By Hunter of Nueces H.B. No. 1926
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of lawyer referral services.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 320d, Revised Statutes, is amended to
1-5 read as follows:
1-6 Art. 320d. Lawyer Referral Services
1-7 Sec. 1. SHORT TITLE. This article may be cited as the
1-8 "Texas Lawyer Referral Service Quality Assurance Act."
1-9 Sec. 2. PURPOSE; PUBLIC POLICY. (a) The legislature finds
1-10 that:
1-11 (1) every person in this state should have access to
1-12 the legal system for legally recognized purposes;
1-13 (2) a person's access to the legal system is enhanced
1-14 by the assistance of a qualified lawyer;
1-15 (3) the public often encounters difficulty in
1-16 identifying and locating qualified lawyers who are willing to
1-17 consult with them about the person's legal needs; and
1-18 (4) in order to prevent potential deception,
1-19 misrepresentation, and unfair business practices by some entities
1-20 that operate as lawyer referral services, a comprehensive
1-21 regulatory scheme is necessary.
1-22 (b) Bona fide lawyer referral services are uniquely
1-23 qualified to provide referral services under the supervision of the
1-24 State Bar of Texas for the benefit of the public. It is the public
2-1 policy of the state to support the establishment of lawyer referral
2-2 services and to encourage these services to:
2-3 (1) make legal services readily available to the
2-4 general public through a referral method that considers the
2-5 client's financial circumstances, spoken language, geographical
2-6 convenience, and the type and complexity of the client's legal
2-7 problem;
2-8 (2) provide information about lawyers and the
2-9 availability of legal services that will aid in the selection of a
2-10 lawyer; and
2-11 (3) provide referrals to lawyers who meet minimum
2-12 qualifications established under this article or to pro bono
2-13 publico legal programs when in the best interests of a client.
2-14 Sec. 3. DEFINITIONS. In this article:
2-15 (1) "Entity" means an individual, partnership,
2-16 corporation, association, or any other form of organization.
2-17 (2) "Lawyer referral service" means an entity or
2-18 service or agency of an entity that refers potential clients to
2-19 lawyers without regard to whether the term "referral service" is
2-20 used. The term does not include:
2-21 (A) a bona fide organization that recommends,
2-22 furnishes, or pays for legal services for its members or
2-23 beneficiaries and that satisfies the conditions of the disciplinary
2-24 rules of professional conduct or other rules adopted by the supreme
2-25 court;
2-26 (B) a plan of prepaid legal services insurance;
2-27 (C) individual referrals made by one lawyer to
3-1 another lawyer that are made in conformance with the disciplinary
3-2 rules of professional conduct or other rules adopted by the supreme
3-3 court;
3-4 (D) lawyers who jointly advertise their own
3-5 services in a manner that clearly discloses that the advertising is
3-6 intended solely to solicit clients for those lawyers; or
3-7 (E) a service of a pro bono publico legal
3-8 assistance program that does not accept a fee from either the
3-9 lawyer or the client.
3-10 (3) "State bar" means the State Bar of Texas acting
3-11 through its board of directors or the board's designee.
3-12 Sec. 4. CERTIFICATION REQUIRED; FEES; RENEWAL. (a) An
3-13 entity must be certified by the state bar as provided by this
3-14 article to operate a lawyer referral service in this state.
3-15 (b) The state bar may adopt reasonable fees for the issuance
3-16 and renewal of a certificate under this article. A fee adopted
3-17 under this subsection shall be in an amount sufficient to cover the
3-18 costs of administering this article.
3-19 (c) A certificate under this section is valid for one year
3-20 from the date issued and may be renewed annually on the payment of
3-21 the required renewal fee.
3-22 Sec. 5. CERTIFICATION REQUIREMENTS. (a) To be certified
3-23 under this article, an entity must:
3-24 (1) be operated by a governmental entity or a
3-25 nonprofit entity exempt from federal taxation under Section
3-26 501(c)(3), 501(c)(4), or 501(c)(6) of the Internal Revenue Code of
3-27 1986 and its subsequent amendments; and
4-1 (2) certify on the application provided by the state
4-2 bar that the entity is operated primarily for the benefit of the
4-3 public.
4-4 (b) An applicant for certification or renewal of a
4-5 certification under this article must provide the state bar with a
4-6 list containing the name, firm name, address, and business
4-7 telephone number of not fewer than 25 lawyers who are from
4-8 different law firms who have contracted with the entity to be a
4-9 recipient of referral services. The list required under this
4-10 subsection must include each attorney or firm that is a subscriber
4-11 or potential subscriber to the entity's services.
4-12 Sec. 6. LAWYER PARTICIPATION. A lawyer who is licensed and
4-13 in good standing in this state who maintains an office in the
4-14 geographical area served by a lawyer referral service may receive
4-15 referrals of potential clients from the service if the lawyer:
4-16 (1) meets the requirements of Section 7 of this
4-17 article; and
4-18 (2) pays the entity a reasonable registration and
4-19 membership fee not to exceed the amounts set by rules adopted by
4-20 the state bar.
4-21 Sec. 7. COSTS AND FEES FOR LAWYERS AND REFERRAL SERVICES.
4-22 (a) A lawyer's charge to a potential client referred by a referral
4-23 service may not exceed the total cost, including legal fees and
4-24 expenses, that the client would be required to pay if a referral
4-25 service had not referred the client.
4-26 (b) The combined charges for a potential client by both the
4-27 lawyer and the referral service may not exceed $20 for the first 30
5-1 minutes of the initial office visit with the lawyer.
5-2 (c) An agreement between a lawyer and a referral service to
5-3 eliminate or restrict the fee for the first 30 minutes of an
5-4 initial office visit with the lawyer is in the public interest and
5-5 does not violate Chapter 15, Business & Commerce Code (Texas Free
5-6 Enterprise and Antitrust Act of 1983), and its subsequent
5-7 amendments or any other statute or rule.
5-8 (d) A fee permitted under Subsection (b) of this section
5-9 shall be dedicated to paying the reasonable operating expenses of
5-10 the referral service and to pay for public service programs
5-11 including pro bono publico legal programs.
5-12 Sec. 8. INSURANCE REQUIREMENT. A lawyer referral service
5-13 may, as a condition of membership, require a member to obtain a
5-14 policy of errors and omissions insurance, or require other proof of
5-15 financial responsibility in an amount to be determined by the
5-16 lawyer referral service.
5-17 Sec. 9. SUBJECT MATTER PANELS. (a) A lawyer referral
5-18 service shall establish specific subject matter panels.
5-19 (b) In addition to the requirement of Subsection (a) of this
5-20 section, a lawyer referral service may establish:
5-21 (1) moderate and no-fee panels;
5-22 (2) alternative dispute resolution panels; and
5-23 (3) other special panels that respond to the referral
5-24 needs of the public.
5-25 Sec. 10. COMMENTS AND COMPLAINT PROCEDURES. A lawyer
5-26 referral service shall establish policies and procedures to
5-27 determine client satisfaction with the services the referral
6-1 service provides and to address client complaints with regard to
6-2 the referral service or attorneys and firms that subscribe to the
6-3 referral service.
6-4 Sec. 11. SUSPENSION AND REMOVAL OF LAWYERS AND FIRMS. (a)
6-5 A lawyer referral service shall establish written policies and
6-6 procedures to suspend or remove a lawyer or firm from the referral
6-7 service's list of subscribers.
6-8 (b) The policies and procedures established under Subsection
6-9 (a) of this section shall include the suspension and removal of a
6-10 lawyer who fails to handle referred clients in a diligent and
6-11 responsible manner.
6-12 Sec. 12. NOTICE REQUIREMENTS. A lawyer referral service
6-13 shall include the following statement in all advertising or other
6-14 promotional efforts:
6-15 "This service is certified as a lawyer referral service as
6-16 required by the State of Texas under Article 320d, Revised
6-17 Statutes."
6-18 Sec. 13. RULES; ENFORCEMENT. (a) The state bar shall adopt
6-19 reasonable rules subject to the approval of the supreme court to
6-20 administer this article.
6-21 (b) The state bar may enforce this article and the rules
6-22 adopted under this article.
6-23 Sec. 14. INJUNCTION. (a) The state bar or a lawyer
6-24 referral service certified under this article may seek to enjoin a
6-25 violation of this article and may recover costs and attorney's fees
6-26 related to obtaining the injunction.
6-27 (b) Bond or other security may not be required of the state
7-1 bar or a referral service as a condition for the issuance of an
7-2 injunction under this section. <(a) An individual, firm,
7-3 corporation, organization, or any other entity may not operate as a
7-4 lawyer referral service in this state, or use the term "referral
7-5 service" or similar terms, if the purpose of the individual, firm,
7-6 corporation, organization, or entity is to refer potential clients
7-7 to attorneys unless:>
7-8 <(1) the referral service is offered primarily for the
7-9 benefit of the public;>
7-10 <(2) the referral service is operated by a
7-11 governmental entity or a nonprofit organization or entity exempt
7-12 from federal taxation under Section 501(c)(3), 501(c)(4), or
7-13 501(c)(6) of the Internal Revenue Code of 1954;>
7-14 <(3) the combined charges to the potential client by
7-15 the referral service and the attorney to whom the potential client
7-16 is referred do not exceed $20 for the first 30 minutes of the
7-17 initial office visit with the participating attorney;>
7-18 <(4) the organization or entity providing referral
7-19 services is the type that a lawyer may cooperate with under the
7-20 Code of Professional Responsibility (Section 9, Article X, Rules
7-21 Governing the State Bar of Texas); and>
7-22 <(5) all attorneys licensed by this state and
7-23 maintaining an office within the geographical area of the
7-24 population of potential clients served by the referral service are
7-25 eligible to participate in the referral service and to receive the
7-26 referral of potential clients if they comply with reasonable
7-27 participation requirements.>
8-1 <(b) This article does not apply to any bona fide
8-2 organization that:>
8-3 <(1) recommends, furnishes, or pays for legal services
8-4 to its members or beneficiaries; and>
8-5 <(2) satisfies the conditions of DR 2-103(E)(5) of the
8-6 Code of Professional Responsibility (Section 9, Article X, Rules
8-7 Governing the State Bar of Texas).>
8-8 <(c) This article does not apply to a lawyer who refers a
8-9 potential client to another lawyer or law firm and receives a
8-10 forwarding fee in conformity with DR 2-107 of the Code of
8-11 Professional Responsibility (Section 9, Article X, Rules Governing
8-12 the State Bar of Texas).>
8-13 <(d) A lawyer referral service and any participating
8-14 attorney accepting referrals from the referral service must comply
8-15 with any representation made to the public by the referral service
8-16 concerning a free or fixed limited-fee initial consultation period
8-17 between a referred potential client and a participating attorney
8-18 if:>
8-19 <(1) the potential client qualifies under the
8-20 conditions for the free or limited-fee consultation period; and>
8-21 <(2) the participating attorney has consented in
8-22 writing to accept referral of potential clients from the referral
8-23 service for free or for a fixed limited fee.>
8-24 <(e) An agreement between a referral service and a
8-25 participating attorney to eliminate or restrict the attorney's fee
8-26 for the first 30 minutes of the initial consultation period for
8-27 each potential client is in the public interest and does not
9-1 violate the Texas Free Enterprise and Antitrust Act of 1983
9-2 (Section 15.01 et seq., Business & Commerce Code).>
9-3 <(f) A violation or threatened violation of this article may
9-4 be enjoined by any person on proof that a violation has occurred or
9-5 is about to occur.>
9-6 SECTION 2. This Act takes effect September 1, 1993, except
9-7 that a lawyer referral service is not required to obtain a
9-8 certification required under this Act until on or after December 1,
9-9 1993.
9-10 SECTION 3. The importance of this legislation and the
9-11 crowded condition of the calendars in both houses create an
9-12 emergency and an imperative public necessity that the
9-13 constitutional rule requiring bills to be read on three several
9-14 days in each house be suspended, and this rule is hereby suspended.