FEE REFERRAL RULE WENT INTO EFFECT
MARCH 1, 2005
Fee referral rules went into effect March 1, 2005. The State Bar of Texas held a referendum on these rules, which was approved by bar members in December 2004. The Supreme Court, on January 28, 2005, then amended Texas Disciplinary Rule 1.04 to reflect the approved changes. (Click here to view the new rule (PDF)). The rule prevents lawyers from collecting fees for referring cases for which they have no continuing responsibility. On a related issue, the referendum also approved changes to the advertising rules to provide that an ad is false and misleading if it features an actor playing a lawyer or a client.
Background: Fee Referral Rule
The Texas Supreme Court adopted Rule 8a of the Texas Rules of Civil Procedure which was to go into effect on January 1, 2004. Rule 8a placed restrictions on referral fees, including limiting the referral fee amount to $50,000. The State Bar of Texas asked the Supreme Court to give the State Bar an opportunity to deal with these issues. The Supreme Court granted the State Bar's request and suspended the January 1, 2004 effective date of the Rule 8a.
The Referral Fee Task Force, set up by the State Bar, conducted public hearings, and gathered comments, and completed a survey (PDF) of Texas referral practices, which culminated in the issuance of a proposal. On June 23rd, the State Bar of Texas board of directors approved the proposal (Click here to view the Proposal PDF) from the Referral Fee Task Force. The Bar board forwarded the proposal to the Texas Supreme Court. After seeking and obtaining comments on that proposal, the Supreme Court approved the proposal and asked that it be submitted to a referendum of the membership of the Bar. The State Bar put the fee referral referendum to a vote and it passed (54 percent voting yes to 45% voting no). The referendum on the advertising rule also passed (76 percent to 23 percent).
You may find the following documents helpful:
The November 2004 issue of the Texas Bar Journal set out the Referendum. Additionally, the December 2003 issue of the Texas Bar Journal contained other articles relating to referral fees. You may read these on-line at www.texasbar.com, by clicking on Texas Bar Journal, and selecting the December 2003 or November 2004 issue.
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