Referendum Rejection: Bar’s Outreach Efforts Fail to Make Texas Disciplinary Rule Proposals Palatable

Referendum Rejection: Bar’s Outreach Efforts Fail to Make Texas Disciplinary Rule Proposals Palatable

Miriam Rozen and John Council
Texas Lawyer
February 28, 2011

Nicole DeBorde

Harris County Criminal Lawyers Association
president Nicole DeBorde

Nicole DeBorde

Nicole DeBorde recalls opening a package late last year that contained a letter on “fancy letterhead” mailed from the State Bar of Texas. The message asked DeBorde, president of the Harris County Criminal Lawyers Association, to persuade her organization’s members to vote yes in the Bar’s 2011 referendum on proposed changes to the Texas Disciplinary Rules of Professional Conduct.

But for DeBorde, the Bar’s correspondence backfired. “I was immediately offended because I knew that I had already received complaints from my members about the proposed changes and then I get this expensive mailing on my dime,” she says referring to the use of her Bar dues. “There are a lot of people who are very unhappy with the State Bar of Texas,” says DeBorde, a Houston solo.

Rejected Amendments

After seven years of development and debate, Bar members voted down six ballot items containing proposed amendments to the Texas Disciplinary Rules of Professional Conduct — some by nearly 80 percent of the vote. The referendum ended at 5 p.m. on Feb. 17, with about 44 percent — or 38,516 — of the 87,910 Texas licensed attorneys who were eligible to vote casting their ballots.

The changes were controversial, including a proposed rule that some attorneys believed could allow third parties to hold up the distribution of clients’ settlement funds and turn lawyers into bill collectors. Others were concerned that another proposed rule failed to define “conflict of interest,” thereby putting lawyers at risk of being sanctioned.

On Feb. 17, after the release of the results, Terry Tottenham, president of the State Bar of Texas, said in a statement that the referendum was “the culmination of a long process that started in 2003. It was time to put these proposals before the lawyers of Texas. The debate was rigorous — from the time the Supreme Court first put the proposed amendments out for comment in October 2009 through” the final day of voting on the referendum. In an interview that night he added, “Referenda have failed in the past and the issues have been reconsidered for future submission. . . . [W]e do not know if this will happen in this case. But we will look to the Supreme Court for direction.”

Texas Supreme Court Justices

Justices on the Texas Supreme Court have the authority to promulgate rules that regulate attorney conduct. Last week they met to consider how to proceed in light of the referendum’s rejection. Kennon Peterson is a rules attorney for the Texas Supreme Court. Peterson says the State Bar passed changes to the disciplinary rules in 1989. In 1993 and 1998, however, Bar referenda on rule changes failed to get enough votes, Peterson says. Limited rule changes were approved in 1994 and 2004.

According to the Bar’s website, the latest disciplinary rule overhaul began in 2003. The Texas Supreme Court appointed an independent task force to review the work of a Bar committee assigned to develop the rules. The court held multiple and joint hearings and published the proposed rules for comment. It revised the rules and sent them back to the Bar’s board of directors. The board sought comments and input through mailings and electronic communications and at hearings held throughout the state. The Bar also included information on the rules in the December 2010 Texas Bar Journal. The January issue included commentary by numerous people on whether they would support the proposed rules. The board posted educational webcasts on the Bar’s website. They advised viewers about some of the concerns expressed by those who did not support specific rules.

But for some Texas lawyers, the Bar’s outreach efforts didn’t make the proposals any more palatable.

Nicole DeBorde’s Disapproval

DeBorde’s dislike of the State Bar’s approach is just one of the reasons the proposed amendments went down in flames. According to opponents and proponents alike, lawyers had negative reactions to specific proposed rules changes and to the Bar’s marketing of the overhaul. DeBorde says HCCLA members told her they opposed the rules because they did not like a proposal they thought would require lawyers to document services rendered for flat fees. Plaintiffs lawyers and large firms objected to proposed rule changes defining a conflict of interest. They both argued that no new rules governing conflicts were necessary and that the proposals created confusion. They argued it would raise the prospect of unnecessary allegations about conflicts in the future.

DeBorde particularly disliked what she perceived as the Bar’s message that lawyers did not understand the amendments and that’s why they responded negatively and the Bar’s lack of response to public comments about the proposed rules.

Bette Pesikoff, a solo in Houston, voted against the proposals. Pesikoff says, “They were like, ‘We’re on the Supreme Court-appointed committee, so trust us.’ ”

Pesikoff also says when she read sections of the proposed rules, she found them poorly written and unclear. This is a reaction echoed by former Texas Trial Lawyers Association president Paula Sweeney. “The rules were so badly written. They were confusing and then to support them they referred to this huge commentary section,” says Sweeney. Sweeney is a partner in Howie & Sweeney in Dallas.

Chuck Herring

Luke Ashley, a Thompson
& Knight partner in Dallas

Chuck Herring

Chuck Herring is a legal ethics expert and partner in Austin’s Herring & Irwin. He opposed the proposals and sent e-mails to Bar members explaining why. On Feb. 17, Herring said, “I think what you saw obviously was that an overwhelming majority thought they [the proposed rules] had problems and flaws. What you did get was a very strong message to that effect. We heard from a broad crosssection of lawyers — big firms to plaintiffs firms to solo practitioners to criminal-defense lawyers. It really cut across groups. It lets them go back to the drawing board and pull in those groups and stakeholders,” Herring says. “It gives the Bar the opportunity to have better rules.”

Thompson & Knight partner and general counsel Luke Ashley says he sent an e-mail to all the lawyers at his Dallas-based firm. He told them he would vote against the proposed rules. Attached to the email was his own analysis of the proposed rule changes.

Ashley says he had proposed a change regarding the conflicts rule during the Bar’s comment period. However, that change was not in the final proposals.

Tottenham, of counsel at Fulbright & Jaworski in Austin, says in an interview that the Bar welcomed feedback on the proposals and responded to comments. He notes that the Bar held public hearings statewide and suggestions were fed in “real-time” to the Supreme Court. They subsequently made changes to the proposals based on those suggestions. “A fair interpretation of what the Bar was trying to do was tell people they should read the rules themselves, make up their own minds, and vote,” Tottenham says.

Response to the Process

Lillian Hardwick, an Austin solo who chaired the State Bar’s Texas committee on the rules, which had input into some of the rule-change proposals, says, “I don’t think the process could have been done better. And if you take as a fact that no single set of rules is going to please everyone, I think you have to look at the process . . . and if that language was not adopted, it means that the people with the knowledge and insight and input simply rejected that language. “You have to think about it. The managing partner of a big firm is not going to have the same desire for these rules as a criminal-defense lawyer,” Hardwick says. “You have to have someone with an overarching view to strike the balance that protects all lawyers and the public.”

Linda Eads

Southern Methodist University Dedman School of Law associate professor Linda Eads, a proponent of the proposed rules, said on Feb. 17 that the result of the referendum is that Texas will be stuck with some inadequate disciplinary rules. “One is that we don’t have a sex-with-clients rule,” said Eads, a former chairwoman of the Committee on the Texas Disciplinary Rules of Professional Conduct. She said Texas will be one of the few states that doesn’t prohibit lawyers from having sex with clients.

Eads also said she believes some lawyers voted against the rules because they don’t like the Texas Supreme Court. They promulgate the rules that regulate attorneys. “One person told me, ‘If these rules go down in defeat it will be a referendum on why we need to throw out the Texas Supreme Court.’ So, a lot of people voted for this as a political agenda as opposed to what are good rules and what are better rules,” she said. “They hate the Texas Supreme Court because plaintiffs lawyers view it as conservative. It’s a shame that better rules won’t get passed but the world will live.”

In a follow-up interview, Eads says the referendum has shown her “how impossible it is to pass regulatory rules when those who are going to be regulated get to vote on them.”

Moving Forward

With the defeat of the proposals, the Texas Supreme Court must make decisions. They need to determine how and when reforms to the disciplinary rules will be made. Justice Phil Johnson is the court’s liaison with the State Bar on the proposed rules. He says the court has a constitutional obligation to make sure rules governing Texas lawyers are “proper and appropriate.”

Johnson met Feb. 22 with the other justices to discuss how to proceed. He says they will work closely with the Bar to regroup and develop another plan to revise the disciplinary rules. Notes Johnson, “We don’t see this as an emergency.”