. . .: 

-IHon. J. P. Bryan Opinion NO. O-831 

County Attorney Re: 

Brazoria County 

Legality of “bond proceedings 

contracW’ between county and a 

Angleton, Texas~ party that has no license to pracDear Mr. Bryan: ’ “’ 

tic,e law ., 

This”is in reply to your letter of May 9,.1939, in 

which you request the opinion of this department as to the legality’ of certain “bond proceedings contracts” .which are described in your letter. 

coin your letter you make the following ~statement: 

“For a certain sum, say one per cent of the 

amount of ,the -bond issue the bond broker will 

enter into ,a contract with Brazoria County to 

work’~ out,~ a schedule of the amount and type. of 

bond to be sold for the particular project suggested, and then procure the services .of an attorney to prepare ~the various orders, notices and 

other instruments required to make up the transcript of the bond proceeding, pay the costs of 

the election, printing of the bonds and furnish 

the’ opinion of a recognized bond attorney. It 

is conceivable that the various orders to be 

passed by the court, the notices, etc., which 

make ,up. the, transcript could be prepared by a 

person not an attorney; however, all proposals 

that have been made to the Commissioners’ Court 

of this County have been that the brokers will 

furnish acceptable attorneys to prepare the 

transcript of the proceedings. As I understand 

it, perhaps more than half of the costs of proceedings contr&t will go to, pay ~sttorneys’ fees.! 

You further state that the part.ies who contract with 

the county~ in the above described manner are not licen.sed to 

practice law, but are individuals who are interested. in purchasing konds.. you request our opinion as to whether or not such 

contracts are illegal as constituting contracts providing for 

unlawful practice of law by unlicensed persons. 
Hon. J. P. Bryan, page 2 (0-831.) 

It'being admitted that the persons who enter into 

the proceedings contracts described in your letter are not 

licensed .to practice law, the first question to be determined 

is whether or not the undertakings which such personshave 

contracted to perform on behalf of the county of Brazoria 

amount to llpractice of law". 

The "practice of law", as generally understood, is 

the doing or performing of services in a court of justice in 

any matter depending therein throughout its various stages and' 

in conformity with~the, adopted,rulesof procedure; but it is. 

not confinsd to performing services inan action or proceeding 

pendingincourts of justice ancl;.in,a larger sense, it' includes 

legal advice and counsel and~the preparation of legal instruments and contracts by which legal rights are secured although 

such matters may or may not be pendingin snycourt.i 7 C.J.S. 

? t 1t.7g3'* ,;,z. 

I' ..,,,. ",. '. .: ., 

The.~~r~ctice.,of:latr'has'also beenIdefinsd.as~ follows: 

,L. ~~'~ ::. :- ,~ 

"In litigated,matters It involves not only 

~the"actual:representatlon.~~f the clfent fn.,court, 

but also services rendered in advising a client 

as tohis ca.use ofactlon or defense. ;'The practice of.~l&iwal&b~ includes' the'~giving'of~:edvice 'or :: 

rendering services requiring~.~the ruse 'of legal I 'L 

skill or .knowledge.lj~, '138 Kan. 899, ~~page 907,.:28:,' 

p.(2d> ~765; -769.,;, ,.:,,,,f,~ 1. :' 

. . :,'.. 

~,, u. 

The: foregoing definltions'or ~ubsbstaritislly. similar 

ones have':been,repeatedQ approved:by"the appellate courts of 

numerous states..' ,.Some'of~:the .decisions which have approved one 

of the foregoing-definitions'of the,-practice.of,law or .substantially similar onesi~ are herewith cited: ', .' 

In Re:, "'Opinion~of the Justice's (Mass~j"~194 N.E. 313; 

Rhode Island Bar Association v. Automobil Service Association 

(Rhode Island)"179~%Lr. 139j Eley v..Miller,.'34,N.E. 836; Paul 

v. Stanley (Washingten) 12 Pai (2) 401% People:-v. People:s Stock 

Yards State'Bank (Illi) 176 N.E. 911; Crawford~v. McConnell 

(Okla.) 49 Pac. (2) .!5.%;.Childs v. Smeltzer (Penn.:) 171 Atl. 883; 

Cain v. Merchants Nat'1 Bank & Trust Co. of Far o (N.Dak.1 268 

N.W. 719; Re: Eastern' Idaho TrustCo.~ (Idaho) 

Fichette v. Taylor (Minn.)~2!% N,W. 910. 

8 Pap. 157; 

'. ... 

./ In'Texas by statute, Artihle'430a PenaZCode of Texas, 

the practice'of'lawis prohibited by any corporation;:'per,son; 

firm~'or~ association.of personsexcept natural per~sons who. are': 

members of the Bar regular1 admitted and licensed topractice 

law. Section 2 of Article c 3Ca ', provides a.5 follows: .~~ c. ',L'.,' '.~ 

,.~ 

,. . ..; ,. 
. l 

Hon. J. P. Bryan, page 3 (0-831) 

“For the purpose of this Act, the practice 

of law is defined as follows: Whoever (a) In a 

representative capacity appears as an advocate or 

draws papers 

forms any ac 4 

pleadings, or documents, or perin connection with proceedings 

pending or prospective before a court or a justice of the peace, or a body 

commission or officer 

board, committee, 

consti c uted by law and 

having authority to take evidence in or settle 

or determine controversies in the exercise of 

the judicial power of the State or subdivision 

thereof; or, (b) For a consideration, reward or 

pecuniary benefit, present or anticipated,, direct, 

or indirect, advises or counsels another as to 

secular law or draws a paper, document or Instrument effecting or relating,to secular rights; or, 

(c) For a consideration, :reward,, or pecuniary 

benefit, present or anticipated, direct or lndireat, dae~s any act in a representative capacity 

in behalf of another tending to obtain or, secure 

for such other.;the. prevention or. ths redress of 

a wrong or the enforcement or establishment of a 

right; or (d) For a consideration, direct orindirect, gives an opinion as to the validity~of 

the title to real or personal property, or (3) As 

a vocation, enforces settles adjusts 

or compromises defauit~~c%%&overted~~or disputed 

account s, claims or dsm&ds between persons with 

neither of whom he is in privity or in the relation of employer ,snd employee in ths ordinary 

Sensej is ‘practicing law. ,. l It 

We believe it ~requires no extended ar,gumentto e&blish that the preparation of orders, notices and other instruments which are necessary to giv,e validity to an election to 

authorize the issuance of bonds are matters,which require legal 

skill and learning on the part of the person undertaking to prepare such instruments. The various constitutional and statutory 

provisions with respect to the proceedings necessary. to a valid 

issuance of bonds must be strictly complied with,; and it is ‘a 

matter of common knowledge in the legal profession that the field 

of bond law is a specialized and technical one which requires experience and study by a trained mind as a prerequisite to the 

practice of such branoh of the law. It seems plain to us that a 

person who unde,rtakes to supervise all of the, necessary steps 

leading up to :a bond election and the issuance of bonds thereunder, inaluding the preparation of necessary orders notices and 

other instruments and the furnishing of ~a legal op l nion upon the 

validity of ‘a ‘bond issue is unmistakably undertaking to~praotice 

law. 
Hon. J. P. Bryan, ‘page 4 (o-831)b 

You are, therefore, advised that, in our opinion, 

the contracts descr1bed.i.n your .letter. insofar as isuch contracts provide for the preparation of orders, notices,’ or 

other legal .documents and”the’ furnishing .of ~a legal o-pinion 

upon the validity of {he bond issue constitute contracts to 

practice law. If such~contracts are entered into by persons 

who are not ~licensed to pr.actice law ..in this State, the ‘same 

are illegal, for the reason thatthe subject matter of snd 

the consideration agreed t,o \be paid by the .bond broker for 

such contracts constitute .illegal transactions, -‘prohibited 

as well by the common law as the statutory law of this State. 

We ‘reach.this result whether we accept as ,the controlling definition.of the practice of law. that definition 

set forth’in’Section 2~ of Artiole 430a,: Texas .Penal Code, or, 

independently of the ‘-statute; ,,the~,‘.definitions whichhave been 

announced and ap~proved .by ‘Oarious appellate courts .throughout 

the United estates. . We-believe .that.no; serious .contenti,on can 

be made to the effect that :.subdivisions (b)‘~and (c) of- Section 

2 of Article 430a; Per@. Code ‘,of. ‘Texas; are~,.not vi,olated ,by 

the undertakings contained ‘in the.:-contractsde’scri.bed in your 

letter insofar as ~:such contracts provide. ‘for Ethel drawing of 

orders, notice8 and ‘other;legal instruments and, the furnishing 

of legal opinions :upon the validity ,o$ the bond’issuel ‘: 

.The most recent ‘discussion ,,by a- Texas Appellate 

Court of-aquesti.onanalagous ‘to.the one:presented:in your 

opinion request ‘1,s found in Montgomery v. Utilities’ Insurance 

co., 117 S.W.(2).‘486 by the Beaumont Court of Civil Appeals. 

This case 1s~’ Howe pen 2t ing for, decision i.n the gupreme Court of 

Texas. In the Montgomery case, an insurance company having 

issued a liability policy in which it agreed to investigate 

all accidents and claims covered by the policysnd to defend 

its assured free of cast in any a&ion brotight to recover a, 

.loss covered by the policy, .subsequently entered into an in- 

-‘~dependent agreement with the -assured whereby the insurance 

.‘~ company agreed to defend any suit brought: against ,its~ assured. 

as a result of a certain collision. Such independent. agree-~ 

ment was termed,.a ‘1non-waiver18 agreement, and it further providea that the insurances company should negotiate a’ settlement 

of the claim against its assured, and failing in such ~endeavor, 

that ‘the insurance company would ‘select and employ lawyers of. 

its own choice to defend the case. However, the insurance ” 

company did not agree or .bind- itself. tom pay any judgment or 

court ‘costs resulting from said suit. Attorneys selected. and. 

employed by the insurance company subsequehtly defendant a suit 

brought against the assured, and in such suit judgment was rendered against the assured. ‘:~The owner of such judgment,then, 

instituted suit thereon against the. insurance company. In holding that the non-waiver agreement was illegal and invalid, the 

Court said: 
Hon. J. P. Bryan, page ,s (0-831) 

“That agreement, by its terms and by the 

construction placed upon, it by the insurance 

company itself in its pleadings in the present 

suit, was a contract to practice law. It was 

therefore in violation of the penal statutes 

of this state which mak it unlawful ‘for any 

corporation or any person firm, .or as,sociati~on 

of persons, except natur a! persons who are members of the bar regularly admitted and licensed, 

to practice law. Act 43rd Leg. p. 835 Ch. 238, 

Vernon’s Ann. Penal ,Code Art. 430a. hing in 

contravention of the sta t ute the agreement was 

lllegsl and of no effeat:” 

,m *** A aorporation:cannot praatiae law, 

and of aours it aannot lsgally contr,aat to do 

State v. C. S. Dudley & Co.Inc. 340 Mom 

@?? 102 S W .(~2d) 895. State ex rel. V. Retail 

Cret3.t Men:s*Ass’n 16i.Tenn. 450 43 S.W.(2d) 

918; Boykin vs. Bo&ns, $74 Ga. $11, 162 SJb 

796; In re Co-operative Law Co. 198 N. Y. 479, 

92 N. g. 15 32 z. R. A. N. .s. $j 1.39 Bm, 8th 

Bep. 839, 18 Ann. Gas. 879; Eley se Miller, 7 

Ind.App. 99 34 N.8. 8365 Richmond Ass'n ,of 

Credit hen bc. v. Bar Ass’n, 167 Va.327 189 

S.E. 153; .&ate ex rel. vi Merchants* Proieetive Corporation 189 Calm. 531, 209 Pa 3630 Bennie ‘v. Triangle Ranch Co. 73 Cola. 586 216 P. 

718; In re .Otterness 181 mm. 254 233 N.W. 33.8 

~73 A.L.R. 133.9* Bla$ & White Opera&g Co. 

v. Grosbart, lb7 N.J.L. 63, 15;r A. 630.~ 

Inc.’ 

“*** And since a corporation cannot praatice law directly. it cannot ‘da so lndi,re+y by 

employing competent lawyers to practke for it. 

That would be an evasion which the .law would not 

tolerate. 2 A.C.L. 946. State v. C .S. Dudley & 

Co., Inc. 34C'Mo. 852, 102 S.W.(2) 895. The intervention of a aorporation as general employer of 

the attorney between him and ‘the client ~1s deStrUCtive of the necessary and i~mportant relation of 

trust and undivided loyalty which ~must exist between attorney and client. ‘Divided obligations 

in trust relations are obnoxious to the law. and 

i&,one more so than in that of attorne~y and ali- 

. People v. People’s Trust Co., 180 App.Div. 

494, 167 N.Y.S. 767, 768." 

The Montgomery case, supra, together with the deal,slons 

here~inafter cited effectively dispose of eny aontentlo~n whiah 
Hon. J. P. Bryan, page 6 (0-8j!l>, 

might be made:%0 the ‘ef!ZeM s:thathe, Go&t&&t2 a.e’&i”ibed in 

your letter ~.sPtiplyprovrde %‘tirthe !per~~rrnapc~~‘~~.P~g~~ services by a licensed attor$ey;‘: . ., 

In the~.Montgomery *&se it. wassaid tha&~:sinee .a corporation cannot, practice ‘law, directly,., (it.-danno42?; do..so indirectly by emplaying.%bmpetenttla\JyeSs:-t~..:praatl’ce zfor“itt,.. ~:Sim&srl.y, 

with respe.oto, theeti’onMxt3~ inquired abcut~by~,yau&it i,s our 

opinion th&t :.inl’~isen~ed~bon~. broker, not.‘being authorized to 

practice law ‘;dii%ctly; cannot -do’ so Indirectly-by employfng competent lawyers to. furnish hia6’~~ith:.k~gal.o~inions and-legal instruments which- the’ broker, ti-.+xrnIn the situation present.ed by your: ;etteri no dontrsctual rela- . . . i., transmj.ts::to.“the. county. 

tlonshlp exists between the county and the licensed,attorney. 

The county’s’ aeaX$ngs’-‘&e’with;a boiid4M&er~ an&‘th” bond broker 

ins turn empl&y&,i &~,att&@&.!.-:~&. p@iy$ty &f &@tk&t$ :Lnbp. r&atlonship of. attorney and;.cl~ent~-8x9sts.betljeeii ?he,.~att,erney amployed by the? broker: and, j$he :?%iznty< :#’ _. 

T@$: s&e r~c<..‘f$:‘$ee~ &&e&Yn: &e;eci’&~hs, of the 

Appellate Coi$t’ts: ini other,! StatWs. ‘I.n(C&WTo$d.~; @Con@@1 . 

(Okla.) 49 Pa~..:f2),:.55l,~;:‘a. c.ontr.@ was+ heId @agal. ‘in which a 

person not licei%& to: pro’ctl&’ Tay. tio’nt#@ted..wtith~ certain 

Olclahoma Cc&y teijc’ p.ay$% to; dist’erm$ne.. the legality of taxes 

asse ssad age&n& property,,. to’ ;flle’z prot’esW %h&%o.f; 1 and If 

neoessary,., eni&*, at,FernBy~s ,,to file ,syits~, ;for \the .,.., “covery of 

illegal tati8.p. : 

?&y ‘cqur*:-~:?i*ld: 

: . \. 

“Clearly we ,,%h&&“:the. &&&iCf ‘by’h&h i&&‘k’at& 

undertook to perform a type of service which could 

only be ‘perpormed .by :orie’ who had~dePionstrat’~~~‘~s 

qualifications by!: obtatning : a l$cens~. :t’o:’ pradtice 

la&t: ” 

.Ip ‘~C&in v; z~ertihhants~ ,Nati’onal~~Bank & Trust:. Company of 

Fargo ,,(N.- lRik.)~~-26%,.N.h 719~i.in,‘whlch~ase the +ssWon’under 

consideration tjas’ the ?&all& of trsinsaotion~s ,fn’ :%hitih a bank 

and tru’st’~,.:i?ompany,-thrbugh~.iatt~m~y~~’ &iqXloyed by’-‘iC”un3?srtook t 

prepare for a ‘co,nslderat+$ ‘de~e,ds;,:~mortgages, trust agreements, 

assignment’s and other, legal $nstruments. The’,‘cotxrt h&L&~ that 

such transactions constituted UIegal pract%ce’ ~ofthela~. With 

respect i-d tha’ bapk’s ++nte,nt‘$on,‘- that such transactfons were 

performed’ .by, ,legally. licenpe~d ~attorneys, the Court::said:-:, 

“Since It (the bank) has no right to praoti.ce: 

law directly, ,$t, cannot do so indirectly by empl’oy,idg’ a l’i’censed; attorney: ‘to Ipraictiae ~for:‘i%t, 

as t&t- would: be ‘a mere evasion of then 1aw.K .‘ 
Hon. J. .i). Bryan,. page 7 (0+831).~- :., 

In Bepew v. Wichita Association of Credit Men (Kansas), 49 Pac. (2) .1041, the Court said: 

“One who confers with clients, advises 

them as to their legal rights, and then takes 

the business to an attorney and arranges with 

him to look after it in court is engaged in 

the practice of law.” 

In Re Cooperative Law Co., (N.Y.) 92 N.E. 15, it was 

held that since a corporation cannot practice law directly, 

it cannot do so indirectly by employing competent lawyers to 

practice for it as that would be an evasion which the law 

will not tolera i e. To the same ,effect are: In re: Otterness 

(Minn.) 232 N.W. 318, and People ex rel ‘Los Angeles Bar Asso~ 

elation v. Cal. Protective Corporation (Cal.) 244 Pac. 1089. 

In the recent case of Rhode Island Bar Association 

v. Automobile Service Association (Rhode Island), 179 Atl. l.jy, 

an exhaustive and able discussion and review of the history of 

the decisions and reasons for prohibiting the practice of law 

by unlicensed persons is found. In that case an automobile 

service association, for a stated annual fee, agreed to furnish 

legal counsel free of charge to represent and defend members 

of the assoclatlon in cases involving violations of traffic 

laws, and also agreed to furnish such counsel for the purpose 

of prosecuting and defending, on the part of the member, cl:.%,?-~rr:

and suits for damages for and against the members. The CourL 

after quoting the contract in detail says: 

“Each of the several numbered paragraphs of the 

respondent’s (A.S.A.) contract with its ,customers 

calls for legal service of some kind except paragraphs 3, 6 and 11. True, this legd service is to 

be rendered hot by them personally, but by counsel 

designated by them. Ostensibly such service is freo, 

but actually it Is by far the major part of the consideration which the customer receives for his member ship fee . Out of eleven paragraphs, only three 

are not of a legal nature,and ‘two of those are so inconsequential as to be disregarded. 

“These respondents then are engaged in selling 

legal advice and assistance in associationwith a 

duly licensed member of the bar of this court. Their 

association with this member does not absolve them 

from responsibility. We see no difference in their 

case from that of the respondent In Re Co-operative 

Law Co. (1910) 198 N.Y. 479, 92 N.E. 15, 16, 32 L.R.A. 
:. 

.-f.r4 

Hon. J. P. Bryan, page a w-831) 

LN.3.) 55, 13,9 Am.St.Bep. 839 19 Ann.Cas. 

879, where the court says: !!!he ~,relatlon of 

attorney and client is that of master and 

servant in ~a limited ,and dignified senses, and 

it involves the highest trust,“and confidence. 

It canti& be ‘delegated without conse’nt, and 

it cannot exiet betw.een an attorney, ‘employed by 

a corporation to practice law for :it, and,,,,a. 

client of the corporation, for he would be subject to ~the directions of the:.corporation,, and 

not ‘to~the dire’tit,ions of the clierit.lf 

In another, place in the opinion, -the Court says: 

“‘Thus, indir&tly~~through the’ respond&i 

Morri’s,“they have bee,n assuming to, conduct ~,a, 

law practice on a wholesale busin6ss .&ale 

~:, 

reaching., throughout, the state . . What these r,e- 

~.$ondents, ~cann0.t ,legally :do ‘.dJr,e&ly ~they; may 

nc$ do :in&lrect:ly; The.y saq’..they ,have rcon-,., ~:: :, ,:. ,-~ 

ducted ‘t.his busipe% for: tw~elve ~ye,@s yithaut. : i 1 ., : ,,, 

interference: ThS$ my w'ell be;. ?I$ #:pe,qe LngJh .; ~. 

Of’ l;iqe does ‘hot .aiid can+ .~convert ,,into; ,alegal. I 

act, what ,‘I s ;illeg,al.” . 

’ “” In ~Iview” of.. the above cited &&ho&tie’s ‘and other,3 

‘.t,oo &me~rous”% ‘quote in ‘this.. opinion~,~, ,:we ‘a& donstrained to 

.hold that the”contra6t.s .described:in your letter;,:‘insofar as 

such contradts provide. for’~ the furni.shing .of ,,legal opinions 

on bond issues and for ,th’e’pprep~ation of ‘orders, notices and 

other. documents of.~a legal nature, contemplate and provide for 

the ‘pract~ice ,of law by an %unlicenseg~‘person and;~ therefore, 

such @itract s are ‘illegal.. 

‘, 

APP.RCVEB ArJG 25,: 1939 "~ 

/s/ Gerald C. Mann ,.:: 

ATTORNEY GENERAL OF TEXAS 

APPROVED: OPINION ‘CG+TTEE 

BY: ,?WE.. CHAIRMAN ~, 

RM1l3T:wb 

Yo6.s ‘very truly 

NJ!TOE@Y .,GENERAL OF TEXAS 

By /s/ Robert E. Kepke 

Robert, E. Kepke,,, Assistant 

: 

., 

,.