become members of the State Bar.
29 This subsection is substantially the same as existing Tex. Government Code § 81.102(b).
30 This subsection would carry forward current law. See TEX. GOV’T CODE § 28.003(corporations need not be represented by attorneys in small claims court); Tex. R. Civ. P. 739(allowing “the party aggrieved or his authorized agent” to file forcible entry and detainercomplaints in justice courts) & 747a (allowing representation by “authorized agents” inforcible entry and detainer suits in justice courts); TEX. PROP. CODE § 24.011 (same); Op.Tex. Att’y Gen. No. JM-451 (1986) (section 24.011 applies only to individuals).
31 This subsection would carry forward and clarify current law. Compare Indus. Accident Bd. v.O’Dowd, 298 S.W.2d 657 (Tex. Civ. App.–Austin), rev’d on other grounds, 303 S.W.2d 763(Tex. 1957) (implicitly approving Industrial Accident Board’s authorization of non-lawyerrepresentatives) with Stewart Abstract Co. v. Judicial Comm’n, 131 S.W.2d 686 (Tex. Civ.App.–Beaumont 1939, no writ) (disapproving interpretation of State Board of Insurance’sregulations as authorizing title insurers to practice law, as being outside the power of theBoard). See also Op. Tex. Att’y Gen. No. H-974 (1977) (non-lawyer representation beforethe State Board of Insurance and Industrial Accident Board found to be permitted by eachagency and hence deemed not the unauthorized practice of law).
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This limitation is imposed to prevent misuse of the provision as a way of representing multiple
clients without having fulfilled the educational and other requirements required by the Supreme
Court.
3. Attorneys licensed in another jurisdiction, bona fide law students, and
unlicensed graduate students who are attending or have attended a
law school approved by the supreme court, to the extent authorized
by rules promulgated by the supreme court;29
4. Individuals representing a client within the jurisdiction of a justice
court or a small claims court of this state, to the extent authorized by
rules promulgated by the supreme court;30
5. Individuals providing to a client legal representation and legal advice
inherent in such representation within the jurisdiction of an
administrative agency of the state or a subdivision of the state, to the
extent authorized by rules promulgated by and within the scope of
authority of such agency or body;31
6. Individuals providing to a client legal representation and legal advice
inherent in such representation within the jurisdiction of a court or
32 This subsection would carry forward current law. See, e.g., Sperry v. Florida, 373 U.S. 379(1963) (federal regulations for the United States Patent Office preempt state unauthorizedpractice of law statute); 8 C.F.R. 292.1 (certain accredited and other persons allowed to act asrepresentatives before the Immigration & Naturalization Service and Board of ImmigrationAppeals).
33 This subsection generally would carry forward current law. See, e.g., TEX. CIV. PRAC. &REM. CODE § 154.052 (qualifications to be an impartial third party appointed under thatchapter do not include any reference to being a lawyer); but compare TEX. CIV. PRAC. &REM. CODE § 155.003 (“Any attorney currently licensed in the state may serve during thesettlement weeks” described in that chapter).
A non-lawyer neutral should not undertake to give legal advice to the parties, as discussed innote 13 supra.
34 This section is derived from Tex. Government Code § 81.101(c) and broadened to includereal estate transactions, except those involving the Texas homestead exemption as defined inTex. Prop. Code § 41.002.
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administrative agency of the federal government, to the extent
authorized by and within the scope of authority of such court or
agency;32
7. Individuals acting as arbitrators, mediators, or impartial third parties
in alternative dispute resolution procedures;33
8. Persons authoring, publishing, and distributing written materials,
books, forms, computer software, or similar products incorporating
legal advice, to the extent of such authorship, publication, and
distribution, if the products clearly and conspicuously state that the
products are not a substitute for the advice of an attorney licensed in
the state where the product is used, provided, however, that this
subsection does not apply to forms or programs used in preparing real
estate transaction documents for the creation, modification, or release
of a single individual’s or family’s homestead rights.34
This provision is modeled on a statutory amendment enacted by the Legislature in 1999
to reverse a federal court decision which had enjoined the distribution of a legal software program,
35 Unauthorized Practice of Law Committee v. Parsons Technology, Inc. d/b/a Quicken FamilyLawyer, No. Civ.A. 3:97 CV 2859H, 1999 WL 47235 (N.D. Tex. Jan. 22, 1999), judgmentvacated, 179 F.3d. 956 (5th Cir. 1999).
36 The new subsection (c) added to section 81.101 in 1999 leaves intact existing section 83.001'sprohibition preventing nonlawyers from charging for the preparation of “a legal instrumentaffecting title to real property.”
37 See, e.g., Richard D. Hauser & Frederic J. Hebert, Managerial Issues in Expert SystemImplementation, 57 SAM ADVANCED MANAGEMENT JOURNAL 10 (Winter 1992) (expertsystems “overcome some of the inconsistencies associated with human informationprocessing, providing the capability to obtain consistent and reliable results over time. Thereare numerous case studies that illustrate this particular benefit.”); Stuart Russell & PeterNorvig, ARTIFICIAL INTELLIGENCE, A MODERN APPROACH 842 (Prentice-Hall 1995) (“Inareas such as game playing, logical inference and theorem proving, planning and medicaldiagnosis, we have seen systems based on rigorous theoretical principles that can perform aswell as, or better than, human experts.”).
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Quicken Family Lawyer.35 The 1999 statute, however, did nothing to change the existing statute’s
regulation of software and printed works for the preparation of legal instruments affecting title
to real property.36 The Task Force recommends altering the scope of the 1999 amendment for
several reasons.
Software programs, and in particular computerized expert systems, offer significant cost
savings and technical proficiency.37 Expert systems are now being used for the preparation of
income tax forms, the diagnosis of medical ailments, and similarly-complex tasks. These systems
offer the same potential in the legal field. If they fail to perform with a competence comparable
to the standard of care generally applicable to Texas lawyers, their authors and publishers will be
liable under the new liability provision included in the Task Force’s proposed statute – section
81.102.C.
Although the correct preparation of title documents such as deeds and deeds of trust is
important to both the parties and society in ensuring the transfer of clean and unclouded title, that
38 Given the continuing change of statutory and decisional law, a prudent distributor will almostby necessity need to have its legal programs and forms continually monitored and updated bylawyers knowledgeable in the areas encompassed in the programs and forms. One wondershow a distributor otherwise could provide an effective product to its customers.
39 This section is derived from Tex. Government Code § 83.001(b)(2).
40 This section is derived from Tex. Government Code § 83.001(b)(3).
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consideration is no more weighty in most real estate transactions than for many other types of legal
matters which can involve human events and monetary values as or more significant. Nor does
the Task Force believe that real estate transactions are any more complex than many other legal
matters.
The Task Force does believe that forms to be used in transactions creating or modifying
an individual’s homestead rights should not be allowed, unless a member of the State Bar has
reviewed and approved those forms. Texas’s homestead statute is unusually protective of
consumers’ interests and reflect a strong Legislative policy which has been repeatedly emphasized.
There is a danger in consumer transactions for unusual state law provisions to be overlooked in
the creation of forms. Requiring that a Texas lawyer be involved in the creation of forms in this
limited circumstance will provide assurance that Texas homestead rights are being respected.38
9. Persons acting as real estate brokers pursuant to The Real Estate
License Act (Article 6573a, Vernon’s Texas Civil Statutes), to the
extent of completing forms promulgated pursuant to and complying
rental of an interest in real property;39
10. Persons performing acts relating to the lease, sale, or transfer of any
mineral or mining interest in real property, to the extent of the
preparation of legal instruments affecting title to real property in a
transaction involving such mineral or mining interest;40
11. Individuals employed by and under the active and direct supervision
and review of an attorney licensed in this state or a person described
41 This subsection would carry forward current law allowing paralegals and others to assistlawyers in the practice of law. See State Bar of Texas General Guidelines for the Utilizationof the Services of Legal Assistants by Attorneys, Guideline V, §§ B, C & D, 63 TEX. B. J. at280 (March 2000).
Guideline V: Except as otherwise provided by statute, court rule or decision,administrative rule or regulation, controlling authority, Texas Disciplinary Rules ofProfessional Conduct, or these guidelines, an attorney may allow a legal assistantunder his or her supervision and direction to perform delegated services in therepresentation of that attorney’s clients, provided:
A. The services performed by the legal assistant do not require the exercise ofindependent professional legal judgement; and,B. The attorney maintains a direct relationship with the client; and,C. The attorney directs and supervises the legal assistant in the performance ofdelegated duties; and,D. The client understands that the legal assistant is not an attorney; and,E. The attorney remains professionally responsible for such client and thatclient’s legal matters, including all actions taken or not taken in connectiontherewith by the legal assistant, to the same extent as if such actions had beentaken or not taken directly by the attorney.
See also TEX. DISCIPLINARY R. PROF. CONDUCT 5.03(a) (“a lawyer having directsupervisory authority over the nonlawyer shall make reasonable efforts to ensure that theperson’s conduct is compatible with the professional obligations of the lawyer”).
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in paragraphs 2, 3, 4, 5, and 6 above, to the extent such employees are
merely assisting but not supplanting the person engaged in the
practice of law and the client understands that the employee is not an
attorney, or if applicable, is not an attorney licensed by the supreme
court;41 and
12. Individuals employed by or acting as an agent for an entity approved
by the Internal Revenue Service as tax exempt pursuant to Section
501 (c) (3) of the Internal Revenue Code and approved under rules of
the Texas Supreme Court as a non-profit organization eligible to use
this section to provide legal services to the poor may appear in court
to adduce testimony to establish the legal prerequisites of agreed or
uncontested orders in suits under Title 1 or Title 5 of the Texas
42 Title 1 of the Texas Family Code governs “The Marriage Relationship,” including suits for thedissolution of marriage. Title 5 governs “The Parent-Child Relationship and the SuitAffecting the Parent-Child Relationship.”
43 This section is new. An earlier proposed version of this section is discussed in Appendix B.
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Family Code,42 provided that: (1) a member of the state bar employed
by or acting as the agent of the entity has undertaken to represent the
person testifying; (2) the order proffered for execution by the court is
prepared under the direct supervision and review of and signed by
the member of the state bar and is submitted to the court prior to
testimony being presented; (3) a record of the testimony is made; (4)
the person testifying acknowledges in writing or on the record that he
or she understands that the individual appearing with the person in
court is not an attorney licensed by the Supreme Court of Texas to
practice law in this state; (5) the individual is limited to adducing
testimony from the person appearing in court and shall not provide
legal advice or otherwise provide legal representation to the person
unless otherwise allowed by law; and (6) the entity shall maintain in
force professional liability insurance with limits of not less than
$100,000 per incident to cover liability for the acts, errors, and
omissions of the person appearing in court to elicit such testimony.
A court shall have the authority to exclude the individual from
participation in proceedings before the court for good cause shown.43
This provision is designed to enable lawyers employed by or volunteering for public interest
legal aid providers to maximize the time available for their clients by allowing those lawyers to
delegate to legal assistants prove-ups of uncontested family law matters. For those providers
which handle pro bono cases in widespread venues, this section will allow a significant
improvement in efficiency. The conditions placed on the use of this section are designed to ensure
that clients will continue to receive legal representation from licensed lawyers in all other
circumstances.
44 This section is new. The Task Force also considered but did not address in the proposedstatute the question of privileged communications with non-lawyers allowed to practice law. It may be appropriate in some circumstances to extend the protections of Texas Rule ofEvidence 503 to such communications.
45 TEX. GOV’T CODE § 81.101(c).
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C. All persons described in subparagraphs 2, 3, 4, 5, 6, and 8 of subsection B
who engage in or undertake the practice of law in this state shall be subject
to the standards of care and ethics as would be applicable to members of the
state bar in similar circumstances.44
The Task Force feels that section 81.102.C is an important way to ensure that the public
is protected from deficient service in those instances where the statute allows nonlawyers to
provide a legal service. Most legal software programs are currently excluded from the definition
of the practice of law by a 1999 statutory revision.45 The intent of the 1999 revision was to allow
consumers access to computer and printed works providing advice as to legal matters. By
declaring most such works to be outside the practice of law, however, the 1999 statute may have
created an argument that the works need not conform to a lawyer’s standard of care. In fact, some
of the computer programs being marketed are reputed to disregard specific requirements of Texas
law in some regards. If those programs fail to achieve their purpose under Texas law, Texas
consumers should have a full remedy.
Section 81.102.C would give them such a remedy. In most cases, the duty owed by a
nonlawyer allowed by this statute to provide legal services would be the same as the duty owed
46 Software companies would be an example of a provider which could potentially be advisingboth sides of a transaction and would have little contact with a client. Real estate agentswould be an example where the provider has a limited role as they are required by law to usethe forms promulgated by the Texas Real Estate Commission. See note 41, supra.
47 This section is new and would enable those bodies which allow non-lawyers to practice lawwithin their jurisdictions to provide an administrative procedure to ensure that the public is notbeing subjected to improper or unethical conduct by those practitioners.
Chapter 2001 provides, inter alia, for notice (§ 2001.051-.052), right to counsel(§ 2001.053), a hearing (§ 2001.057), evidentiary rules (§ 2001.081-.086), cross-examination(§ 2001.087), discovery (§ 2001.091-.103), findings of fact and conclusions of law(§ 2001.141), and judicial review (§ 2001.171-.178). Unless otherwise stated in the statutegiving rise to the administrative proceeding, judicial review will be under the substantialevidence rule (rather than trial de novo).
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by a lawyer. In some situations, however, a nonlawyer’s duty might need to be adjusted as would
a lawyer’s duty in similar circumstances – for example, where the service is being properly
provided to both sides of a transaction and/or where the provider has a limited role.46
D. Any administrative agency of this state or a subdivision of this state which
allows persons other than members of the state bar to engage in the practice
of law within its jurisdiction may provide for an administrative procedure to
hear complaints as to the conduct of such persons and to discipline any such
person. Such procedure will be subject to the provisions applicable to
contested cases in Chapter 2001, Government Code.47
Sections 81.107 and 81.108 - Enhanced Enforcement
Sections 81.103 to 81.106 would be unchanged, after which new sections 81.107 and
81.108 would be added.
48 This section is new.
49 Although the question of appropriations is outside the purview of the Task Force, many onthe Task Force believe that UPL enforcement historically has been inadequately funded, whichhas placed a significant strain on the volunteers assisting the UPL Committee and in someinstances has curtailed the ability of the UPL Committee to carry out its enforcement duties.
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§ 81.107 Attorney General as Special CounselThe attorney general, on request of the unauthorized practice of law committee, mayact as special counsel to assist the unauthorized practice of law committee incarrying out its purposes in such manner as the unauthorized practice of lawcommittee and attorney general may decide. Such assistance shall be in addition tothe attorney general’s other powers and authority under applicable law.48
The Unauthorized Practice of Law Committee has relied almost exclusively on volunteers
to investigate and pursue violations of the UPL statute. This provision is intended to augment the
Committee’s resources by allowing the Committee to call on the Office of Attorney General to
assist in investigation and enforcement.49 This assistance might be such that the Office of Attorney
General acts as sole counsel or as co-counsel with other counsel for the Committee. The scope
of assistance would be determined by agreement between the Committee and the Attorney
General. The Attorney General would continue to retain authority to investigate and enforce
other violations of law, including violations of the Texas Deceptive Trade Practices - Consumer
Protection Act.
§ 81.108 Recovery
A. A person who pays compensation to another person who engages in the
unauthorized practice of law in violation of section 81.102 may bring suit for
and is entitled to:
1. Recovery of the compensation paid; and
2. Court costs and reasonable and necessary attorney’s fees.
50 See TEX. BUS. & COM. CODE § 17.45(9) (“‘Knowingly’ means an actual awareness, at thetime of the act or practice complained of, of the falsity, deception, or unfairness of the act orpractice . . . but actual awareness may be inferred where objective manifestations indicate thata person acted with actual awareness.”).
51 Subsection 81.108 is derived from Tex. Government Code § 83.004.
52 Precedent allows a person sued by a non-lawyer for fees for the legal services rendered by thenon-lawyer to refuse to pay, because the contract for such fees is illegal. Hughes v. FortWorth Nat’l Bank, 164 S.W.2D 231 (Tex. Civ. App. — Fort Worth 1942, writ ref’d); J. R.Phillips Inv. Co. v. Road Dist. No. 18, 172 S.W.2d 707 (Tex. Civ. App. — Waco 1943 writref’d); cf. Elliott v. Henck, 223 S.W.2d 292 (Tex. Civ. App. — Galveston 1949, writ ref’dn.r.e.) (citing to former Penal Code article 430a, §7). Recovery has been denied even wherethe person being sued is a lawyer who breached a fee-splitting agreement with the non-lawyerby retaining both shares of the fees. See Red v. McComb, 119 S.W.2d 707 (Tex. Civ. App. —Beaumont 1938, no writ). This principle of law has been codified for real estate transactiondocuments in Tex. Government Code § 83.005.
53 That section provides:A person who pays a fee prohibited by this chapter may bring suit and is entitledto:
(1) recovery of the fee paid;(2) damages equal to three times the fee paid; and(3) court costs and reasonable and necessary attorney’s fees.
TEX. GOV’T CODE § 83.005.
54 See TEX. BUS. & COM. CODE § 17.50(b)(1).
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If the trier of fact finds that the other person has knowingly50 engaged in the
unauthorized practice of law in violation of section 81.102, the court shall
increase threefold the recovery of compensation paid.
B. An employer may not recover under this section against a person who
has acted as an employee of the employer.
C. This section does not limit or restrict any other remedy available at
law.51
This subsection extends current law, which allows a person to refuse to pay for legal
services performed by a nonlawyer.52 Adapting the language of section 83.005 of the Government
Code53 and the treble-damages approach used in the Texas Deceptive Trade Practices Act54 and
55 See TEX. BUS. & COM. CODE § 15.21(a)(1).
56 The American Bar Association is considering a revision to Model Rule of ProfessionalConduct 5.5 to allow more multijurisdictional practice. See Margaret Graham Tebo, StateHopping: UPL case law trying to catch up with lawyers on the go, ABA JOURNAL 18 (Dec.
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the Texas Free Enterprise and Antitrust Act55, this subsection trebles the amount of recovery to
three times the amount of compensation paid if the provider knowingly engages in the
unauthorized practice of law.
There is a general perception that the prohibition against the unauthorized practice of law
has not been effectively enforced. Although the Task Force believes that the Unauthorized
Practice of Law Committee has done a commendable job of enforcement with the resources
available, this treble-damage provision will enable consumers effectively to enforce the statute
themselves.
An exception is made to disallow an employer from suing its own employee. The Task
Force felt that giving an employer a right to recover in that situation could unjustly reward the
employer and lessen the motivation of the employer to police its employees concerning conduct
which could be a violation of the statute.
Epilogue
The Task Force has come to understand that the next two decades will bring dramatic
changes to the legal profession. What labor-saving devices were to the Twentieth Century,
thought-saving devices will be to the Twenty-first. Artificial intelligence and expert systems will
assume the burden of accomplishing many if not most analytical tasks. Medical diagnosis, legal
analysis and drafting, scientific testing, and business evaluation will be a few of the fields
transformed. As electronic commerce becomes prevalent, borders will become less significant.56
2000) (both the ABA Commission on the Evaluation of the Rules of Professional Conduct andthe Commission on Multijurisdictional Practice are studying the issue). See also <www.abanet.org/cpr/ethics2k.html>.
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The more nationwide and worldwide commerce becomes, so will follow law and the practice of
law. The legal profession will probably evolve more in the next twenty years than it has in the past
century.
The proposal made by this Task Force does not try to look forward to anticipate
developments well over the horizon. The Task Force does believe, however, that the profession
must start moving forward to modernize regulation of the practice of law as it exists today. To
leave the 1980's-vintage UPL statutes where they are now would only make more wrenching the
changes which will be coming.
The last decade has shown us what happens to those who fail to adapt to the realities of
a computer and electronic world. If we do not move forward with changes obviously needed to
reflect currently-evolving practice, Texas law and practitioners will be left behind by other
jurisdictions and lawyers willing to move forward at equal pace with the future.
Walker Arenson
Amanda G. Birrell
Jim Blume
Brent Clifton (chair)
Terry W. Conner
Kelly Frels
Hon. Rodney Gilstrap
Gregory Huffman
Rebecca Lightsey
Vidal Martinez
Witcher McCullough III
Dick Miller
Lee Teran
Robert Valdez
Doc Watson
Mark Witcher
ex officio
Lynne Liberato
Broadus Spivey
Antonio Alvarado
Linda Acevedo
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Appendix A
Text of Proposed Statutory Language
§ 81.101 Definitions
A. The “practice of law,” as used in this chapter, includes
1. Providing legal representation;
2. Providing legal advice;
3. Preparing or negotiating, in whole or in part, a will, trust,
contract, conveyance, pleading, or other instrument to the
extent such preparation or negotiation is performed or offered
explicitly or implicitly to provide legal advice or legal
representation; or
4. Those activities described in section 81.102.B.
B. “Legal representation” means acting as an advocate in governmental
adjudicative proceedings in a court or administrative agency to
determine the specific rights or obligations of one or more persons.
C. “Legal advice” means acting in a professional capacity as a personal
advisor to another person as to the specific rights or obligations of one
or more persons through the interpretation and application of laws,
regulations, and other legal standards;
D. “In a professional capacity” means acting i) with the expectation that
compensation for such advice will be provided by or on behalf of the
person receiving the advice or that such compensation, although
ordinarily expected by the provider, will be waived for charitable or
civic reasons, ii) with the express or implied representation that the
provider is an attorney or lawyer, or iii) as part of a pattern of
recurring conduct in which the provider holds himself or herself out
as an advisor having special competence in the interpretation and
application of laws, regulations, and other legal standards.
E. “Individual” means a human being.
F. “Person” means an individual, corporation, organization, government
or governmental subdivision or agency, business trust, estate, trust,
partnership, association, or any legal entity.
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G. “Attorney” or “lawyer” means an individual who is a member of the
state bar or is otherwise licensed and in good standing to practice law
in another state of the United States.
H. The definition of the practice of law in this section is not exclusive and
does not deprive the judicial branch of the power and authority to
determine whether other services and acts not enumerated may
constitute the practice of law.
Section 81.102 - Who Can Practice Law and Under What Circumstances
§ 81.102 Qualifications for the Practice of Law
A. Except as provided in subsection B, a person may not engage in the
practice of law in this state unless the person is a member of the state
bar.
B. The following additional persons may engage in the practice of law to
the limited extents specified below:
1. Individuals, to the extent they are acting pro se;
2. Individuals who are continuing employees of a person, to the
extent they are engaged in providing solely to their primary
employer or any entity controlled by or controlling such
employer, and no one else, legal advice, but not legal
representation or the authorship of forms or programs for use
in preparing real estate transaction documents for the
creation, encumbrance, or release of a single individual’s or
family’s homestead rights;
3. Attorneys licensed in another jurisdiction, bona fide law
students, and unlicensed graduate students who are attending
or have attended a law school approved by the supreme court,
to the extent authorized by rules promulgated by the supreme
court;
4. Individuals representing a client within the jurisdiction of a
justice court or a small claims court of this state, to the extent
authorized by rules promulgated by the supreme court;
5. Individuals providing to a client legal representation and legal
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advice inherent in such representation within the jurisdiction
of an administrative agency of the state or a subdivision of the
state, to the extent authorized by rules promulgated by and
within the scope of authority of such agency or body;
6. Individuals providing to a client legal representation and legal
advice inherent in such representation within the jurisdiction
of a court or administrative agency of the federal government,
to the extent authorized by and within the scope of authority
of such court or agency;
7. Individuals acting as arbitrators, mediators, or impartial third
parties in alternative dispute resolution procedures;
8. Persons authoring, publishing, and distributing written
materials, books, forms, computer software, or similar
products incorporating legal advice, to the extent of such
authorship, publication, and distribution, if the products
clearly and conspicuously state that the products are not a
substitute for the advice of an attorney licensed in the state
where the product is used, provided, however, that this
subsection does not apply to forms or programs used in
preparing real estate transaction documents for the creation,
modification, or release of a single individual’s or family’s
homestead rights.
9. Persons acting as real estate brokers pursuant to The Real
Estate License Act (Article 6573a, Vernon’s Texas Civil
Statutes), to the extent of completing forms promulgated
pursuant to and complying with section 16 of that act to bind
the sale, exchange, option, lease or rental of an interest in real
property;
10. Persons performing acts relating to the lease, sale, or transfer
of any mineral or mining interest in real property, to the extent
of the preparation of legal instruments affecting title to real
property in a transaction involving such mineral or mining
interest;
11. Individuals employed by and under the active and direct
supervision and review of an attorney licensed in this state or
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a person described in paragraphs 2, 3, 4, 5, and 6 above, to the
extent such employees are merely assisting but not supplanting
the person engaged in the practice of law and the client
understands that the employee is not an attorney, or if
applicable, is not an attorney licensed by the supreme court;
and
12. Individuals employed by or acting as an agent for an entity
approved by the Internal Revenue Service as tax exempt
pursuant to Section 501 (c) (3) of the Internal Revenue Code
and approved under rules of the Texas Supreme Court as a
non-profit organization eligible to use this section to provide
legal services to the poor may appear in court to adduce
testimony to establish the legal prerequisites of agreed or
uncontested orders in suits under Title 1 or Title 5 of the
Texas Family Code, provided that: (1) a member of the state
bar employed by or acting as the agent of the entity has
undertaken to represent the person testifying; (2) the order
proffered for execution by the court is prepared under the
direct supervision and review of and signed by the member of
the state bar and is submitted to the court prior to testimony
being presented; (3) a record of the testimony is made; (4) the
person testifying acknowledges in writing or on the record that
he or she understands that the individual appearing with the
person in court is not an attorney licensed by the Supreme
Court of Texas to practice law in this state; (5) the individual
is limited to adducing testimony from the person appearing in
court and shall not provide legal advice or otherwise provide
legal representation to the person unless otherwise allowed by
law; and (6) the entity shall maintain in force professional
liability insurance with limits of not less than $100,000 per
incident to cover liability for the acts, errors, and omissions of
the person appearing in court to elicit such testimony. A
court shall have the authority to exclude the individual from
participation in proceedings before the court for good cause
shown.
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C. All persons described in subparagraphs 2, 3, 4, 5, 6, and 8 of
subsection B who engage in or undertake the practice of law in this
state shall be subject to the standards of care and ethics as would be
applicable to members of the state bar in similar circumstances.
D. Any administrative agency of this state or a subdivision of this state
which allows persons other than members of the state bar to engage
in the practice of law within its jurisdiction may provide for an
administrative procedure to hear complaints as to the conduct of such
persons and to discipline any such person. Such procedure will be
subject to the provisions applicable to contested cases in Chapter
2001, Government Code.
* * * * *
§ 81.107 Attorney General as Special Counsel
The attorney general, on request of the unauthorized practice of law
committee, may act as special counsel to assist the unauthorized practice of
law committee in carrying out its purposes in such manner as the
unauthorized practice of law committee and attorney general may decide.
Such assistance shall be in addition to the attorney general’s other powers
and authority under applicable law.
§ 81.108 Recovery
A. A person who pays compensation to another person who engages in
the unauthorized practice of law in violation of section 81.102 may
bring suit for and is entitled to:
1. Recovery of the compensation paid; and
2. Court costs and reasonable and necessary attorney’s fees.
If the trier of fact finds that the other person has knowingly engaged
in the unauthorized practice of law in violation of section 81.102, the
court shall increase threefold the recovery of compensation paid.
B. An employer may not recover under this section against a
person who has acted as an employee of the employer.
C. This section does not limit or restrict any other remedy
available at law.
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Appendix B
Changes from Preliminary Report
The May 2000 Preliminary Recommendation was revised in a number of significant regards
by the Task Force. Many of the changes merely reflect tighter editing to accomplish the goals
discussed above in regard to each section. A few of the changes either deleted or added
provisions, the most significant of which changes are discussed below.
Section 81.101
Section 81.101 was revised to add an additional category of conduct which can constitute
the practice of law – a pattern of recurring conduct of holding oneself out as specially competent.
This revision was made to close a possible loophole in the original recommendation where an
organization might seek to advise members or others on their legal rights without any charge for
the service. The Task Force was concerned that a person might have the same reliance in that
situation as in the situation where the person is paying for the service. However, the Task Force
was concerned that reliance alone should not be the criterion as that would sweep in situations
such as where a person relies on a comment by a friend or neighbor about legal issues. To ensure
that the additional category did not recreate the overbreadth found in the current statute, the
additional category was drafted to include only those situations where there was a pattern of that
conduct.
57 This section would have been an expansion of Tex. Government Code § 83.003, which appliesonly to instruments affecting title to real property.
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Former Section 81.102(11)
This proposed section read as follows:
11. Persons preparing and negotiating a trust, contract, conveyance, or other
transaction instrument to which such person is a party without compensation
for preparation of the instrument paid by the other party to the instrument,
to the extent of completion of forms prepared and approved for the particular
kind of transaction by a member of the state bar or by a person described in
and to the extent allowed by paragraphs 2 or 3 of this section;57
This subsection was inserted in the Preliminary Recommendation to recognize the
widespread use of computer programs by lenders and other institutional parties to frequently-
occurring transactions, especially loan transactions. The intent of the new provision was to
provide greater protection for consumers by ensuring that a licensed Texas lawyer or equivalently-
qualified person would have a role in creating and monitoring the forms program creating the
transaction documents. This provision was intended as an additional layer of protection to
supplement the provision (section 81.102.C) creating a duty on creators of software and other
publications equivalent to that of an attorney.
This proposed provision received a great deal of comment. A number of persons were
concerned that the provision would encourage the use of forms by persons other than licensed
Texas lawyers and create problems, especially in real estate transactions involving consumers’
homestead rights.
58 This blank would have been filled in after receiving public comment.
59 See Chapter 153, TEX. FAMILY CODE.
60 See Chapter 154, TEX. FAMILY CODE.
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The Task Force decided to eliminate this provision for at least two reasons. On one hand,
the Task Force inserted a new limitation in section 81.102 on an inhouse employee’s preparation
of real estate documents involving Texas homestead rights to reduce the danger of a consumer’s
homestead rights being clouded by improper transaction documents. On the other hand, the Task
Force concluded that the eliminated provision could have been read incorrectly to imply that a
corporation does not have a right to use form documents in transactions to which the corporation
is a party.
Originally-proposed Section 81.102.B.12
The May 2000 recommendation included a section which would have allowed charitable
organizations to provide very limited types of pro bono legal services through non-lawyers. This
section was proposed in response to criticisms of the bar for failing to meet the legal needs of low-
income clients.
12. Persons which have been determined by the Internal Revenue Service
to be entities described in Section 501(c)(3) of the Internal Revenue
Code and have been listed in the Cumulative List of Organizations
Described in Section 170(c) of the Internal Revenue Code of 1986, IRS
Publication 78, to the extent such entity provides without payment of
compensation by the client:
a. Legal advice or legal representation relating to divorces
involving less than $_______58 of property and not involving
any dispute as to the conservatorship59 or support60 of any
children;
61 This blank would have been filled in after receiving public comment.
62 This blank would have been filled in or eliminated after receiving public comment. Onepossible additional area in which charitable entities might have been allowed to practice lawwould be in drafting “wills devising less than $_______ of property at the time the will isdrawn.” The task force chose not to recommend such a provision in the PreliminaryRecommendation because of questions raised as to the need for such a provision.
63 This provision does not currently exist under Chapter 81.
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b. Legal advice or legal representation to obtain protective
orders described in Tex. Family Code § 85.022 for the
protection of any individual alleged to be a victim of family
violence;
c. Legal advice relating to claims made out-of-court for
benefits of less than $_______61 pursuant to an insurance
policy for which the client is a named insured; and
d. ___________________;62
provided, however, such entity shall (1) maintain in force professionalliability insurance with limits of not less than $100,000 per incident tocover liability as a result of acts, errors or omissions in the course ofproviding legal advice or legal representation, and (2) obtain a writtendeclaration from each client, in the client’s native language if the client isnot fluent in English, that the client understands that the employeeproviding legal advice or legal representation is not an attorney, or ifapplicable, is not an attorney licensed by the supreme court;63
This provision was reduced in scope partly because of concerns expressed about the
inability of nonlawyers to discern complexities in even simple-appearing divorces, the
availability to clients of inexpensive no-frills divorces, and the effect the provision might have
in reducing the bar’s commitment to public interest representation. Although a number of the
64 In July of this past year, Attorney General Reno suggested in a speech in Runnymede,England a similar proposal. Janet Reno, After-Luncheon Speech (July 15, 2000), reprinted in<http://www.usdoj.gov/ag/speeches/2000/0715agrunnymede.htm> (suggesting college-educated “community advocates” to handle landlord/tenant, domestic violence, immigration,and “re-entry from prison” matters). The American Bar Association will be studying thisissue.
65 One possible change might be the simplification of the divorce process. Large numbers ofpersons represent themselves pro se in divorce proceedings. If the process of obtaining even asimple-appearing divorce is fraught with legal issues too complex or subtle for well-trainednon-lawyer advocates to handle, then the current process clearly places in jeopardy theuntrained pro se parties handling their own divorces.
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members of the Task Force had reservations about the validity of these concerns, the lack of
support from both family lawyers and public interest providers made clear that the time had not
arrived for this type of proposal to be enacted in Texas.64
The Task Force hopes that the modest revision which the Task Force substituted into
the final proposal will be viewed as a first step which will lead to more ambitious changes in
the future.65
