December 21, 2014

Frederick Skillern: Real Estate Case Law — Contracts, Purchase and Sale, Transactions

Editor’s note: This is Part 4 of a series of posts in which Denver-area real estate attorney Frederick Skillern provides summaries of case law pertinent to real estate practitioners (click here for previous posts). These updates originally appeared as materials for the 32nd Annual Real Estate Symposium in July 2014.

frederick-b-skillernBy Frederick Skillern

Gattis v. McNutt (In re Estate of Gattis)
Colorado Court of Appeals, November 7, 2013
2013 COA 145
Residential sales contract; nondisclosure; economic loss rule
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This case presents another test of the outer limits of the economic loss rule. The buyer of a house, Carol Gattis, sues for fraudulent concealment and recovers a judgment against McNutt. McNutt’s company acquired the property to “fix and flip,” and obtained detailed soils reports outlining damage that was caused by shifting soils. On the disclosures form included in the standard form residential purchase and sale contract, McNutt disclaimed any “personal” knowledge of defects, and identified only the name of a company which had performed structural repairs — without describing the nature of the repair. McNutt appeals on the basis that the fraud claim is barred by the economic loss rule. He argues that the contract calls for specific disclosures, which were given, and that tort actions are precluded by the economic loss rule, as the requirement for disclosures “subsumes” the common-law duty to disclose material information.

The appeals court disagrees and affirms the judgment. Under the economic loss rule, “a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such a breach absent an independent duty of care under tort law.” The court rejects the economic loss rule defense for two reasons. First, home sellers owe consumers an independent duty to disclose latent defects of which they are aware. Second, the court reasons that the disclosure provisions in the commission-approved form do not subsume the independent duty so as to trigger the economic loss rule. Although sellers were not required by the disclosure form to disclose their involvement with the entity that had performed repairs, the trial court found that this fact was material and should have been disclosed. Gattis could have prevailed on this nondisclosure claim without relying on the form disclosure. In short — the seller was perhaps “too cute by half.”

The court distinguishes two recent decisions in which a real estate seller has successfully invoked the economic loss rule to avoid a fraud claim. In those cases — Former TCHR, LLC v. First Hand Mgmt. LLC, 2012 COA 129 (Colo. App. 2012), and Hamon Contractors, Inc. v. Carter & Burgess, Inc., 229 P.3d 282 (Colo. App. 2009) — the parties negotiated “transaction-specific” contracts. Here, the parties used standard real estate commission forms. The court holds that neither the Seller’s Property Disclosure nor any other term in the form contract limits or subsumes the home sellers’ common-law duty to disclose latent defects of which they are aware.

 

Planning Partners International, LLC v. QED, Inc.
Colorado Court of Appeals, July 1, 2013.
2013 CO 43
Contracts; attorney fee shifting provision; discretion to reduce fee claim to account for successful claim for offsets; no mandatory rule.

Our supreme court accepts this case to decide a recurring issue in attorney fee hearings pursuant to contractual fee shifting provisions. The court of appeals held that the trial court erred in failing to apportion a fee award to account for an offset caused by judgment or a counterclaim. The Supreme Court rejects a per se rule of mandatory apportionment in this circumstance. Requiring proportional diminishment in all cases where the judgment based on a note or contract had been reduced by a counterclaim arising out of the transaction would undermine the trial court’s ability to determine a reasonable fee under the specific facts of the cases before them. The widely divergent circumstances under which attorney fee issues are litigated militate in favor of flexibility and discretion on the part of the trial court, rather than a rule of mandatory apportionment. In the current case, the trial judge proceeded methodically through the planning company’s accounting, discounting the fees incurred in a claim he found to be unsupported by the evidence and reducing the entire amount of requested fees by 20%. He further determined that the attorney’s fee issues were sufficiently intertwined and inter-related that apportionment was not appropriate.

The court notes that a trial court’s discretion may be circumscribed by the statute or contract giving rise to fees. It points out that the note provision here did not require or preclude apportionment, which is a factor that a drafter of such a note or contract might consider. As a result, a trial court may determine that some apportionment is necessary for a fee to be reasonable, or it may not. The court here holds only that the widely divergent circumstances under which attorney fee issues are litigated militate in favor of flexibility and discretion on the part of the trial court, rather than a rule of mandatory apportionment.

Frederick B. Skillern, Esq., is a director and shareholder with Montgomery Little & Soran, P.C., practicing in real estate and related litigation and appeals. He serves as an expert witness in cases dealing with real estate, professional responsibility and attorney fees, and acts as a mediator and arbitrator in real estate cases. Before joining Montgomery Little in 2003, Fred was in private practice in Denver for 6 years with Carpenter & Klatskin and for 10 years with Isaacson Rosenbaum. He served as a district judge for Colorado’s Eighteenth Judicial District from 2000 through 2002. Fred is a graduate of Dartmouth College, and received his law degree at the University of Colorado in 1976, in another day and time in which the legal job market was simply awful.

Frederick Skillern: Real Estate Case Law — Condemnation, Eminent Domain

Editor’s note: This is Part 3 of a series of posts in which Denver-area real estate attorney Frederick Skillern provides summaries of case law pertinent to real estate practitioners (click here for previous posts). These updates originally appeared as materials for the 32nd Annual Real Estate Symposium in July 2014.

frederick-b-skillernBy Frederick Skillern

Regional Transportation District v. 750 West 48th Ave, LLC
Colorado Court of Appeals, December 5, 2013
2013 COA 168
Qualification of eminent domain commissioner; partiality.

The only question for a trial to a panel of three commissioners is, in most cases, the value of property taken by the government. Three commissioners were appointed by the court, including a Cassidy Turley broker, Ms. Hook. The commissioners were approved after a 90-minute voir dire hearing in the district court. Six months later, but before trial, RTD challenged the partiality of Ms. Hook, on the basis that two other brokers in her firm had testified on value issues in a separate but similar RTD eminent domain case. The question raised here is whether the standard of review on the disqualification motion is based on the standard applicable to a judge, or a juror. The eminent domain statute, C.R.S. § 38-1-105(1), instructs the trial court to disqualify a proposed commissioner who is “not disinterested and impartial.” Under C.R.C.P. 97 and Colorado Code of Judicial Conduct Rule 1.2, by contrast, judges may be disqualified if they “appear” partial. In the latter case, courts have held that the test for appearance of partiality of a judge is whether a reasonable person, knowing all the relevant facts, would doubt the judge’s impartiality.

Applying the plain language of the eminent domain statute, the court agrees with the trial court and affirms. The applicable standard for disqualifying commissioners is not “an appearance of partiality,” a standard applicable to sitting judges, but whether the commissioner was “in fact interested and partial.” The court holds that Hook’s professional relationship with two fellow employees who had testified against RTD did not make her interested or partial.

The court comments on the special role of a condemnation commissioner: “The court relies on their experience and knowledge of the law of real estate to make the appropriate determination of just compensation. Because commissioners are supposed to bring expertise to valuation proceedings . . . they could not do so if the very knowledge and experience that made their views desirable also disqualified them.”

Frederick B. Skillern, Esq., is a director and shareholder with Montgomery Little & Soran, P.C., practicing in real estate and related litigation and appeals. He serves as an expert witness in cases dealing with real estate, professional responsibility and attorney fees, and acts as a mediator and arbitrator in real estate cases. Before joining Montgomery Little in 2003, Fred was in private practice in Denver for 6 years with Carpenter & Klatskin and for 10 years with Isaacson Rosenbaum. He served as a district judge for Colorado’s Eighteenth Judicial District from 2000 through 2002. Fred is a graduate of Dartmouth College, and received his law degree at the University of Colorado in 1976, in another day and time in which the legal job market was simply awful.

Frederick Skillern: Real Estate Case Law — Common Interest Communities, Covenants, and CCIOA

Editor’s note: This is Part 2 of a series of posts in which Denver-area real estate attorney Frederick Skillern provides summaries of case law pertinent to real estate practitioners (click here for previous posts). These updates originally appeared as materials for the 32nd Annual Real Estate Symposium in July 2014.

frederick-b-skillernBy Frederick Skillern

Triple Crown at Observatory Village Association v. Village Homes of Colorado
Colorado Court of Appeals, November 7, 2013
2013 COA 150
Construction defect claims; interlocutory review; relationship between revised Nonprofit Corporation Act and the Common Interest Ownership Act.

Arising from alleged construction defects in a common interest community, this interlocutory appeal under C.A.R. 4.2 presents four questions of first impression in Colorado, which the court answers as follows:

  1. Where an association is a nonprofit corporation, the Colorado nonprofit act establishes the time limit for amending its declaration based on action taken without a meeting;
  2. The statutory power to engage in “litigation” under C.R.S. § 38-33.3-302(1)(d) includes arbitration;
  3. C.R.S. § 38-33.3-302(2) does not invalidate the mandatory arbitration provision, because the dispute resolution procedures apply to parties other than the declarant; and
  4. Colorado consumer protection act claims may be subject to mandatory arbitration, because the CCPA does not include a nonwaiver provision.

Village Homes, a residential developer, built homes subject to recorded covenants, and thereby created an association, Triple Crown. Triple Crown was set up as a nonprofit corporation under C.R.S. §§ 7-121-101, et seq. In the declaration of covenants, the developer included a dispute resolution procedure for claims arising from the design or construction of homes in the Triple Crown development. The declaration required that construction defect claims be arbitrated under American Arbitration Association rules.

In 2012, residents began a campaign to amend the declaration by repealing the arbitration clause. Unfortunately, it took more than sixty days to gather the votes to amend the covenants. After sixty days, 48% of the members had cast votes in favor of revocation. After another sixty days, the Association had obtained the required 67% of votes to effect the amendment. The Association recorded the amendment, and then brought this action against Village Homes, alleging negligent construction, Colorado Consumer Protection Act (CCPA) violations, and breach of fiduciary duties.

Village Homes moved to dismiss for lack of jurisdiction, based on the arbitration clause in the declaration. It argued that the amendment repealing the arbitration provision was ineffective because the Association failed to amend Article 14 within the time limits in the Nonprofit Corporations Act, specifically C.R.S. § 7-127-107(2), which deals with time limits for actions taken without a meeting. The trial court granted the motion, dismissed the case, and ordered the case to arbitration. This order is affirmed on appeal. The court holds that when an association amends its declaration without a meeting under the CCIOA, the association, if it is a nonprofit corporation, must comply with the 60-day time limit provided in section 7-127-107.

The Court also agreed that the Common Interest Association Act gives power to associations to “institute, defend, or intervene in litigation or administrative proceedings . . . on the matters affecting the common interest community.” However, the court reasons that “litigation” includes both civil actions in court and arbitrations. It holds that the mandatory arbitration clause did not infringe on the association’s statutory power to “institute litigation.”

The association then argues that CCIOA § 38-33.3-302(2) invalidated Article 14. The trial court rejected this argument. The court agreed with the trial court, finding that the CCIOA section forbids only restrictions unique to the declarant. Article 14 controlled disputes between all parties.

The trial court rejected the association’s argument that its CCPA claims should not be subject to mandatory arbitration, because CCPA provisions by statute “shall be available in a civil action.” The court holds that such a right can be waived, and that Article 14 of the Triple Crown declaration was such a waiver.

 

Ryan Ranch Community Assn., Inc. v. Kelley
Colorado Court of Appeals, March 27, 2014
2014 COA 37M
Liability for homeowner association assessments; annexation; developer side agreement.

This is an interesting situation involving a developer, a side agreement with another landowner to exempt that owner’s land from subdivision covenants, and the annexation provisions of the CCIOA. As a prequel, the following general principles stated in the dissent by Judge Terry set the stage.

  • “Provisions of this article may not be varied by agreement. . . . A declarant may not . . . use any . . . device to evade the limitations or prohibitions of this article or the declaration.” C.R.S. § 38-33.3-104. . . .
  • Members are not “entitled to set up agreements reached with the developer as defenses to the obligation to pay assessments . . . . [T]he developer does not have the power to waive the assessment obligations imposed on property within the common-interest community.” Restatement (Third) of Property: Servitudes, 6.5, cmt. e (2000).

Nice notions, but the developer here found the approval process for a second filing of his development sometimes required some last-minute adjustments. He had a side agreement with Kelley, an owner of a minority of land to be included in a second filing of a large development, to keep the “Kelley Lots” from control of any covenants or new HOAs. At the late stages of approval of the new filing, however, the developer included Kelley’s land in the filing – Kelley signed the plat – and sold the lots in bulk to Ryland.

Ryland, going along with the deal, sold the Kelley lots immediately back to developer, and the developer then deeded the land to Kelley. Kelley sold the lots to another builder, who sold homes to consumers. Several years go by, during which the consumers enjoy neighborhood improvements, and then the HOA takes action to collect assessments – including back fees totaling $70,000. The homeowners had constructive notice of the plat and the declaration from exceptions to their deed warranties. In defense, the homeowners and Kelley argued that their lots had not been appropriately “annexed” into the association. The decision goes through the statutes, and two judges reverse the trial court and hold that the requirements for annexation had not been met.

The reasoning of the majority goes like this. To exercise a development right under CCIOA, a developer must comply with the plat and map requirements of C.R.S. § 38-33.3-209 and the recording requirements of C.R.S. § 38-33.3-217(3). The homeowner defendants argue that to exercise a reserved development right, CCIOA requires the recording of an amendment to the declaration that must contain certain information and be properly indexed. The court agrees that the recording of an Official Development Plan and the declaration was not sufficient to meet these requirements. The original declaration cannot logically be considered an amendment to itself such that it could annex the Kelley Lots. Moreover, nothing was denominated as an amendment, nothing assigned identifying numbers to newly created units, there was no reallocation of interests among all units, and no common elements were described. Nothing on the Filing 2 plat map subjected the described property to the Declaration.

On the other hand, the dissent notes, the Declaration provides that the additional lots will be annexed into the HOA when (1) a plat for additional properties to be annexed is recorded, and (2) either an annexation form is recorded, or a deed for real property within the plat is conveyed from Ryland to a third party other than Ryland. “On November 17, 2005, Ryland recorded the Filing 2 plat, which included the Kelley Lots. On December 20, 2005, Ryland conveyed the Kelley Lots back to the developer by deed. These two actions — filing of the plat and conveyance by deed — fulfilled the requirements of the Declaration to annex real property to the HOA.”

CCIOA fans and developers’ counsel will want to dive into this discussion — and avoid those shortcuts.

Frederick B. Skillern, Esq., is a director and shareholder with Montgomery Little & Soran, P.C., practicing in real estate and related litigation and appeals. He serves as an expert witness in cases dealing with real estate, professional responsibility and attorney fees, and acts as a mediator and arbitrator in real estate cases. Before joining Montgomery Little in 2003, Fred was in private practice in Denver for 6 years with Carpenter & Klatskin and for 10 years with Isaacson Rosenbaum. He served as a district judge for Colorado’s Eighteenth Judicial District from 2000 through 2002. Fred is a graduate of Dartmouth College, and received his law degree at the University of Colorado in 1976, in another day and time in which the legal job market was simply awful.

Frederick Skillern: Real Estate Case Law — Brokers

Editor’s note: This is the first in a series of posts in which Denver-area real estate attorney Frederick Skillern provides summaries of case law pertinent to real estate practitioners. These updates originally appeared as materials for the 32nd Annual Real Estate Symposium in July 2014.

frederick-b-skillernBy Frederick Skillern

CapitalValue Advisors, LLC v. K2D, Inc.
Colorado Court of Appeals, August 15, 2013
2013 COA 125

K2D was a business that required new capital, and it contracted with CapitalValue Advisors for a number of different tasks. CapitalValue entered into an engagement agreement whereby it agreed to either help sell K2D (either a majority or minority interest) or to assist K2D in obtaining debt financing. The rub is that CapitalValue does not have a real estate broker license or a securities license. That is required in order to market the sale of K2D as an entity, as one asset of the company was a leasehold interest in property, or to market its stock under state and federal securities laws.

During the course of its engagement, K2D terminated Capital Value and engaged another company for help. That company obtained a bank loan for K2D — an action which, of itself, does not require a specific license. Since the loan was obtained during the carryover period under the CapitalValue engagement agreement, CapitalValue sued for a 4.5% commission under the terms of its agreement.

The engagement agreement provided:

In executing this Agreement, [CapitalValue] is committing its resources to provide you the best possible representation in the sale of your business, and in turn, you are granting [CapitalValue] the sole, exclusive, and irrevocable right to procure parties (“Buyer(s)”) to purchase, exchange, lease, invest in, loan to, contract for the services of, or otherwise obtain an interest in the Client’s business, its corporate stock, business assets, right and properties or any portion thereof of Client or Client’s affiliates.

(Emphasis added.)

In addition, the Agreement set forth that CapitalValue would earn 4.5% of the total amount secured for “debt financing.”

The district court dismissed all claims on summary judgment, holding that the entire engagement agreement was an illegal contract. CapitalValue does not contest that it lacked either license, and does not appeal the trial court’s finding that two parts of the contract are void under these theories. However, it argues that other contractual obligations in the agreement are lawful, and that those provisions are severable from the “void” agreements, even in the absence of an express contract provision allowing the obligations to be severed. The district court dismissed the complaint on summary judgment, finding that the agreement had no severability clause, so the entire contract was unenforceable.

The court of appeals reverses the summary judgment order, finding that the lack of a severability clause is not determinative as to whether portions of the contract can be enforced.

Where a contract contains multiple provisions, some of which cannot be legally performed, the remaining provisions are not necessarily unenforceable. Rather, “[w]here an agreement founded on a legal consideration contains several promises, or a promise to do several things, and a part only of the things to be done are illegal, the promises which can be separated, or the promise, so far as it can be separated, from the illegality, may be valid.” Reilly v. Korholz, 320 P.2d 756, 760 (Colo. 1958).

The court distinguishes Broughall v. Black Forest Development Co., 196 Colo. 503, 593 P.2d 314 (1978), the leading case on the requirement for a real estate license to sell a business owning real property. That case involved a single agreement — to find a buyer to purchase a business, including its real estate interest. The broker there argued that, although he was not a licensed real estate broker, his commission could be “based on that part of the sale price which did not involve real estate.” The court there ruled that “severing” the contract by simply discounting Broughall’s fee “would allow finders and business brokers to disregard completely the licensing requirement to the detriment of the public whom the statute is designed to protect.”

In contrast, the court here finds that the CapitalValue agreement contains multiple agreements, each of which could be a separate contract. The Agreement provides that CapitalValue would earn (1) 4.5% for a sale of less than a majority interest in K2D, Inc.; (2) 4.0% for a sale of more than a majority interest in K2D, Inc.; or (3) 4.5% for helping K2D obtain debt financing. CapitalValue does not appeal the district court’s rulings that the first and second provisions violate federal and state securities licensing requirements. However, because the Agreement also contains a third provision for payment for securing debt financing that the parties do not contend violates either set of licensing laws, the district court erred in concluding as a matter of law that the Agreement could not be severed. The case is remanded for further proceedings to determine an issue of fact — whether the parties intended the provisions of the contract to be severable.

Frederick B. Skillern, Esq., is a director and shareholder with Montgomery Little & Soran, P.C., practicing in real estate and related litigation and appeals. He serves as an expert witness in cases dealing with real estate, professional responsibility and attorney fees, and acts as a mediator and arbitrator in real estate cases. Before joining Montgomery Little in 2003, Fred was in private practice in Denver for 6 years with Carpenter & Klatskin and for 10 years with Isaacson Rosenbaum. He served as a district judge for Colorado’s Eighteenth Judicial District from 2000 through 2002. Fred is a graduate of Dartmouth College, and received his law degree at the University of Colorado in 1976, in another day and time in which the legal job market was simply awful.

New Legal Technology: Reduced Risk, Increased Flexibility, Automated Systems—Better for Lawyers

tech-lawIt’s estimated that 90% of lawyers use mobile to check email; 34% of lawyers use tablets in the courtroom; 27% of law firms have legal blogs; 10% of individual lawyers have blogs; 48% use a tablet at work (and the tablet is capturing laptop share); 17% use litigation support software; 39% of blogs resulted in clients or referrals; 40% of solos and 30% of all lawyers use cloud services; and 58% use Dropbox to transfer and store files. Technology (including legal technology) moves fast, with new products and updates arriving at a dizzying pace.

Wouldn’t it be nice if this burgeoning technology resulted in less time in the office and an increase in billings? Many attorneys are finding this to be the case. Automating systems and keeping better track of files and cases has actually resulted in more flexibility and peace of mind for attorneys, even those having to juggle more responsibilities. In addition, smaller firms have discovered by using new technologies they are able to better compete with larger firms.

This year’s first Colorado Legal Technology Expo is October 27-28, 2014, at the CBA-CLE offices in Denver. The Legal Technology Expo is free and the place for the technology and legal communities to interact and to mutually benefit.

Not only will there be legal technology companies exhibiting, but short, educational seminars offered on the latest in technology for the legal community. Legal technology tips and best practices will be shared by experts with topics that include: Managing Interruption and Info Overload; Cloud Security; E-Recording; Using the Latest in Technology to Market Your Law Firm; and 5 Technologies Every Lawyer Should be Using Today.

We invite you to drop by, even for an hour or two, to the free Legal Tech Expo. Click here to find out more and to register for the 20-30 minute educational seminars.

CLE Program: The 2014 Colorado Legal Technology Expo

This CLE presentation will take place from Monday, October 27 through Tuesday, October 28, 2014. Click here to register.

 

Colorado Supreme Court Reverses Years of Precedent in Softrock and Western Logistics

It is advantageous to employers to retain the services of independent contractors when possible. Contractors are not required to be covered by workers’ compensation insurance and employers need not pay unemployment tax out of the contractors’ wages. However, classifying workers as contractors has its risks; after an audit, the employer may be found liable for back taxes on workers who are found to be employees rather than contractors.

That is precisely what happened to Carpet Exchange in 1993, when the Colorado Court of Appeals issued its opinion in Carpet Exchange of Denver v. Industrial Claim Appeals Office, 859 P.2d 278 (Colo. App. 1993). The court of appeals analyzed C.R.S. § 8-70-115(1)(b) and, after applying the factors, decided that the workers in question were employees rather than contractors because they were not “customarily engaged in an independent trade, occupation, profession, or business related to the service performed.” Since then, courts have relied on this one-factor test to determine whether long-term workers are employees or contractors.

Industrial Claim Appeals Office v. Softrock Geological Services, 2014 CO 30 (Colo. May 12, 2014), reversed that precedent. In Softrock, the Colorado Supreme Court rejected the outside employment test as dispositive of whether a worker is an employee or an independent contractor, ruling instead that the totality of the circumstances must be considered and no single factor can be dispositive in deciding whether an individual is customarily engaged in an independent business or trade.

Michael Santo, lead counsel in Softrock, will present a lunchtime program on Friday, August 22, 2014 at the CLE offices to discuss Softrock‘s impact on employment law. Santo will also discuss Western Logistics, Inc. v. Industrial Claim Appeals Office, 2014 CO 31 (Colo. May 12, 2014), a related opinion that the supreme court delivered the same day as Softrock. Employment attorneys, business attorneys, and in-house counsel should attend this informative lunchtime program.

CLE Program: Independent Contractor or Employee? Softrock‘s and Western Logistics‘ Effect

This CLE presentation will take place on August 22, 2014. Click here to register for the live program and click here to register for the webcast. You can also register by phone at (303) 860-0608.

Can’t make the live program? Order the homestudy here — MP3 audio downloadVideo OnDemand

6 Ways To Overcome Fear of Failure

Editor’s Note: This post originally appeared on the ALPS 411 blog on August 11, 2014. Reprinted with permission.

SusanCartierLiebelBy Susan Cartier Liebel

Life begins at the end of your comfort zone ~ Neale Donald Walsh

We’ve all been there. We are so morbidly afraid to fail. So afraid, in fact, we find ourselves paralyzed and simply can’t take the next step forward. Not one. And when it comes to starting a solo practice or taking on a legal matter one grade level above our expertise or leaving the Big Law job you hate, you name it, it can cripple us and severely limit our futures.

This fear is quite possibly the single strongest force holding people down far below their professional and personal potential. In a crazy world full of uncertainty, a roller coaster economy, the myriad of unexpected disasters that could happen to anyone at any time, isn’t it easy to see why most people will take the safest route possible, the tried and true?

But this is where the joke is on us: playing it safe has risk as well. If you never give yourself permission to fail, your success in life will have clear self-imposed limits. Most people grossly underestimate their recuperative powers if they don’t succeed. This underestimation leads them to pass on valuable opportunities that come knocking. And we’ve all read with awe and longing the stories of those who failed often, failed big and then rose to the top with incredible success. It’s part of our business folklore!

If you are reading this, chances are you want to open a solo practice. Here are a few strategies that can help you put risk and reward of opening up your own business in perspective. It may even help you to challenge the fears which have been holding you back from taking the plunge.

1. Missed opportunities don’t happen without a cost – Without taking risk, you can’t take advantage of opportunities that present themselves. While a steady paycheck may sound appealing, a pink slip can hit you upside the head without warning, too. But, even in with this possibility, your life can still be pleasing and predictable, quiet and reasonably fulfilling. However, the odds of you creating something original are very low and most likely you will not leave any lasting mark on the world. (And that’s not to say that’s a bad thing.) But the reality is today’s careers are dynamic, not static and you may not have the luxury of a pleasing and predictable life. Career planning is less about planning and more about being continuously alert to opportunities that present themselves to you spontaneously. You need to be able to respond. Therefore, the ideal career is one where there is a wide range of opportunities (some more risky, some less) that together form a relatively safe career choice with a high upside for growth. Taking some of these high risk opportunities is essential because at the end of the day, they offer the greatest upside for reward.

2. Banish Ignorance – What we don’t know is the source of most fear. Eliminate the paralyzing power of fear by learning and understanding what you are up against. Research and be aware of all the possible outcomes (both the good and the bad) so you can get both a macro and micro picture of the benefits of success and the risks of failure. This analysis will help you see beyond the fear and help you make a more reasoned and dispassionate decision. Learn what it really means to run your own business as a lawyer. Talk to lawyers who are doing it; talk to lawyers who have done it and now are doing something else. Educate yourself. It is the most powerful antidote to fear.

3. And if you fail? – Know how long it will take you to recover if you fail. Odds are it will be less time than you think and not as financially disruptive as you fear. Is the fear of a few potentially difficult months so strong it can keep you in a mediocre or miserable situation indefinitely?

4. Understand the benefits of failure – While I say there is no such thing as failure if you try (only not trying is failure) others believe you can fail and should fail and should fail often. So if you are in this category know that every failure is an experiment and an opportunity to grow. Sometimes, even if the failure impacts you financially, oftentimes the knowledge you accumulate from the experience can be worth the financial downside. It can even position you for the next opportunity which will help you not only recoup the losses but take you further in your life than you would have gone otherwise. In the corporate world, it is well known that managers prefer to hire someone who tried to start a company and failed than someone who has always been strictly corporate. It is true in the legal world, too. Many who have gone solo have been offered jobs because they showed initiative, took risks, showed they could wear multiple hats and hustle. That the solo practice wasn’t a raging success didn’t matter to the hiring lawyer. The initiative, chutzpah and self-taught education the lawyer received is what mattered.

5. Have a Plan BContingency plans (or a safety net) are yet another way to minimize risk. If Plan A doesn’t work out you always have Plan B. Sometimes just knowing there is a Plan B makes it easier to move forward with Plan A. I find, depending upon the situation, having contingency plans allows me to take more risks and take them with greater confidence simply because I know it’s not ‘do or die.’

6. Start Moving – Sometimes the best way to climb the mountain is not to look at the mountain peak but down at your feet and put one foot in front of the other. As soon as you take the first step you begin to gain experience and education. We’ve all been there. Everything is or seems hardest the first time we do it quite simply because we’ve never done it before. So, you just put one foot in front of the other, build up momentum and rhythm and as you get closer to your goal, the fear of not succeeding seems less overwhelming.

How have you addressed your fears?

Susan Cartier Liebel is the Founder & CEO of Solo Practice University® (solopracticeuniversity.com), the only educational and professional networking community for lawyers and law students designed for those who want to create and grow their solo or small firm practices.

A coach/consultant for solos and small firms, an attorney who started her own practice right out of law school, a Member of the Suffolk School of Law – Institute on Law Practice Technology & Innovation advisory board charged with guiding the Institute’s future, an Entrepreneur Advisor for Law Without Walls, an adjunct professor at Quinnipiac University School of Law for eight years teaching law students how to open their own legal practices right out of law school, a columnist for LawyersUSA Weekly, the Connecticut Law Tribune, The Complete Lawyer, and Law.com, she has contributed to numerous online publications such as Forbes.com, legal publications and books on this topic as well as the issues facing women in the workforce. She speaks frequently to law schools and professional organizations around the country on issues facing solos, offering both practical knowledge and inspiration. She can be contacted at: susan@solopracticeuniversity.com.

CLE is hosting Hanging Your Shingle this weekend. If you are ready to overcome your fears and hang your shingle, this program is for you. Order the homestudy below.

CLE Program: Hanging Your Shingle

This CLE presentation will take place on August 14  through 16, 2014. Click here to order the CD homestudy – click here to order the Video OnDemand homestudy – click here to order the MP3 Audio Download homestudy. You can also order by phone at (303) 860-0608.

Walking the Talk: An Interview with Judy Mares-Dixon

JudyMaresDixonJudy Mares-Dixon, M.A., is well experienced in conflict resolution. Since 1986, she has been working in the dispute resolution field as a trainer, mediator, coach, facilitator, consultant, and dispute resolution systems designer. We are honored to have Judy return to CLE for our 40 Hour Mediation Training beginning on August 11, and are excited to present an interview with Judy.

CLE: Thank you for allowing us to interview you. First, what brought you to the field of conflict resolution?

Judy: I was working full-time as a contract negotiator for the state. I really enjoyed the high-energy interaction and the relationship with customers from around the state. I’ve always been fueled by negotiations. I found out that the City of Boulder was looking for mediators to help resolve landlord-tenant and neighbor-neighbor disputes, so I went through their training course — it’s similar to the 40 Hour course I teach at CLE — and absolutely loved it. I continued working full-time for the state and would mediate for Boulder’s program at night. Some nights, I would return home at 9 o’clock or later and could not sleep because I was so charged up from the excitement of the mediation. The interaction between people who start out so far apart, and their capacity to find intelligent solutions, is fascinating to me.

CLE: What is your favorite part of doing dispute resolution?

Judy: My favorite part is assisting people who have not been able to get through their conflicts to analyze their situation and come up with smart solutions. I love being able to effectively analyze situations and find the pros and cons of a variety of ideas and really assist people in finding the best solutions for everyone, especially in situations where one or more parties think it’s hopeless. I love really thinking about what it’s going to take to solve the problem.

CLE: How do you apply the techniques you teach to your day-to-day life?

Judy: There is always an exchange in business. My colleagues and I are always looking at our projects to decide who is going to do which project, whose skills match best with the job at hand, and we negotiate. I think one of the keys to being a successful mediator is that you have to walk the talk – it is critically important to the job. I work with a small number of associates and we’ve been together for several years. The reason we work so well together and have such a fun, respectful relationship, is that we all walk the talk. We expect high quality work — we expect perfection and are hard on ourselves — but we are good at what we do because we walk the talk. It’s critically important to success as a mediator.

CLE: You mentioned situations where one or more parties think it’s hopeless. Can you share with us a story of a conflict that seemed impossible that you helped resolve?

Judy: I once did a mediation for five physicians who co-owned a practice. Two of the physicians were very senior and three were very junior — new to medicine and new to the practice. Three of the physicians had serious conflicts with each other. There were concerns as to whether everyone was doing their fair share — bringing enough business and revenue to the practice, contributing the right amount. They came to me because they were not sure if they should try to work together or if there should be a buy-out of some of the partners. They felt hopeless and frustrated to say the least — they weren’t getting what they wanted from one another. Ultimately, they decided to stay together in the practice. We developed a monthly evaluation tool so the partners could evaluate who was bringing in revenue and how the work load was shared.

One other thing they were quick to identify was how poorly they responded to conflicts. Three of them would duck and run, one would try to bring the issue to the table, and the other would get aggressive. We worked out a plan for how they could address their concerns when conflicts arise in the future, and expected time frames for resolution of future conflicts.

 

CLE is honored to have Judy return for our 40 Hour Mediation Training. Join us on August 11, 12, 13, 18, and 19 for our 40 Hour Mediation Training with renowned mediator Judy Mares-Dixon. To register, click the links below or call (303) 860-0608.

CLE Program: 40 Hour Mediation Training

This CLE presentation will take place on August 11, 12, 13, 18, and 19, 2014. Click here to register for the live program. You can also register by phone at (303) 860-0608.

Bankruptcy Plan Modification by Debtor’s Counsel – Part of Bankruptcy Update 2014

In any three- to five-year period, many of us face unanticipated financial obstacles – medical expenses, educational expenses, dependent expenses. For a bankruptcy debtor, these unexpected financial burdens can derail a payment plan. Thankfully, the Bankruptcy Code at 11 U.S.C. § 1329 allows post-confirmation plan modifications so that debtors can adapt to changing life circumstances.

Section 1329 permits a debtor, trustee, or holder of an unsecured loan to request modification to increase or reduce payments to a particular class; prolong or shorten the time for those payments; alter the amount of distribution to a creditor in order to account for another payment not covered by the plan; or reduce payments in order to cover health insurance expenses for the debtor.

Experienced bankruptcy attorney Andrew S. Trexler offers some of the common scenarios in which his clients have requested post-confirmation plan modification:

  • To remove unpaid mortgage arrears following a mortgage loan modification and reduce plan length;
  • To bring payments current and reduce payments to account for change in projected disposable income, such as from retirement;
  • To allow for debtor to transition from one job or business to another through temporary reduction in monthly payment and provide for post-petition mortgage and HOA arrears;
  • To provide for pre-petition priority support arrears and cram down secured debt;
  • To surrender property securing Class 2 or 3 debts (Note: this is explicitly allowed by Judge Tallman so long as in good faith but disallowed by Judge Campbell);
  • Generally, to accommodate any significant decrease in disposable income caused by reduction in hours, job loss, increase in taxes due to end of payroll tax holiday in 2013 or increased medical bills, insurance costs, lawsuit defense, etc.; or
  • To allow for the purchase of health insurance (now generally required by the Affordable Care Act), so long as the debtor complies with § 1329(a)(4).

Trexler also provides the sample modification request motions and projected plans for several of these scenarios. He will present on this topic at Friday’s CLE program – Bankruptcy Update 2014 – along with several bankruptcy court judges and other area bankruptcy attorneys. Click the links below to register or call (303) 860-0608.

CLE Program: Bankruptcy Update 2014

This CLE presentation will take place on June 6, 2014. Click here to register for the live program and click here to register for the webcast. You can also register by phone at (303) 860-0608.

Can’t make the live program? Order the homestudy here — CD homestudy • MP3 audio downloadVideo OnDemand

Creative Solutions in the Legal Profession

“Creativity is the soul of the scholar.” -Nnamde Azikiwe, First President of Nigeria

The practice of law is filled with complex problems, and clients frequently ask their attorneys to present creative solutions. Likewise, new attorneys are often tasked with finding creative solutions by senior attorneys. Creativity can be liberating, but it can also be risky—how far is too far to stray from the tried and true path?

Creative filings can lead to sanctions designed to prevent frivolous proceedings. Frivolous proceedings can lead to disciplinary proceedings for violations of Colo. RPC 3.1, which states that a lawyer shall not bring or defend a proceeding unless there is a basis in law or fact for doing so that is not frivolous. So how can a lawyer develop his or her creativity without violating any rules?

CLE is hosting a panel discussion on June 4, 2014, between Byeongsook Seo, a litigation attorney; Jonathan H. Steeler, a transactional attorney; and Hon. Jim S. Miller, a judge. These three panelists have very different backgrounds, but all three exercise creativity in their practices. They will present several scenarios in order to develop creative case strategies from their unique perspectives.

Creativity can open doors for new attorneys and experienced attorneys alike. Join us on June 4 for this interesting panel discussion about the benefits of creativity and the bounds of duty. Click the links below or call (303) 860-0608 to register.

“Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after a while. That’s because they were able to connect experiences they’ve had and synthesize new things.” -Steve Jobs

CLE Program: Creative Solutions in the Legal Practice

This CLE presentation will take place on June 4, 2014. Click here to register for the live program and click here to register for the webcast. You can also register by phone at (303) 860-0608.

Can’t make the live program? Order the homestudy here — MP3 audio downloadVideo OnDemand

Alternative Lawyer Relationships: Ethical Implications of Contract Lawyering

DavidCLittleOutsourced legal work and contract lawyers are becoming more prevalent. There are many reasons to outsource legal services or hire contract lawyers. David C. Little of Montgomery Little & Soren, PC, in Chapter 3, “Alternative Lawyer Relationships,” of Lawyers’ Professional Liability in Colorado – Preventing Legal Malpractice and Disciplinary Actions, proposes four hypothetical scenarios:

  1. A lawyer is not comfortable drafting a special needs trust to settle a minor client’s personal injury claim and seeks assistance from another lawyer (a specialist experienced in the intricacies of such arrangements) to create the trust.
  2. The general counsel of a business corporation being sued in an environmental damage claim hires a contract law firm that specializes in the defense of environmental damage claims.
  3. A lawyer in one state is not admitted to practice in another state and must retain local counsel in order to participate pro hac vice in the other state.
  4. A firm lawyer in charge of the management of complex litigation asks a temporary lawyer service agency to provide a contract lawyer to organize the client’s documents for discovery production.

These scenarios occur regularly in practice, and there is nothing inherently unethical about hiring contract lawyers or outsourcing legal work. However, each scenario has unique ethical pitfalls, as explained by Little:

In the first example, what happens if the contract lawyer engaged to draft the special needs trust makes a mistake and the minor client loses the benefits the trust would have provided? Does it make any difference if the principal lawyer informed the minor’s guardian about the contract lawyer or had the guardian’s consent? Does the knowledge or consent of the client to the contract lawyer arrangement make any difference?

In the second example, what happens if the specialized law firm hired by the corporation’s general outside counsel discovers that the general counsel has been giving incorrect advice to the client that may have compromised the corporation’s defense to the environmental damage claim? What obligations does the contract firm (the specialist) have to the client to advise the client about the incorrect advice? Is there an independent client-lawyer relationship between the contract specialist and the client, and does the existence of any such relationship depend upon the client’s knowledge of and consent to the arrangement?

In the third example, what are the obligations of local counsel to the client for the procedural aspects of the case in the local lawyer’s jurisdiction? Does the local counsel  have any responsibility to either the client or the referring counsel to advise on either procedural or substantive matters involved in the claim?

Finally, what happens in the fourth example if the contract lawyer fails to recognize the proprietary nature of many of the client’s scientific documents and the client is damaged when its scientific secrets are disclosed without a protective order? In this example where a temporary lawyer service agency or referral agency is involved, does the agency have any exposure for the temporary lawyer’s errors or omissions?

On May 12, 2014, David Little will discuss ethical considerations involved in alternative lawyer relationships at a lunchtime CLE program, “Alternative Lawyer Relationships: Contract Lawyering and Its Ethical Implications.” Join us for this informative program.

CLE Program: Alternative Lawyer Relationships: Contract Lawyering and Its Ethical Implications

This CLE presentation will take place on May 12, 2014. Click here to register for the live program and click here to register for the webcast. You can also register by phone at (303) 860-0608.

Can’t make the live program? Order the homestudy here — MP3 audio downloadVideo OnDemand

Probate Litigation Depositions – Not Your Grandmother’s Deposition

Probate Litigation ImageProbate litigation depositions can be many things – tense, perhaps emotionally draining for the deponent and the parties. But as David R. Struthers of Godfrey | Johnson PC illustrates, learning about probate depositions can be entertaining as well.

His tongue-in-cheek materials discuss the prudence of determining in each case whether it is desirable to “open the door of discovery,” despite the endless enjoyment every lawyer derives from conducting depositions. Amidst the humor are practical tips, such as applying to the probate court to use the Colorado Rules of Civil Procedure in order to engage in discovery and requesting permission to videotape the deposition. Struthers is truly a splendid wordsmith who excels at cleverly crafting instructional materials disguised as humor. But his true talent is with the guitar.

In the video clip below, Struthers explains the difficulty in removing a troublesome client who returns to Spencer Crona’s door every single day.

Click here to view online.

CLE Homestudy: Probate Litigation Depositions – Not Your Grandmother’s PI Depo

This CLE presentation took place on March 4, 2014. Click the links below to order the homestudy — MP3 audio downloadVideo OnDemand