1-1 By: Hunter of Nueces (Senate Sponsor - Armbrister) H.B. No. 1926
1-2 (In the Senate - Received from the House May 13, 1993;
1-3 May 14, 1993, read first time and referred to Committee on State
1-4 Affairs; May 29, 1993, reported favorably by the following vote:
1-5 Yeas 12, Nays 0; May 29, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Harris of Dallas x
1-9 Rosson x
1-10 Carriker x
1-11 Henderson x
1-12 Leedom x
1-13 Lucio x
1-14 Luna x
1-15 Nelson x
1-16 Patterson x
1-17 Shelley x
1-18 Sibley x
1-19 West x
1-20 Whitmire x
1-21 A BILL TO BE ENTITLED
1-22 AN ACT
1-23 relating to the regulation of lawyer referral services.
1-24 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-25 SECTION 1. Article 320d, Revised Statutes, is amended to
1-26 read as follows:
1-27 Art. 320d. Lawyer Referral Services
1-28 Sec. 1. SHORT TITLE. This article may be cited as the
1-29 "Texas Lawyer Referral Service Quality Assurance Act."
1-30 Sec. 2. PURPOSE; PUBLIC POLICY. (a) The legislature finds
1-31 that:
1-32 (1) every person in this state should have access to
1-33 the legal system for legally recognized purposes;
1-34 (2) a person's access to the legal system is enhanced
1-35 by the assistance of a qualified lawyer;
1-36 (3) the public often encounters difficulty in
1-37 identifying and locating qualified lawyers who are willing to
1-38 consult with them about the person's legal needs; and
1-39 (4) in order to prevent potential deception,
1-40 misrepresentation, and unfair business practices by some entities
1-41 that operate as lawyer referral services, a comprehensive
1-42 regulatory scheme is necessary.
1-43 (b) Bona fide lawyer referral services are uniquely
1-44 qualified to provide referral services under the supervision of the
1-45 State Bar of Texas for the benefit of the public. It is the public
1-46 policy of the state to support the establishment of lawyer referral
1-47 services and to encourage these services to:
1-48 (1) make legal services readily available to the
1-49 general public through a referral method that considers the
1-50 client's financial circumstances, spoken language, geographical
1-51 convenience, and the type and complexity of the client's legal
1-52 problem;
1-53 (2) provide information about lawyers and the
1-54 availability of legal services that will aid in the selection of a
1-55 lawyer; and
1-56 (3) provide referrals to lawyers who meet minimum
1-57 qualifications established under this article or to pro bono
1-58 publico legal programs when in the best interests of a client.
1-59 Sec. 3. DEFINITIONS. In this article:
1-60 (1) "Entity" means an individual, partnership,
1-61 corporation, association, or any other form of organization.
1-62 (2) "Lawyer referral service" means an entity or
1-63 service or agency of an entity that refers potential clients to
1-64 lawyers without regard to whether the term "referral service" is
1-65 used. The term does not include:
1-66 (A) a bona fide organization that recommends,
1-67 furnishes, or pays for legal services for its members or
1-68 beneficiaries and that satisfies the conditions of the disciplinary
2-1 rules of professional conduct or other rules adopted by the supreme
2-2 court;
2-3 (B) a plan of prepaid legal services insurance;
2-4 (C) individual referrals made by one lawyer to
2-5 another lawyer that are made in conformance with the disciplinary
2-6 rules of professional conduct or other rules adopted by the supreme
2-7 court;
2-8 (D) lawyers who jointly advertise their own
2-9 services in a manner that clearly discloses that the advertising is
2-10 intended solely to solicit clients for those lawyers; or
2-11 (E) a service of a pro bono publico legal
2-12 assistance program that does not accept a fee from either the
2-13 lawyer or the client.
2-14 (3) "State bar" means the State Bar of Texas acting
2-15 through its board of directors or the board's designee.
2-16 Sec. 4. CERTIFICATION REQUIRED; FEES; RENEWAL. (a) An
2-17 entity must be certified by the state bar as provided by this
2-18 article to operate a lawyer referral service in this state.
2-19 (b) The state bar may adopt reasonable fees for the issuance
2-20 and renewal of a certificate under this article. A fee adopted
2-21 under this subsection shall be in an amount sufficient to cover the
2-22 costs of administering this article.
2-23 (c) A certificate under this section is valid for one year
2-24 from the date issued and may be renewed annually on the payment of
2-25 the required renewal fee.
2-26 Sec. 5. CERTIFICATION REQUIREMENTS. (a) To be certified
2-27 under this article, an entity must:
2-28 (1) be operated by a governmental entity or a
2-29 nonprofit entity exempt from federal taxation under Section
2-30 501(c)(3), 501(c)(4), or 501(c)(6) of the Internal Revenue Code of
2-31 1986 and its subsequent amendments; and
2-32 (2) certify on the application provided by the state
2-33 bar that the entity is operated primarily for the benefit of the
2-34 public.
2-35 (b) An applicant for certification or renewal of a
2-36 certification under this article must provide the state bar with a
2-37 list containing the name, firm name, address, and business
2-38 telephone number of not fewer than 25 lawyers who are from
2-39 different law firms who have contracted with the entity to be a
2-40 recipient of referral services. The list required under this
2-41 subsection must include each attorney or firm that is a subscriber
2-42 or potential subscriber to the entity's services.
2-43 Sec. 6. LAWYER PARTICIPATION. A lawyer who is licensed and
2-44 in good standing in this state who maintains an office in the
2-45 geographical area served by a lawyer referral service may receive
2-46 referrals of potential clients from the service if the lawyer:
2-47 (1) meets the requirements of Section 7 of this
2-48 article; and
2-49 (2) pays the entity a reasonable registration and
2-50 membership fee not to exceed the amounts set by rules adopted by
2-51 the state bar.
2-52 Sec. 7. COSTS AND FEES FOR LAWYERS AND REFERRAL SERVICES.
2-53 (a) A lawyer's charge to a potential client referred by a referral
2-54 service may not exceed the total cost, including legal fees and
2-55 expenses, that the client would be required to pay if a referral
2-56 service had not referred the client.
2-57 (b) The combined charges for a potential client by both the
2-58 lawyer and the referral service may not exceed $20 for the first 30
2-59 minutes of the initial office visit with the lawyer.
2-60 (c) An agreement between a lawyer and a referral service to
2-61 eliminate or restrict the fee for the first 30 minutes of an
2-62 initial office visit with the lawyer is in the public interest and
2-63 does not violate Chapter 15, Business & Commerce Code (Texas Free
2-64 Enterprise and Antitrust Act of 1983), and its subsequent
2-65 amendments or any other statute or rule.
2-66 (d) A fee permitted under Subsection (b) of this section
2-67 shall be dedicated to paying the reasonable operating expenses of
2-68 the referral service and to pay for public service programs
2-69 including pro bono publico legal programs.
2-70 Sec. 8. INSURANCE REQUIREMENT. A lawyer referral service
3-1 may, as a condition of membership, require a member to obtain a
3-2 policy of errors and omissions insurance, or require other proof of
3-3 financial responsibility in an amount to be determined by the
3-4 lawyer referral service.
3-5 Sec. 9. SUBJECT MATTER PANELS. (a) A lawyer referral
3-6 service shall establish specific subject matter panels.
3-7 (b) In addition to the requirement of Subsection (a) of this
3-8 section, a lawyer referral service may establish:
3-9 (1) moderate and no-fee panels;
3-10 (2) alternative dispute resolution panels; and
3-11 (3) other special panels that respond to the referral
3-12 needs of the public.
3-13 Sec. 10. COMMENTS AND COMPLAINT PROCEDURES. A lawyer
3-14 referral service shall establish policies and procedures to
3-15 determine client satisfaction with the services the referral
3-16 service provides and to address client complaints with regard to
3-17 the referral service or attorneys and firms that subscribe to the
3-18 referral service.
3-19 Sec. 11. SUSPENSION AND REMOVAL OF LAWYERS AND FIRMS.
3-20 (a) A lawyer referral service shall establish written policies and
3-21 procedures to suspend or remove a lawyer or firm from the referral
3-22 service's list of subscribers.
3-23 (b) The policies and procedures established under Subsection
3-24 (a) of this section shall include the suspension and removal of a
3-25 lawyer who fails to handle referred clients in a diligent and
3-26 responsible manner.
3-27 Sec. 12. NOTICE REQUIREMENTS. A lawyer referral service
3-28 shall include the following statement in all advertising or other
3-29 promotional efforts:
3-30 "This service is certified as a lawyer referral service as
3-31 required by the State of Texas under Article 320d, Revised
3-32 Statutes."
3-33 Sec. 13. RULES; ENFORCEMENT. (a) The state bar shall adopt
3-34 reasonable rules subject to the approval of the supreme court to
3-35 administer this article.
3-36 (b) The state bar may enforce this article and the rules
3-37 adopted under this article.
3-38 Sec. 14. INJUNCTION. (a) The state bar or a lawyer
3-39 referral service certified under this article may seek to enjoin a
3-40 violation of this article and may recover costs and attorney's fees
3-41 related to obtaining the injunction.
3-42 (b) Bond or other security may not be required of the state
3-43 bar or a referral service as a condition for the issuance of an
3-44 injunction under this section. <(a) An individual, firm,
3-45 corporation, organization, or any other entity may not operate as a
3-46 lawyer referral service in this state, or use the term "referral
3-47 service" or similar terms, if the purpose of the individual, firm,
3-48 corporation, organization, or entity is to refer potential clients
3-49 to attorneys unless:>
3-50 <(1) the referral service is offered primarily for the
3-51 benefit of the public;>
3-52 <(2) the referral service is operated by a
3-53 governmental entity or a nonprofit organization or entity exempt
3-54 from federal taxation under Section 501(c)(3), 501(c)(4), or
3-55 501(c)(6) of the Internal Revenue Code of 1954;>
3-56 <(3) the combined charges to the potential client by
3-57 the referral service and the attorney to whom the potential client
3-58 is referred do not exceed $20 for the first 30 minutes of the
3-59 initial office visit with the participating attorney;>
3-60 <(4) the organization or entity providing referral
3-61 services is the type that a lawyer may cooperate with under the
3-62 Code of Professional Responsibility (Section 9, Article X, Rules
3-63 Governing the State Bar of Texas); and>
3-64 <(5) all attorneys licensed by this state and
3-65 maintaining an office within the geographical area of the
3-66 population of potential clients served by the referral service are
3-67 eligible to participate in the referral service and to receive the
3-68 referral of potential clients if they comply with reasonable
3-69 participation requirements.>
3-70 <(b) This article does not apply to any bona fide
4-1 organization that:>
4-2 <(1) recommends, furnishes, or pays for legal services
4-3 to its members or beneficiaries; and>
4-4 <(2) satisfies the conditions of DR 2-103(E)(5) of the
4-5 Code of Professional Responsibility (Section 9, Article X, Rules
4-6 Governing the State Bar of Texas).>
4-7 <(c) This article does not apply to a lawyer who refers a
4-8 potential client to another lawyer or law firm and receives a
4-9 forwarding fee in conformity with DR 2-107 of the Code of
4-10 Professional Responsibility (Section 9, Article X, Rules Governing
4-11 the State Bar of Texas).>
4-12 <(d) A lawyer referral service and any participating
4-13 attorney accepting referrals from the referral service must comply
4-14 with any representation made to the public by the referral service
4-15 concerning a free or fixed limited-fee initial consultation period
4-16 between a referred potential client and a participating attorney
4-17 if:>
4-18 <(1) the potential client qualifies under the
4-19 conditions for the free or limited-fee consultation period; and>
4-20 <(2) the participating attorney has consented in
4-21 writing to accept referral of potential clients from the referral
4-22 service for free or for a fixed limited fee.>
4-23 <(e) An agreement between a referral service and a
4-24 participating attorney to eliminate or restrict the attorney's fee
4-25 for the first 30 minutes of the initial consultation period for
4-26 each potential client is in the public interest and does not
4-27 violate the Texas Free Enterprise and Antitrust Act of 1983
4-28 (Section 15.01 et seq., Business & Commerce Code).>
4-29 <(f) A violation or threatened violation of this article may
4-30 be enjoined by any person on proof that a violation has occurred or
4-31 is about to occur.>
4-32 SECTION 2. This Act takes effect September 1, 1993, except
4-33 that a lawyer referral service is not required to obtain a
4-34 certification required under this Act until on or after December 1,
4-35 1993.
4-36 SECTION 3. The importance of this legislation and the
4-37 crowded condition of the calendars in both houses create an
4-38 emergency and an imperative public necessity that the
4-39 constitutional rule requiring bills to be read on three several
4-40 days in each house be suspended, and this rule is hereby suspended.
4-41 * * * * *
4-42 Austin,
4-43 Texas
4-44 May 29, 1993
4-45 Hon. Bob Bullock
4-46 President of the Senate
4-47 Sir:
4-48 We, your Committee on State Affairs to which was referred H.B.
4-49 No. 1926, have had the same under consideration, and I am
4-50 instructed to report it back to the Senate with the recommendation
4-51 that it do pass and be printed.
4-52 Harris of
4-53 Dallas, Chairman
4-54 * * * * *
4-55 WITNESSES
4-56 FOR AGAINST ON
4-57 ___________________________________________________________________
4-58 Name: James Mc Cormack x
4-59 Representing: State Bar of Texas
4-60 City: Austin
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