By Corte                                                H.B. No. 19
         77R524 KLA-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to personal representatives of decedents' estates and the
 1-3     regulation of attorneys representing those personal
 1-4     representatives.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1. Subtitle G, Title 1, Government Code, is amended
 1-7     by adding Chapter 85 to read as follows:
 1-8                     CHAPTER 85. REGULATION OF ATTORNEYS
 1-9         REPRESENTING PERSONAL REPRESENTATIVES OF DECEDENTS' ESTATES
1-10                      SUBCHAPTER A.  GENERAL PROVISIONS
1-11           Sec. 85.001.  DEFINITIONS.  In this chapter:
1-12                 (1)  "Attorney" means a person who is licensed to
1-13     practice law in this state.
1-14                 (2)  "Estate" has the meaning assigned by Section 3,
1-15     Texas Probate Code.
1-16                 (3)  "Personal representative" has the meaning assigned
1-17     by Section 3, Texas Probate Code.
1-18                 (4)  "Representing attorney" means an attorney to whom
1-19     this chapter applies.
1-20           Sec. 85.002.  APPLICABILITY. (a)  Except as provided by
1-21     Subsection (b), this chapter applies only to an attorney who is
1-22     retained to provide legal services to a person in the person's
1-23     capacity as a personal representative of a decedent's estate.
1-24           (b)  Sections 85.052 and 85.053 do not apply to an attorney
 2-1     who is retained to defend the personal representative of a
 2-2     decedent's estate in an action for a breach of the representative's
 2-3     fiduciary duty after the breach is alleged to have occurred.
 2-4           Sec. 85.003.  CONSTRUCTION. Nothing in this chapter may be
 2-5     construed as creating an attorney-client relationship between an
 2-6     attorney who represents a personal representative of the estate of
 2-7     a decedent and an heir or beneficiary of the decedent.
 2-8           Sec. 85.004.  EFFECT ON OTHER LAW. (a)  This chapter controls
 2-9     to the extent of any conflict between this chapter and the Texas
2-10     Rules of Evidence, the Texas Disciplinary Rules of Professional
2-11     Conduct, or any other law governing an attorney-client
2-12     relationship.
2-13           (b)  Notwithstanding Section 81.024, the supreme court may
2-14     not amend or adopt rules in conflict with this chapter.
2-15               (Sections 85.005-85.050 reserved for expansion
2-16           SUBCHAPTER B.  DUTIES OF AND PROHIBITIONS ON ATTORNEYS
2-17           Sec. 85.051.  DISCLOSURE OF DUTIES AND PROHIBITIONS REQUIRED.
2-18     A representing attorney shall disclose to the personal
2-19     representative in writing the duties and prohibitions prescribed by
2-20     this subchapter.
2-21           Sec. 85.052.  DISCLOSURE OF CERTAIN ACTIONS OR OMISSIONS OF
2-22     PERSONAL REPRESENTATIVE REQUIRED. (a)  A representing attorney
2-23     shall disclose to each of the known or reasonably ascertainable
2-24     heirs or beneficiaries of the decedent and to the court in which
2-25     the estate is pending:
2-26                 (1)  any action taken or omission made by the personal
2-27     representative with respect to estate property that constitutes a
 3-1     breach of the personal representative's fiduciary duty, including
 3-2     the misuse, misappropriation, or unlawful conversion of estate
 3-3     property; and
 3-4                 (2)  any material misrepresentation made by the
 3-5     personal representative to the court with respect to estate
 3-6     property that adversely affects or has the potential to adversely
 3-7     affect the value of the estate.
 3-8           (b)  The attorney shall make the disclosure required by this
 3-9     section not later than the 10th day after the date the attorney
3-10     becomes aware of the action taken or omission or misrepresentation
3-11     made by the personal representative.
3-12           Sec. 85.053.  ASSISTANCE OF CERTAIN CONDUCT PROHIBITED. (a)
3-13     In this section, "knowingly assist" includes a failure to disclose.
3-14           (b)  A representing attorney may not knowingly assist the
3-15     personal representative in engaging in conduct described by Section
3-16     85.052.
3-17           Sec. 85.054.  ACCEPTANCE OF PAYMENT FOR SERVICES FROM ESTATE
3-18     PROHIBITED UNDER CERTAIN CIRCUMSTANCES. (a)  Except as provided by
3-19     Subsection (b), an attorney may not accept payment from a
3-20     decedent's estate for legal services provided by the attorney in
3-21     defending the decedent's personal representative in an action
3-22     brought by an heir or beneficiary of the decedent for breach of a
3-23     fiduciary duty.
3-24           (b)  An attorney may accept payment from the estate for legal
3-25     services described by Subsection (a) if:
3-26                 (1)  the court in which the estate is pending
3-27     determines, after a preliminary hearing, that the personal
 4-1     representative is likely to prevail in the action; and
 4-2                 (2)  the personal representative posts a bond in an
 4-3     amount determined by the court to be sufficient to pay the
 4-4     attorney's fees in the action.
 4-5               (Sections 85.055-85.100 reserved for expansion
 4-6                       SUBCHAPTER C.  CAUSE OF ACTION
 4-7           Sec. 85.101.  CIVIL ACTION. (a)  An heir or beneficiary of a
 4-8     decedent may file on behalf of the estate an action against an
 4-9     attorney who violates this chapter, other than Section 85.051.
4-10           (b)  An heir or beneficiary must file an action under this
4-11     section in the court in which the estate is pending.  If the estate
4-12     is closed, the heir or beneficiary must file the action in  a
4-13     county court or district court in the county in which:
4-14                 (1)  the attorney provided legal services to the
4-15     personal representative; or
4-16                 (2)  the attorney's office is located.
4-17           (c)  If an action authorized by this section is filed in the
4-18     court in which the estate is pending, the judge, on the motion of
4-19     any heir or beneficiary of the decedent, may transfer the action to
4-20     the district court located in the county in which the action was
4-21     filed.
4-22           (d)  An heir or beneficiary must bring an action under this
4-23     section not later than the fourth anniversary of the date the cause
4-24     of action accrues.
4-25           Sec. 85.102.  CERTAIN ACTIONS NOT AUTHORIZED.  A personal
4-26     representative may not bring an action against the personal
4-27     representative's attorney for a breach of the attorney-client
 5-1     privilege resulting from a duty required to be performed by the
 5-2     attorney under this chapter.
 5-3           Sec. 85.103.  DAMAGES. (a)  An attorney who violates Section
 5-4     85.052, 85.053, or 85.054 is liable:
 5-5                 (1)  to the decedent's estate for actual damages; and
 5-6                 (2)  to the heir or beneficiary bringing the action on
 5-7     behalf of the estate for exemplary damages and reasonable expenses
 5-8     incurred in filing the action, including reasonable attorney's
 5-9     fees, reasonable expert witness fees, and deposition expenses.
5-10           (b)  Actual damages for a violation of Section 85.052 or
5-11     85.053 include:
5-12                 (1)  an amount equal to the attorney's fees charged to
5-13     and collected from the estate by the attorney for legal services
5-14     provided on or after the date the act or omission that constituted
5-15     the violation occurred; and
5-16                 (2)  an amount equal to the amount by which the value
5-17     of the estate property was depleted as a result of the personal
5-18     representative's breach of fiduciary duty or misrepresentation, as
5-19     appropriate, and the attorney's violation of Section 85.052 or
5-20     85.053.
5-21           (c)  Actual damages for a violation of Section 85.054 include
5-22     all fees collected by the attorney in violation of that section.
5-23     The court shall order that all fees charged to the estate but not
5-24     yet collected by the attorney be canceled.
5-25           SECTION 2.  Section 221(a), Texas Probate Code, is amended to
5-26     read as follows:
5-27           (a)  Application to Resign.  A personal representative who
 6-1     wishes to resign his trust shall file with the clerk his written
 6-2     application to the court to that effect, accompanied by a full and
 6-3     complete exhibit and final account, duly verified, showing the true
 6-4     condition of the estate entrusted to his care.  A personal
 6-5     representative who filed an application for resignation with the
 6-6     court but has not been discharged may not sell, distribute, or
 6-7     otherwise dispose of estate property except as provided by an order
 6-8     of the court.
 6-9           SECTION 3. Section 222(c), Texas Probate Code, is amended to
6-10     read as follows:
6-11           (c)  Order of Removal.  The order of removal shall state the
6-12     cause thereof.  It shall require that any letters issued to the one
6-13     removed shall, if he has been personally served with citation, be
6-14     surrendered, and that all such letters be cancelled of record,
6-15     whether delivered or not.  The order of removal shall prohibit the
6-16     personal representative from selling, distributing, or otherwise
6-17     disposing of estate property for any purpose except as provided in
6-18     the order.  It shall further require, as to all the estate
6-19     remaining in the hands of a removed person, delivery thereof to the
6-20     person or persons entitled thereto, or to one who has been
6-21     appointed and has qualified as successor representative.
6-22           SECTION 4. (a)  This Act takes effect September 1, 2001.
6-23           (b)  Chapter 85, Government Code, as added by this Act,
6-24     applies only to an attorney retained by a personal representative
6-25     on or after the effective date of this Act.  An attorney who is
6-26     retained by a personal representative before the effective date of
6-27     this Act is governed by the law in effect on the date the attorney
 7-1     was retained, and the former law is continued in effect for that
 7-2     purpose.
 7-3           (c)  Section 221(a), Texas Probate Code, as amended by this
 7-4     Act, applies only to a personal representative who files an
 7-5     application for resignation on or after the effective date of this
 7-6     Act.  A personal representative who files an application for
 7-7     resignation before the effective date of this Act is governed by
 7-8     the law in effect on the date the application was filed, and the
 7-9     former law is continued in effect for that purpose.