TexasBarCLE
Ultimate Transactions
Annual Meeting 2004
TEXASBARCLE
continuing legal education
ANNUAL MEETING:
ULTIMATE TRANSACTIONS
Copyright © 2004 by
STATE BAR OF TEXAS
Austin, Texas
All rights reserved
June, 2004
Table of Contents for
Annual Meeting: Ultimate Transactions |
Real Estate
Estate Planning
Venture Capital Forms for Business
Debtor & Creditor
Debtor & Creditor
DEBTOR & CREDITOR
I. INTRODUCTION
This chapter discusses selected issues in the creditor / attorney relationship and in the debtor / creditor relationship. The chapter is written fi:om the creditor's perspective. The text of the chapter consists of materials written or edited by the author and his colleagues for the State Bar of Texas or for the University of Houston Law Foundation. Similarly, the forms in the chapter are derived fi:om publications and continuing legal education materials of the State Bar of Texas or the University of Houston Law Foundation. The most current comprehensive publication concerning debtor / creditor matters in this state is the
Texas Collections Manual,
3d Ed., published by the State Bar of Texas, for which this author served as a contributing author and a member of the editorial committee.
II. PROFESSIONALISM
A. Informing Client of the Grievance Process
Attorneys practicing law in Texas must provide notice to clients of the existence of a grievance process by one of four means: making available at the attorney's place of business brochures printed by the State Bar of Texas describing the grievance process; posting a sign prominently displayed in the attorney's place of business describing the grievance process; including the grievance process information in the written contract for services with the client; or providing the information in a bill for services. Tex. Gov't Code Ann. § 81.079(b) (Vernon 1998). This information may be included in the retainer agreement or project engagement terms letter to the client.
B. Texas Lawyer's Creed
On November 7, 1989, the Supreme Court of Texas and the Texas Court of Criminal Appeals adopted "The Texas Lawyer's Creed-A Mandate for Professionalism." The order of adoption and Creed may be found at the Texas Center for Legal Ethics and Professionalism Web site,
www.txethics.org .An attorney adhering to the Creed agrees to advise a client of the contents of the Creed when undertaking a representation. A copy of the Creed is included with the at Form 1.
III. CLIENT RELATIONS
A. Keeping the Client Informed
An attorney must keep the client reasonably informed of the status of a matter, promptly comply with reasonable requests for information, and explain matters to the extent reasonably necessary to permit the client to make informed decisions regarding representation. Tex. Disciplinary R. Profl Conduct 1.03. Keeping the client informed typically consists of:
1. providing the client with copies of all pleadings, motions, and correspondence;
2. informing the client in writing of actions the attorney is taking; and
3. if the fee agreement is for an hourly fee, providing regular invoices, itemized with the actions taken by the law firm.
B. Authority to Sue or Take Other Action
Mere employment of an attorney to collect a claim does not confer authority to sue, and mere forwarding of a claim for collection does not warrant commencement of a suit. An attorney should not file suit unless there is specific authority from the creditor or forwarder to do so. [See Form 2, which is a letter recommending suit but stating that no action will be taken without authorization].
C. When to Recommend Not Filing Suit.
The attorney should consider recommending not filing suit if:
1. the debtor cannot be located;
2. the debtor has not responded to demands for payment, and the amount involved is too small to justify filing suit;
3. the debtor's assets would not be sufficient to satisfy or substantially contribute toward satisfaction of a judgment;
4. suit cannot be filed and service effected before the statute of limitations expires;
5. the debtor disputes the claim and alleges a valid affirmative defense or counter-claim, and the time and expense involved in handling a contested suit on his claim cannot be justified; or
6. an investigation indicates that many claims against the debtor have been handled by local attorneys without successful settlement or that some judgments have been obtained with little or no satisfaction of them having been achieved.
D. Declining Representation
Attorneys decline to represent clients for a variety of reasons, including conflict with a current or former client, a claim that is barred by limitations, or failure to provide sufficient documentation to prosecute the claim. An attorney declining the matter must clearly state in writing that he is doing so and must take all reasonable steps to mitigate the consequences to the client. This typically takes the form of a letter to the client advising that the client may want to consult other attorneys and, if