Legal Ethics

Law firms can't call nonlawyers 'CEO' or 'chief technology officer,' ethics opinion says

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Law firms operating in Texas can’t use titles such as “chief executive officer” or “chief technology officer” for nonlawyer managers, according to an ethics opinion by the Texas bar’s ethics committee.

The ethics opinion says firms shouldn’t use “officer” in nonlawyer titles because the word indicates the person has the power to control either the entire law firm or significant areas of the firm’s operations. Nor can law firms use the word “principal” to describe nonlawyer managers because the word implies the employee has an interest in the firm involving control or ownership.The ABA/BNA Lawyers’ Manual on Professional Conduct has a report on the opinion.

Texas ethics rules do not allow nonlawyers to direct or control the professional judgment of a lawyer, the ethics opinion says. Firms that follow this rule but nonetheless give nonlawyers the title of “officer” or “principal” are communicating in a false or misleading way, according to the opinion.

The ethics opinion is at odds with the way that many large law firms operate, according to the Lawyers’ Manual. Many law firms hire nonlawyers with top business backgrounds and give them titles reflecting their roles. The story offers some examples. Scott Green is “chief executive officer” of Pepper Hamilton, which doesn’t have offices in Texas. And Elizabeth Hughes Eginton is “chief marketing officer” at Latham & Watkins.

The ethics opinion addressed a second question: May a Texas law firm pay bonuses to nonlawyer employees based on its ability to meet a revenue or profit target? The opinion said firms can’t do so because of the ethical ban on sharing legal fees with a nonlawyer.

“Such a plan would provide an incentive for the firm’s non-lawyer employees to increase revenues,” the opinion said, “which could be accomplished through soliciting clients, or to reduce expenses, which could be accomplished by interfering with a lawyer’s independent judgment in practicing law.”

The opinion adds that law firms may, however, take revenue and profits into account when deciding whether to pay bonuses and how much to pay. But firms can’t make promises such as, “We will pay you a bonus of $10,000 if the firm’s revenue (or profit) for the year is at or above $1 million.”

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