dissenting.
This case presents the issue of whether a lawyer who refers a case to another lawyer because of a conflict of interest may claim a referral fee. I would hold that he cannot and would affirm the judgment of the trial court.
The disciplinary rules
Polland claims the trial court erred in holding that Fleming v. Campbell, 537 S.W.2d 118, 119 (Tex.App.-Houston [14th Dist.] 1976, writ ref’d n.r.e.) and Lemond v. Jamail, 763 S.W.2d 910, 914 (Tex.App.-Houston [1st Dist.] 1988, writ denied), prevent his recovery.
Polland contends that Quorum, acting on behalf of the clients, agreed to the referral fee. Lehmann contends that Quorum was not the actual client and could not consent on their behalf to a referral fee. In this case and on these facts, I agree with Leh-mann. Polland, although he admitted he could not represent the investors in the bankruptcy proceeding because he represented the debtor, drafted the documents for Quorum to send to the investors to get their authority for Quorum to hire an attorney and drafted a letter from Quorum to Lehmann in which Quorum agreed to pay Polland the referral fee. Polland extracted the execution of the referral fee from Leh-mann at a meeting by dangling a check for $20,000 from the investors. In these trans*741actions, Polland was acting within an area of conflict of interest.
On page 736 of the majority opinion, the majority notes a number of distinctions between this case and Fleming and Lemond. In spite of those distinctions, both Fleming and Lemond stand for the proposition that disclosure has as its purpose the client’s right to know the nature and basis of the legal representation. That principle is probably more important in this case than in either Fleming and Lemond. Here, the lawyer claiming a referral fee was involved in the same litigation; in Fleming and Le-mond, the lawyer claiming the fee had no involvement in the litigation. Here, the lawyer claiming the fee was in the position to decide the merits of the other party’s case; in Fleming and Lemond, no such conflict existed.
Conflict of interest
Lehmann contends that Polland, as the lawyer for the bankruptcy debtor, could not collect a referral fee from Lehmann, the lawyer for the bankruptcy creditors. I agree.
I believe the old and the new disciplinary rules presuppose that the forwarding lawyer does not have a disability that would prevent the formation of an attorney-client relationship between the forwarding attorney and the client.1 Here, Polland did not and could not have had an attorney-client relationship with the clients because, as he recognized, he had a conflict of interest. In fact, part of Polland’s argument is that he was merely a forwarding lawyer and was never a lawyer employed by the clients. Lehmann, in response, argues that if Polland could not have represented the clients, he could not collect any part of the legal fees.
Polland, in his pleadings, claimed to have a partnership with Lehmann regarding the representation of the investors. Polland’s petition claims:
By entering into this Referral Agreement, all parties became partners whereby Lehmann & Assoc, provided legal services and Polland & Cook provided the clients.
(Emphasis added.) Polland and Lehmann could not legally be “partners” in the bankruptcy action: Polland represented the debtor, and Lehmann represented the creditors. Polland could not represent both.
During the trial, Polland was asked about the fee disclosure statement filed with the bankruptcy court:
Q. When you assisted Major Funding Corporation in filing its petition for a Chapter 11, did you not sign a fee disclo*742sure statement with the bankruptcy court?
A. Yeah, one was filed.
Q. And that was in 1986?
A. I believe that the bankruptcy was filed in 1986.
******
Q. To your knowledge, however, in that compensation statement, do you have to make the affirmation that you have no conflict or interest adverse to that of the estate? Is that not true? I am just asking you.
A. I believe so.
******
Q. Now, did you ever amend or supplement your compensation schedule ... to reflect the additional compensation that you were planning to receive from an interest that was potentially adverse to the estate?
The last question was objected to by counsel for Polland and was not answered.
A lawyer cannot represent opposing parties to the same litigation. Tex. Disciplinary Rules of Prof. Conduct, Rules 1.05, 1.06, 1.09 (1992); Supreme Court of Texas, Code of Professional Responsibility, Canons 4, 9 (1988). By representing the bankruptcy debtor, MFC, and by sharing in the fees of the bankruptcy creditors, the 279 investors, Polland would have collected legal fees from both sides of the same litigation. As stated in the comment that follows rule 1.06, loyalty is an essential element in the lawyer’s relationship to a client. Tex. Disciplinary Rules of Prof. Conduct, Rule 1.06 comment 1 (1992). The comments also state:
Loyalty to a client is impaired not only by the representation of opposing parties in situations within paragraphs (a) and (b)(1), but also in any situation when a lawyer may not be able to consider, recommend or carry out an appropriate course of action for one client because of the lawyer’s own interests or responsibilities to others.
Id. at comment 4.
I would hold that Polland’s loyalty to his own client, MFC, as well as to the investors, was tainted by his own interest in the referral fee from the investors. The investors, as the real clients, had a right to know about Polland’s role in the bankruptcy.
Rule 1.06, “Conflict of Interest: General Rule,” states in part:
(a) A lawyer shall not represent opposing parties to the same litigation.
(b) In other situations and except to the extent permitted by paragraph (c), a lawyer shall not represent a person if the representation of that person:
(1) involves a substantially related matter in which that person’s interests are materially and directly adverse to the interest of another client of the lawyer or the lawyer’s firm; or
(2) reasonably appears to be or become adversely limited by the lawyer’s or the law firm’s responsibilities to another client or to a third person or by the lawyer’s or law firm’s own interests.
(c) A lawyer may represent a client in the circumstances described in (b) if:
(1) the lawyer reasonably believes the representation of each client will not be materially affected; and
(2) each affected or potentially affected client consents to such representation after full disclosure of the existence, nature, implication, and possible adverse consequences of the common representations and the advantages involved, if any.
I would also note that rule 1.09 required Polland to obtain consent from MFC to receive funds under the fee-split arrangement. Rule 1.09(a) provides: “Without pri- or consent, a lawyer who personally has formerly represented a client in a matter shall not thereafter represent another person in a matter adverse to the former client....” There is no evidence in the record to indicate that Polland received MFC’s consent regarding the arrangement with the investors.
“A party is forbidden to do indirectly that which he is forbidden to do directly.” Shenson v. Fresno Meat Packing Co., 96 Cal.App.2d 725, 216 P.2d 156, 160 (1950); see also Reherman v. Oklahoma Water Resources Bd., 679 P.2d 1296, 1301 *743(Okla.1984); Corkins v. Ritter, 326 Mich. 563, 40 N.W.2d 726, 729 (1950); League Gen. Ins. Co. v. Budget Rent-A-Car, 172 Mich.App. 802, 432 N.W.2d 751, 753 (1988). Here, Polland, by his own admission could not represent the investors because he represented MFC. Instead, Polland attempted to do indirectly what he could not do directly — obtain a fee for representing investors, who had interests adverse to his existing client, MFC. To grant Polland relief under the fee-splitting agreement would enable Polland to benefit from conduct that is forbidden under the disciplinary rules and contrary to the public interest. See Daley v. City of Melvindale, 271 Mich. 431, 260 N.W. 898, 900 (1935) (“Equity ... will not permit that to be done by indirection which, because of public policy, cannot be done directly”).
Individuals who are represented by attorneys should be represented without actual or apparent conflicts of interest on behalf of the attorney who is their chosen advocate. See Davis v. Stansbury, 824 S.W.2d 278, 283 (Tex.App.-Houston [1st Dist.], 1992) (orig. proceeding). The public should be protected from fee-splitting arrangements in situations where the forwarding or referring attorney could not undertake representation due to a prohibition set forth in law or policy. Restatement (Second) of Contracts § 179 (1979). The policy underlying the prohibition against conflicts of interest set forth in the disciplinary rules has a regulatory purpose and clearly outweighs the interest of Polland in enforcing the agreement. Restatement (Second) of Contracts § 181 (1979).
Polland argues that Lehmann should not be allowed to claim that the agreement is invalid, because Lehmann received substantial benefits under the contract. When a contract is against the law or public policy, the courts will not enforce it. Baron v. Mullinax, Wells, Mauzy & Baab, Inc., 623 S.W.2d 457, 461 (Tex.App.-Texarkana 1981, writ ref'd n.r.e.) (suit between law firm and former associate, who claimed he was not required to pay his former firm a referral fee on cases he took with him after he left.). As a general rule, parties to an illegal transaction are left where they find themselves. O'Hara v. Ahlgren, Blumenfeld & Kempster, 127 Ill.2d 333, 130 Ill.Dec. 401, 408, 537 N.E.2d 730, 737 (1989). The principle of public policy is stated as “Ex dolo malo non oritur actio,” which loosely translates: no court will lend its aid to a person who found his cause of action upon an immoral or an illegal act.
. The only case that I could find that dealt with this issue is Musslewhite v. State Bar, 786 S.W.2d 437 (Tex.App.-Houston [14th Dist.] 1990, writ denied), a case involving a suit on an agreed judgment executed to settle a disciplinary action. Under the terms of the agreed judgment, Musslewhite was suspended from the practice of law for 90 days and placed on a three-year probation. The agreed judgment permitted Musslewhite to refer potential clients to other lawyers, but he could not represent them. Id. at 439. The agreed judgment made no provision about accepting a referral fee for the cases referred during the 90-day suspension. Because Musslewhite violated the agreed judgment by representing clients while he was suspended, the State Bar filed a motion to revoke Mussle-white’s probation. Id.
On appeal, Musslewhite raised the issue that, to refer the new clients, he first had to be employed by them. Id. at 443. He argued that the agreed judgment was in conflict with DR 2-107. In response, the court of appeals noted two things. First, the agreed judgment prohibited Musslewhite from accepting new employment as a lawyer, it was not intended to facilitate his recovery of referral fees. Id. Second, DR 2-107 does not mean that a lawyer must first be employed by a client before he can refer the case to another lawyer and collect a referral fee. Id.
As to the first statement, the Fourteenth Court of Appeals said that Musslewhite’s ability to collect referral fees was not the intent of the agreed judgment. Thus, because the ability to claim a referral fee is the only issue here, Mus-slewhite does not help us resolve our case. As to the second statement, I respectfully disagree. I agree that DR 2-107 did not interfere with the terms of the agreed judgment — Musslewhite could refer cases during his 90-day suspension. Nothing in the agreed judgment, however, addressed whether Musslewhite could collect a referral fee for those cases. The court’s statement — that a lawyer is not required to be employed by a client before he can refer the client to another lawyer and collect a referral fee — is dicta because the agreed judgment did not address the issue of referral fees.