What’s in a Name For Texas Law Firms?

When it comes to their non-lawyer executives, apparently a lot.

Imagine being the chief technology officer or chief information officer at a large Texas company. You’ve worked hard and risen through the ranks, the top executives respect and value your expertise, and you’ve contributed to the firm’s overall success. Then one day, you learn that, for reasons completely unrelated to your job performance, the company has to remove your title of “officer.”

Confused? Then join a club populated by the biggest law firms in Texas and many of the large national firms with Texas offices that have been surprised by an ethics opinion issued in May by the State Bar of Texas. That opinion bans law firms in the state from using terms like “officer” or “principal” in the job titles of their non-lawyer employees. According to Opinion No. 642 from the State Bar’s Professional Ethics Committee, using such terms indicates that the person holding the title has the power to control “significant areas of the firm’s operations” (and possibly all, in the case of a “chief executive officer”). 

In addition, the opinion goes on, using a term like “principal” for non-lawyer employees “implies that the employees have an interest in the firm involving control, ownership, or both”—something strictly forbidden by the Texas Disciplinary Rules of Professional Conduct. These disciplinary rules prohibit non-lawyer ownership of a law firm, the sharing of legal fees with non-lawyers, and allowing non-lawyers to direct or conduct the professional judgment of a lawyer.

From the outset, Opinion No. 642 ignited a firestorm of controversy. In June, Stacy Brainin, the general counsel of Haynes and Boone, sent a letter to the chair of the Professional Ethics Committee, joined by the general counsel of 52 other firms based in Texas or with Texas offices. The letter urged the committee to reconsider its decision, saying, “We believe the Opinion misapplied the relevant ethical rules and, as a result, reached an overly broad conclusion that is not supported by the rules and does not protect the public, but instead would cause enormous problems for the day-to-day operations of law firms throughout Texas.” 

The firms went on to write that the committee was attributing too much significance to the word “officer” and ignoring both the important distinction between law firm employees who deal with clients and those who work in the back office, as well as the “realities facing law firms in the 21st century.” Far from using the “officer” title in the sense of corporate officers with the power to control and direct the law firm as a business entity, the firms pointed out, law firms have hired non-lawyer professionals to manage their finances, technology, human resources, marketing, etc., and bestowed on them titles like “chief technology officer”—much like the rest of corporate America.  

With titles like CIO and CTO becoming fairly common, the new restrictions could be sweeping.

But thanks to the opinion, critics argue, it will be harder for law firms to attract and retain these professionals, because the firms won’t be able to offer a title reflecting the employees’ significance within the firm.

With titles like CIO and CTO becoming more common, the new restrictions could be sweeping. A number of IT professionals at leading law firms have the word “officer” in their title, including Kurt Geisler, chief technology officer at Dallas-based Haynes and Boone, and Jerry McEachern, chief information officer at Locke Lord in Dallas. Most firms have chosen to stand pat for now, but at least one has changed the title of its chief information officer. Norton Rose Fulbright, which was not among the signatories on the law firms’ protest letter, reacted to the opinion by changing Edie Dillon’s title to chief of information technology, according to Dan McKenna, the firm’s director of media relations.  

The ethics opinion has prompted strong reactions from quarters beyond law firms, too. In June, five national or international organizations representing non-lawyer professionals also sent the Professional Ethics Committee a letter urging it to reconsider its position. The Association of Legal Administrators, the American Association of Law Libraries, the International Practice Management Association, and the Legal Marketing Association all wrote that they believed the opinion is “overly broad and fails to provide the protections to lawyer independence and to the public interest as intended.” The organizations asked the committee to adopt a “more flexible approach” to the issue of job titles for non-lawyer employees.

Specifically, they asked the committee to allow the use of the term “officer” or “principal” in titles for “clearly non-lawyer and/or administrative roles.” They also asked to “allow firms to provide incentive compensation for business performance to non-lawyer employees, as such compensation is not equivalent to sharing legal fees on specific client legal matters.” The reaction by members of the five national organizations of non-lawyer professionals reflects what has become the status quo throughout the U.S. Steve Fletcher, CIO at Charlotte, North Carolina’s Parker Poe Adams & Bernstein, says, “There is a universal use of the title ‘officer’, including CFO, CEO, CIO, CMO, and others. To say that these same professional executives couldn’t have ‘officer’ in their titles when working in a law firm is absurd.”

‘CONDESCENDING AND ANTIQUATED’

In the meantime, the opinion continues to generate controversy. SMU Dedman School of Law Professor Emeritus Fred Moss called the opinion “unrealistic,” and says the committee banned such titles “for the wrong reason.”  Moss says the committee is “worried about the diluting of the lawyer’s professional judgment by people in the firm who are not lawyers,” but he points out that because “the practice of law is becoming more interdisciplinary in nature, with technology assuming a greater role, lawyers and non-lawyers will be working more closely together in day-to-day legal practice.” 

The American Bar Association and states such as Michigan have also issued ethics opinions that don’t ban the use of titles like “officer” for non-lawyers, Moss says. The key, he explains, is providing greater disclosure to the public of the individual’s non-lawyer status on everything from websites to business cards and email signature blocks. “More disclosure is what should have been required,” Moss says. “If you’re concerned about misleading the public, then provide more disclosure.” 

Other commenters around the country are even more critical of the Texas committee’s ruling. Jeffrey Brandt, principal of Brandt Professional Services, says, “ the Texas bar’s attitude takes law firms back to the Stone Age with its ethics ruling. Perhaps they would prefer titles like ‘non-lawyer in charge of information’ or ‘non-lawyer in charge of marketing’?” And an editorial in Law Technology News called for Texas “to recant this condescending and antiquated opinion.”

Mark Osborn, an El Paso lawyer who chairs the Professional Ethics Committee, says the body agreed to revisit Ethics Opinion No. 642 at its Oct. 15 meeting, in response to the backlash. Neither he nor Dallas attorney John Glancy, who also serves on the committee, had any comment on the opinion or the reasoning behind it. “As with all of our opinions,” Osborn says, “Opinion 642 must stand on its own and speak for itself.” 

The day after meeting, the committee issued two letters—one directed to the 53 law firms that had asked that the opinion be repealed, and one to the Association of Legal Administrators, copying the executive directors at the four other national organizations for non-lawyer legal professionals. The letters were virtually identical, announcing that the committee had decided to “reconsider” Opinion 642. 

Osborn’s letter made it clear that he couldn’t say what the outcome would be or how long the process would take. Indeed, he has cautioned observers not to read too much into the decision to reconsider the opinion, saying the committee could elect to “make no change whatsoever, or to issue a different opinion clarifying its earlier stance.” 

The State Bar’s Professional Ethics Committee has a worthy goal: preventing the public from being misled. But it’s a goal that can be met without decimating the C-suite and disrespecting those who, even without a law license, nevertheless contribute to a law firm’s success. 

Comments