Back in the summer of 2014, a hot topic was a Texas State Bar Opinion designating the use of job titles such as COO, CFO, or CMO as potentially inviting unwanted scrutiny by your State Bar.
According to that opinion, giving a law firm employee the title of “officer” indicates that person has the power, capability, and authority to control the entire law firm or a significant area of that firm’s operations. Prohibited titles cited by the opinion and subsequent interpretations include “Chief Financial Officer,” “Chief Technology Officer,” “Chief Executive Officer,” and “Chief Marketing Officer.” Along with the title of “officer,” the Texas State Bar included “principal” as a designation prohibited for non-lawyer employees. I suppose this was an attempt by the Texas State Bar to cover all its bases.
According to the Texas State Bar, the restrictions grew from the prohibition of various lawyer and non-lawyer conduct. For example, a lawyer may not practice in a for-profit organization authorized to practice law if a non-lawyer is a corporate director or officer. A lawyer may not practice in a for-profit setting where the non-lawyer has the right to direct or control the professional judgment of the lawyer. And finally, a lawyer is prohibited from entering into a partnership with a non-lawyer if the partnership/business consists of activities related to the practice of law.
Following that opinion, the Texas State Bar was flooded with inquires and comments both pro and con. Eventually, they backed down from some of the restrictions and said that non-lawyer employee titles such as “officer”, “principal” or “director” are permissible under the Texas Disciplinary Rules “because the titles could not be reasonably understood to indicate authority to exercise control over the practice of firm lawyers.” And, adding the word “Chief” in front titles such as “Chief Information Officer”, “Chief Administrative Officer” or “Principal Technology Officer” was even more acceptable as denoting control over a specific area of the law firm’s business, not the firm’s practice of law.
However, the fate of titles such as “Chief Executive Officer” and in some instances “Chief Operations Officer” was not the same. Obviously, the title of “CEO” would indicate a person has the ultimate authority over the firm’s activities, including the practice of law. For a non-lawyer to hold such a position with a firm would, in the eyes of the Texas Bar, allow that person to hold too much control over a lawyer’s practice of law, or at the very least be perceived as having such authority. As far as the title of “COO” goes for non-lawyers, the situation must be evaluated on an individual basis to confirm that a person dealing with the firm would understand the scope of the “COO” position and that it does not extend authority or control over the firm’s practice of law.
So, where do we go from here? Texas came out strong, then backed down. While you must still be cautious in Texas, the restrictions and concerns are a far cry from the original opinion. I have heard rumblings in other jurisdictions such as Florida, Tennessee and Arizona on the same subject. At the very least, it’s likely wise to consider whether a substantial risk exists in your jurisdiction when designating titles to non-lawyer employees based on them performing similar functions for the same positions outside the legal industry.