June 20, 2019

Colorado’s Lawful Activities Statute Does Not Protect Employees’ Medical Marijuana Use

Lipinsky-PrattBy Lino Lipinsky and Joel Pratt

On June 15, the Colorado Supreme Court ruled in Coats v. Dish Network, LLC, No. 13SC394, 2015 CO 44 (2015), that employers with a drug-free workplace policy have the right to take adverse action against employees who test positive for marijuana, even if the employees fully comply with the state’s medical marijuana laws, do not use marijuana at the workplace, and are not impaired on the job. This landmark decision affirms the right of employers to require that their employees comply with all federal drug laws, regardless of their states’ marijuana laws.

The plaintiff, Brandon Coats, a quadriplegic as a result of an automobile accident, failed a random drug test required by his employer, Dish Network. Mr. Coats argued that his use of medical marijuana was the only means by which he could control his leg spasms. Dish Network did not contest that Mr. Coats had no work-related problems other than the failed drug test. There was no dispute that Mr. Coats used marijuana only at home and had a valid Colorado medical marijuana card.

The court rejected the plaintiff’s argument that the Colorado lawful off-duty activities statute, Colo. Rev. Stat. § 24-34-402.5, protected his use of medical marijuana at home. That statute bars employers from taking adverse employment action against employers for “lawful” activities conducted away from work.

The Colorado Supreme Court narrowly focused on the definition of “lawful” in the statute and declined to reach any other issue. Mr. Coats’s attorney argued that the definition encompasses activities legal under state law, regardless of their status under federal law. Dish Network disagreed, arguing that the word “lawful” referred to activities legal under both state and federal law.

A unanimous court, with Justice Márquez not participating, agreed with Dish Network. The court held that the word “lawful” should be interpreted according to its generally accepted meaning, and that the Colorado legislature included no language indicating that the word should refer to state law alone. Colorado’s lawful activities statute thus only protects employees engaged in activities that are legal under both state and federal law.

Because the federal Controlled Substances Act lists marijuana as a Schedule I controlled substance and prohibits its possession, manufacture, sale, or use, medical marijuana remains illegal under federal law. Accordingly, Colorado’s lawful activities statute does not protect an employee using medical marijuana because such use is prohibited by federal law.

The trial court dismissed Mr. Coats’s claim against Dish Network. A split panel of the Colorado Court of Appeals affirmed the trial court’s decision, holding that Colorado’s lawful activities statute incorporated both state and federal law, and therefore, does not protect activity illegal under federal law. Judge Webb dissented, arguing that the reach of “lawful activities” should be determined exclusively by state law, under which marijuana use is considered lawful. The supreme court affirmed the court of appeals’ ruling.

The Coats decision reaffirms the right of employers to manage and to enforce drug-free workplaces. Employers will not have to make individualized decisions about whether a particular employee’s marijuana use is “lawful” under state law for bona fide medicinal purposes; instead, employers can institute and enforce broad drug-free workplace policies.

Further, the Coats decision avoids potential problems with the conflict between state and federal law. Colorado employers who contract with the federal government generally must comply with the federal Drug-Free Workplaces Act, which requires drug-free workplaces. Similarly, employers engaged in the transportation industry may be required to comply with the Omnibus Transportation Employee Testing Act of 1991, which mandates drug testing of certain transportation workers.

Had the court ruled in favor of Mr. Coats, employers subject to federal drug-free workplace regulations would have faced conflicting obligations. Colorado law would have demanded that employers tolerate certain employee drug use, while federal law would have demanded that employers take action against those same employees. The court avoided that problem by clarifying that Colorado law only protects employees engaged in activities that are lawful under state and federal law.

Employers also need to recognize the limits of this decision. Importantly, the court did not hold that employers have unfettered rights to fire or to discipline employees for the use of marijuana. Employers must still follow the law. Dish Network likely prevailed because it had adopted a clear and broad drug-free workplace policy, engaged in random drug testing, and applied its policies neutrally. An employer that selectively applies a policy could be vulnerable to discrimination claims.

Additionally, the Coats decision does not resolve the preemption issues surrounding Colorado’s medical and recreational marijuana amendments. A number of other pending cases, including Nebraska’s and Oklahoma’s challenge to Colorado’s marijuana laws filed in the U.S. Supreme Court, raise the preemption issue head-

Lino Lipinsky de Orlov is a litigation partner in the Denver office of McKenna Long & Aldridge, LLP.  He represents clients in all aspects of commercial litigation, mediation, arbitration, and appeals.  He has developed particular experience in complex business cases, particularly those involving creditor’s rights, real estate, trade secrets, and employment disputes.  Mr. Lipinsky also frequently speaks and writes on legal issues relating to technology, employment law, and ethics.   He is a member of the Colorado Bar Association’s Board of Governors and serves on the Board of the Colorado Judicial Institute.  He is a former President of the Faculty of Federal Advocates.  Among his honors, Chambers USA has recognized Mr. Lipinsky as one of Colorado’s leading general commercial litigators, and he has been included in The Best Lawyers in America.  He received his A.B. degree, magna cum laude, from Brown University and his J.D. degree from New York University School of Law, where he was a member of the New York University Law Review.

Joel M. Pratt is a member of McKenna Long & Aldridge’s Government Contracts Department in the Denver office. Mr. Pratt graduated, magna cum laude, from the University of Michigan Law School in 2014 where he served on the Michigan Law Review as the Executive Notes Editor and an Associate Editor. While earning his J.D., Mr. Pratt served as a judicial intern for the Honorable Alan M. Loeb, was a student attorney for the Michigan Unemployment Insurance Project and the Child Advocacy Law Clinic, and published several articles in legal academic journals across the country. Prior to joining the firm, Mr. Pratt worked as a law clerk for the Office of the Vice President and General Counsel of the University of Michigan. Mr. Pratt graduated with distinction in 2009 from the University of Colorado with a Bachelor of Arts in English Literature.  Mr. Pratt was also the winner of the University of Colorado Alumni Association Scholarship.

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

The Colorado Lawyer: Four Things to Know About Motions to Disqualify

Editor’s Note: This article originally appeared in the April 2015 issue of The Colorado Lawyer. Reprinted with permission.

By J. Randolph Evans, Shari L. Klevens, and Lino S. LipinskyEvans-Klevens-Lipinsky


Authors’ Note
Readers’ comments and feedback on this series of “Whoops—Legal Practice Malpractice Prevention” articles are welcomed and appreciated. References in the articles to “safest courses to proceed,” “safest course,” or “best practices” are not intended to suggest that the Colorado Rules require such actions. Often, best practices and safest courses involve more than just complying with the Rules. In practice, compliance with the Rules can and should avoid a finding of discipline in response to a grievance or a finding of liability in response to a malpractice claim. However, because most claims and grievances are meritless, effective risk management in the modern law practice involves much more. Hence, best practices and safer courses of action do more; they help prevent and more quickly defeat meritless claims and grievances.


Few things are worse for an attorney than getting a new big matter, starting work on it, and then facing a motion to disqualify. At that point, the attorney is put in the awkward position of either explaining to the client why he or she should pay more money to keep the attorney, or absorbing the fees associated with defending the motion to disqualify.

Motions to disqualify are far from rare occurrences. In recent months, a number of high-profile disqualification motions have been reported.[1] Many disqualification motions are well-founded. Others are nothing more than a litigation tactic, forcing attorneys to scramble to protect valued client relationships. Significantly, the increasing mobility of lateral attorneys (with attorneys rarely spending their entire legal careers at a single law practice or firm) has raised issues that can serve as the basis of a motion to disqualify.

Disqualification motions implicate the most important duties that an attorney owes a client: the duties of confidentiality and loyalty. Under the Colorado Rules of Professional Conduct (Colorado Rules or Colo. RCP), an attorney must safeguard client confidences and secrets, subject to a few exceptions.[2] The attorney is also obligated to elevate the client’s interests above the interests of the attorney and the law firm. Disqualification motions put these obligations directly at issue.

Courts differ on how they address motions to disqualify, especially because such motions are at times simply a litigation tactic by an opposing party in search of a strategic advantage.[3] Additionally, courts are usually reluctant to interfere with a client’s choice of counsel unless the conflict is real and there are few options other than to grant disqualification.[4]

Courts also appear to distinguish between conflicts based on multiple representations and those based on successive representations.[5] After all, parties filing disqualification motions based on multiple representation conflicts are typically strangers to the attorney-client relationship.

The far more common motion to disqualify involves a former client, either of the law firm or of an individual attorney (who may have recently joined the firm). In those circumstances, courts are generally protective of confidences or secrets that the law firm or attorney may possess or to which the firm or attorney has access as a consequence of either the prior or the existing representation. According to the Colorado Supreme Court, however, a court “may not disqualify counsel on the basis of speculation or conjecture.”[6] The moving party’s burden for a motion to disqualify is satisfied only when “the motion to disqualify sets forth specific facts that ‘point to a clear danger that either prejudices counsel’s client or his adversary.’”[7]

Conflict violations are not always the focal point for resolution of a motion to disqualify. As the Colorado Supreme Court has noted, “[v]iolation of an ethical rule, in itself, is neither a necessary nor a sufficient condition for disqualification,” although there typically must be evidence of a violation or potential violation of “attorney ethical proscriptions,” such as those centered on the duties of loyalty and fairness or those intended to protect the integrity of the process.[8] Often, motions to disqualify turn on the risk that a client’s former attorney or law firm might be able to use against the client the confidences or secrets gained during the prior representation. This is because it “must be presumed” that a client shared confidences with its attorney pursuant to the attorney-client relationship.[9] Appreciating this distinction is important to successfully making or defeating a motion to disqualify.

In assessing motions to disqualify based on conflicts, Colorado courts also consider (1) a client’s preference for a particular counsel, (2) the client’s right to confidentiality in communications with his or her attorney, (3) the integrity of the judicial process, and (4) the nature of the particular conflict of interest involved.[10] Below are some important concepts that have emerged in the context of motions to disqualify.[11]

“Substantially Related” Matters

The Colorado Rules do not bar attorneys from representing current clients against former clients. Instead, Colo. RPC 1.9(a) provides that

[a] lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.

Colo. RPC 1.9 does not define a “substantially related matter,” although Comment 3 to that Rule provides some context:

Matters are “substantially related” for purposes of this Rule if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client’s position in the subsequent matter.

More Than “Playbook Knowledge”

Frequently, a former client accuses the attorney of having “insider information” regarding the client that does not rise to the level of a client confidence. Indeed, even if the attorney does not possess any direct information regarding the present lawsuit or transaction, the client may say that the attorney understands how the client thinks and acts. The attorney may know the client’s bottom line for settlement or how the client prefers to approach litigation. This is often referred to as “playbook knowledge”—the attorney knows the client’s paths and approaches.

As with the “substantial relationship” test, whether an attorney’s playbook knowledge is sufficient for disqualification is heavily dependent on the facts. Thus, there is no bright-line rule or test to determine whether an attorney should be disqualified because of her or his playbook knowledge. However, Comment 3 to Colo. RPC 1.9 sets a minimum baseline: “In the case of an organizational client, general knowledge of the client’s policies and practices ordinarily will not preclude a subsequent representation.”

This comment makes clear that attorneys are permitted, under some circumstances, to engage in representations that are adverse to a former client. Possessing “general knowledge” about a client may not, by itself, be enough for disqualification. Typically, a former client seeking to disqualify a former attorney from representing an opposing party must identify specific, cogent information that the attorney possesses and show that the information is confidential and implicates the duty of loyalty.

Attorneys should not assume that possession of mere playbook knowledge precludes disqualification. Attorneys should be aware, however, that clients can make a successful case for disqualifying attorneys who had a greatly invested role with the organizational client or where the playbook knowledge is uniquely and particularly relevant to the new representation.

Avoiding the Motion to Disqualify

The best way to deal with motions to disqualify is to prevent them. Two important pre-motion strategies are effective. First, identify and resolve potential conflicts, including both multiple and successive representations, before undertaking a representation or hiring a lateral. Where a conflict exists, an effective written consent is the best defense to a motion to disqualify.

Second, take effective steps to mitigate, if not eliminate, risks that a former client’s confidences and secrets might be accessible to attorneys working on a matter involving the former client. Increasingly, courts nationwide have recognized and accepted timely, effective ethics screens as a positive factor for permitting an attorney to continue the representation, although sometimes a screen is not enough to avoid the ramifications of an imputed conflict.[12] Nonetheless, if the attorneys choose to employ a screen, it is important that it be erected before the involvement of the conflicted attorney in the new representation.[13]

Responding to a Motion to Disqualify

Upon receiving a motion to disqualify, the attorney should promptly notify the client. Attempting to defeat the motion without advising the client is not an acceptable solution.

In addition, if the motion is made by a former client, attorneys should consider providing notice of a potential circumstance to their legal malpractice insurer. Such motions are sometimes followed by either a grievance or a legal malpractice claim.

Finally, assess whether the firm or different counsel should defend the motion to disqualify. Independent counsel, free from the suggestion of economic self-interest, often can more effectively than the attorney press the case for allowing the client to keep its counsel of choice.

Conclusion

Attorneys understandably may feel apprehensive about the threat of a motion to disqualify, given the potential risk and loss of work. However, by understanding the underpinnings of this ethical issue, attorneys will be better prepared to anticipate, respond to, or even avoid motions to disqualify.


Notes

[1] E.g., Celgard, LLC v. LG Chem., Ltd, No. 2014-1675 (Fed.Cir. Dec. 10, 2014) (order disqualifying Jones Day), http://assets.law360news.com/0606000/606910/Celgard-LGC%20Order%20disqualifying%20Jones%20Day.pdf; Utica Mut. Ins. Co. v. Employers Ins. Co. of Wausau, No. 6:12-cv-01293-NAM-TWD (N.D.N.Y. Dec. 18, 2014) (denying motion for summary judgment on issue of whether Hunton & Williams should be disqualified in underlying arbitration), http://assets.law360news.com/0580000/580691/Memorandum%20and%20Order.pdf; Defendant and Counterclaimant Tate & Lyle Ingredients Americas LLC’s Notice of Motion and Motion to Disqualify Squire Patton Boggs (US) LLP; Memorandum of Points and Authorities in Support Thereof, Western Sugar Coop. v. Archer-Daniels-Midland Co., No. 2:11-cv-03473-CBM-MAN (Aug. 26, 2014) (motion to disqualify Squire Patton Boggs), www.law360.com/dockets/download/53fdfac81101ea655a00000b?doc_url=https%3A%2F%2Fecf.cacd.uscourts. gov%2Fdoc1%2F031119586589&label=Case+Filing.

[2] Colo. RPC 1.6.

[3] Brown v. Encompass Ins. Co. of Am., No. 14-CV-01885-RM-BNB, 2014 WL 7177378 at *2 (D.Colo. Dec. 16, 2014) (the court noted that “[m]otions to disqualify opposing counsel are viewed with suspicion”).

[4] People v. Nozolino, 298 P.3d 915, 919 (Colo. 2013) (“Disqualification of a party’s chosen attorney is an extreme remedy and is only appropriate where required to preserve the integrity and fairness of the judicial proceedings.”) (citation omitted).

[5] See, e.g., People v. Shari, 204 P.3d 453, 457 (Colo. 2009) (distinguishing between duties to current clients under Colo. RPC 1.7 and to former clients under Colo. RPC 1.9).

[6] People v. Harlan, 54 P.3d 871, 877 (Colo. 2002).

[7] Id. (quoting People ex rel. Woodard v. Dist. Ct., 704 P.2d 851, 853 (Colo. 1985)).

[8] Myers v. Porter (In re Estate of Myers), 130 P.3d 1023, 1025 (Colo. 2006).

[9] Rodriguez v. Dist. Ct., 719 P.2d 699, 704 (Colo. 1986).

[10] Shari, 204 P.3d at 460-62. See also Harlan, 54 P.3d at 877 (the Court noted that “[i]n determining whether disqualification is warranted ‘the critical question is whether the litigation can be conducted in fairness to all parties’” and explained that “[d]isqualification should not be imposed unless the claimed misconduct in some way ‘taints’ the trial or legal system”) (quoting Fed. Deposit Ins. Co. v. Isham, 782 F.Supp. 524, 528 (D.Colo. 1992)).

[11] By far the majority of successful motions to disqualify are brought on the basis of a conflict of interest with a former or concurrent client or imputation, but attorneys should also be aware that successful motions to disqualify have been brought on the following bases, among others: (1) lawyer as witness, (2) appearance of impropriety, (3) receipt of confidential data, (4) personal interest, (5) violation of the no contact rules, and (6) misconduct with a witness. See Swisher, “The Practice and Theory of Lawyer Disqualification,” 27 Geo. J. Legal Ethics 71, 77 (Winter 2014).

[12] See People ex rel. Peters v. Dist. Ct., 951 P.2d 926, 930 (Colo. 1998).

[13] See People v. Perez, 201 P.3d 1220, 1246 n.11 (Colo. 2009).

Randy Evans is an author, litigator, columnist and expert in the areas of professional liability, insurance, commercial litigation, entertainment, ethics, and lawyer’s law. He has authored and co-authored eight books, including: The Lawyer’s Handbook; Georgia Legal Malpractice Law; Climate Change And Insurance; Georgia Property and Liability Insurance Law; Appraisal In Property Damage Insurance Disputes; and California Legal Malpractice Law. He writes newspaper columns (the Atlanta Business Chronicle, the Recorder, and the Daily Report) and lectures around the world. He served as counsel to the Speakers of the 104th – 109th Congresses of the United States. He co-chairs the Georgia Judicial Nominating Commission. He serves on the Board of Governors of the State Bar of Georgia. He handles complex litigation throughout the world. He has been consistently rated as one of the Best Lawyers in America, Super Lawyer (District of Columbia and Georgia), Georgia’s Most Influential Attorneys, and Georgia’s Top Lawyers for Legal Leaders. Along with numerous other awards he has been named the “Complex Litigation Attorney of the Year in Georgia” by Corporate International Magazine, and Lawyer of the Year for Legal Malpractice Defense in Atlanta. He is AV rated by Martindale Hubble.

Shari Klevens is a partner in the Atlanta and Washington, D.C. offices of McKenna Long & Aldridge LLP. Shari represents lawyers and law firms in the defense of legal malpractice claims and advises and counsels lawyers concerning allegations of malpractice, ethical violations, and breaches of duty. In addition, Shari is the Chair of the McKenna’s Law Firm Defense and Risk Management Practice and is a frequent writer and lecturer on issues related to legal malpractice and ethics. Shari co-authored Georgia Legal Malpractice Law and California Legal Malpractice Law, which address the intricacies and nuances of Legal Malpractice law and issues that confront the new millennium lawyer. She also co-authored The Lawyer’s Handbook: Ethics Compliance and Claim Avoidance, which is an easy-to-use desk reference offering practical solutions to real problems in the modern law practice for every attorney throughout the United States.

Lino Lipinsky de Orlov is a litigation partner in the Denver office of McKenna Long & Aldridge, LLP.  He represents clients in all aspects of commercial litigation, mediation, arbitration, and appeals.  He has developed particular experience in complex business cases, particularly those involving creditor’s rights, real estate, trade secrets, and employment disputes.  Mr. Lipinsky also frequently speaks and writes on legal issues relating to technology, employment law, and ethics.   He is a member of the Colorado Bar Association’s Board of Governors and serves on the Board of the Colorado Judicial Institute.  He is a former President of the Faculty of Federal Advocates.  Among his honors, Chambers USA has recognized Mr. Lipinsky as one of Colorado’s leading general commercial litigators, and he has been included in The Best Lawyers in America.  He received his A.B. degree, magna cum laude, from Brown University and his J.D. degree from New York University School of Law, where he was a member of the New York University Law Review.

 

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

The Colorado Lawyer: Effective Conflict Waivers

Editor’s Note: This article originally appeared in the February 2015 issue of The Colorado Lawyer. Reprinted with permission.

By J. Randolph Evans, Shari L. Klevens, and Lino S. LipinskyEvans-Klevens-Lipinsky


Authors’ Note:
The references to “safest courses to proceed,” “safest course,” or “best practices” in this series of articles in the “Whoops—Legal Malpractice Prevention” department are not intended to suggest that the Colorado Rules require such actions. Rather, these references reflect actual experience and results from defending legal malpractice claims, where attorneys are often best served if they follow the best practice rather than simply complying with the bare minimum that the Rules of Professional Conduct require.

For example, as explained in this article on “Effective Conflict Waivers,” a client’s oral consent to a conflict waiver should always be confirmed in writing for an obvious reason—to avoid factual disputes that may result from differing recollections or testimony. Hence, the best practice is to obtain a written confirmation signed by the client. This protects both the attorney and the client because it reduces the risk that the client will later disclaim having provided the consent. The Colorado Rules, however, also permit the attorney to document the client’s consent to the waiver in a writing provided to the client, although experience suggests that this is not a best practice. In any event, as stated in the article, the writing, whether obtained by or transmitted to the client, must be created within a reasonable time of obtaining the client’s oral consent to the conflict waiver. The authors welcome and comments and feedback on these articles and are happy to discuss them.


By performing fast and broad computer searches, attorneys and law firms are able to identify potential conflicts of interest. But, like the dog that catches the bus, many attorneys encountering a potential conflict invariably face the important question of “What now?”

Identifying potential conflicts of interest is only half the battle. The other half requires attorneys to seek and obtain the client’s written consent to the representation after obtaining informed consent. After all, a potential conflict of interest that has not been resolved in accordance with the applicable ethical rules is still a conflict.

Informed Consent for Purposes of Resolving Potential Conflicts

Informed consent is required to enable a client to make an educated decision regarding whether to agree or object to a representation. For a former client, it involves accepting the risk that the attorney could use confidential information against the former client on behalf of a new client. For current clients who share an attorney, it involves waiving the right to insist that the attorney protect only their interests, as opposed to protecting their collective interests with the other clients.

According to the Colorado Rules of Professional Conduct (Rules), to obtain informed consent, an attorney must provide a full disclosure that demonstrates he or she has made reasonable efforts to ensure that the client or other person has obtained information reasonably adequate to make an informed decision.[1] Comment 6 to Rule 1 explains, in relevant part:

Ordinarily, this will require communication that includes a disclosure of the facts and circumstances giving rise to the situation, any explanation reasonably necessary to inform the client or other person of the material advantages and disadvantages of the proposed course of conduct and a discussion of the client’s or other person’s options and alternatives. . . . [A] lawyer who does not personally inform the client or other person assumes the risk that the client or other person is inadequately informed and the consent is invalid.

For the disclosure to be effective, it must enable a former or existing client to fully appreciate the risks of granting consent. It is not sufficient for an attorney to simply advise a client that there is a potential conflict of interest and to ask for consent without providing an explanation and additional information.

A Simple Waiver Isn’t Enough

Similarly, it is not sufficient merely to confirm a client’s waiver of the conflict and consent to the representation. An effective disclosure requires more. The Rules require that an attorney

propose a course of conduct to [the client or other person] with adequate information and explanation about the material risks of [giving consent] and reasonably available alternatives to the proposed course of conduct.[2]

In general terms, this means that an attorney should disclose whatever information a reasonable person would expect and need before waiving an important right.

There are topics that every attorney should include when seeking a client’s consent or waiver. However, there is no template that attorneys can use as a form for full disclosure when seeking a client’s consent to a representation, because the type and content of a disclosure required for effective consent varies depending on the facts and circumstances of the specific representation. For example, the scope and content of full disclosure will often depend on the sophistication of the client, the nature of the representation, prior representations, and the length of the relationship.[3]

Written Consent

Does the client’s consent have to be in writing? Under the Rules, the answer is yes. Rules 1.7(b)(4) and 1.9(a) require that informed consent be “confirmed in writing.” Comment 20 of Rule 1.7 further requires that the writing be obtained or transmitted within a “reasonable time” after receipt of oral consent. Additionally, Comment 20 emphasizes the importance of written consent:

[T]he writing is required in order to impress upon clients the seriousness of the decision the client is being asked to make and to avoid disputes or ambiguities that might later occur in the absence of a writing.

Invariably, once problems arise, clients have different recollections about the extent of the disclosure, their understanding of the risks, and whether they consented to the representation. That is why the safest way to proceed is to require that all clients consent in writing to a multiple or successive representation.

The easiest course is to include a signature line on the full disclosure letter and have the client return an executed copy. This simple measure serves to protect both the client (by making sure the client receives full disclosure in writing) and the attorney.

Client Consultation: Next Steps

Now that you have a client in your office, what steps should you take? First, identify the proposed representation and then state what consent the attorney seeks. General waivers involve a different kind of disclosure than a limited waiver for a specific representation. Hence, tailoring the full disclosure necessarily involves clarifying exactly which type of waiver the attorney seeks.

In the multiple representation context, this means advising the client that the attorney is requesting permission to jointly represent the client along with others. In the successive representations context, this means advising a former client that the attorney is requesting permission to represent a new client in a matter involving the former client.[4]

Second, identify the risks. There should be no mincing of words when disclosing the potential risks to a client. Subtle implication and suggestion do little when an attorney is attempting later to prove that a client consented to a representation after full disclosure. To be effective, the disclosure should clearly and plainly articulate the risks so that, if necessary, a court can determine that the client understood and accepted the risks by providing consent to the representation.

In the multiple representation context, this means identifying the kinds of things that an attorney cannot and will not do because the representation involves more than one client. For example, the attorney will not explore or pursue claims by one client against another client, such as opposing parties in the same transaction, a testator and beneficiary of a will, or spouses in a dissolution of marriage proceeding. Similarly, a lawyer who prosecuted a case could not subsequently represent the accused in a civil action against the government involving the same facts.[5] In addition, information communicated by one client may be disclosed to the other clients. Other limitations on the attorney’s ability to act may also need to be disclosed, depending on the context.

The important point is to ensure that the consenting clients understand the limitations that arise from a joint representation, as opposed to the representation of a single client. In the successive representation context, this means explaining the risk that the attorney may have learned confidential information that may be used on behalf of a new client. The standard is not whether an attorney actually did learn confidential information in the prior representation that can be used against a former client. Instead, to trigger an attorney’s obligation to obtain a former client’s consent, all that is required is that the new representation be “substantially related” to the former representation.[6] The existence of confidential information is presumed.

Third, advise the clients of their right to consult with independent counsel in deciding whether to agree to the multiple or successive representation. The safest course is to encourage independent counsel on all issues arising out of the potential conflict of interest.

Importantly, an attorney seeking a client’s consent should not advise a client on whether to give consent. Instead, the attorney’s role should be limited to fully disclosing the risks without actually advising the client about whether to give consent.

Fourth, confirm what will happen if an actual conflict develops that precludes the continued representation. Clients may agree, for example, that the attorney may continue to represent one of the clients if an actual conflict develops. Alternatively, the clients may insist that, under such circumstances, an attorney withdraw from the entire representation. In either case, it is important that the clients agree before the representation begins.

Both the multiple and successive representation rules require a consultation with the attorney for the client to consent. In most cases, the consultation will be in person. Unfortunately, although it is important to answer any questions a client may have, the consultation actually does little to protect an attorney from a later allegation challenging the client’s consent to the representation.

In addition to the consultation, there must be a written component. The most important document for effective consent is a writing, typically a letter. The letter should be jointly addressed to all of the clients (for a multiple representation), or to the former client (for successive representations), and should include a discussion of all the material risks of the representation.

Conclusion

Effective conflict waivers require a writing confirming the affected clients’ informed consent. There is no checklist or formula that an attorney can use in discussing conflict waivers with a client, or in drafting a written waiver for the client’s execution. These must be tailored to the unique circumstances of each situation. The four steps above, however, provide a helpful starting point for the attorney.


Notes

[1] See, e.g., Colo. RPC 1, cmt. [6].

[2] Colo. RPC 1.0(e).

[3] See Colo. RPC 1.7, cmt. [22] for additional information on how the effectiveness of informed consent will be evaluated.

[4] See Colo. RPC 1.9, cmt. [1]. A client transitions from a current client to a former client when the attorney–client relationship is terminated, such as when the attorney or the client provides the other with a writing confirming that the relationship has concluded.

[5] See Colo. RPC 1.9, cmt. [1].

[6] See Colo. RPC 1.9(a).

Randy Evans is an author, litigator, columnist and expert in the areas of professional liability, insurance, commercial litigation, entertainment, ethics, and lawyer’s law. He has authored and co-authored eight books, including: The Lawyer’s Handbook; Georgia Legal Malpractice Law; Climate Change And Insurance; Georgia Property and Liability Insurance Law; Appraisal In Property Damage Insurance Disputes; and California Legal Malpractice Law. He writes newspaper columns (the Atlanta Business Chronicle, the Recorder, and the Daily Report) and lectures around the world. He served as counsel to the Speakers of the 104th – 109th Congresses of the United States. He co-chairs the Georgia Judicial Nominating Commission. He serves on the Board of Governors of the State Bar of Georgia. He handles complex litigation throughout the world. He has been consistently rated as one of the Best Lawyers in America, Super Lawyer (District of Columbia and Georgia), Georgia’s Most Influential Attorneys, and Georgia’s Top Lawyers for Legal Leaders. Along with numerous other awards he has been named the “Complex Litigation Attorney of the Year in Georgia” by Corporate International Magazine, and Lawyer of the Year for Legal Malpractice Defense in Atlanta. He is AV rated by Martindale Hubble.

Shari Klevens is a partner in the Atlanta and Washington, D.C. offices of McKenna Long & Aldridge LLP. Shari represents lawyers and law firms in the defense of legal malpractice claims and advises and counsels lawyers concerning allegations of malpractice, ethical violations, and breaches of duty. In addition, Shari is the Chair of the McKenna’s Law Firm Defense and Risk Management Practice and is a frequent writer and lecturer on issues related to legal malpractice and ethics. Shari co-authored Georgia Legal Malpractice Law and California Legal Malpractice Law, which address the intricacies and nuances of Legal Malpractice law and issues that confront the new millennium lawyer. She also co-authored The Lawyer’s Handbook: Ethics Compliance and Claim Avoidance, which is an easy-to-use desk reference offering practical solutions to real problems in the modern law practice for every attorney throughout the United States.

Lino Lipinsky de Orlov is a litigation partner in the Denver office of McKenna Long & Aldridge, LLP.  He represents clients in all aspects of commercial litigation, mediation, arbitration, and appeals.  He has developed particular experience in complex business cases, particularly those involving creditor’s rights, real estate, trade secrets, and employment disputes.  Mr. Lipinsky also frequently speaks and writes on legal issues relating to technology, employment law, and ethics.   He is a member of the Colorado Bar Association’s Board of Governors and serves on the Board of the Colorado Judicial Institute.  He is a former President of the Faculty of Federal Advocates.  Among his honors, Chambers USA has recognized Mr. Lipinsky as one of Colorado’s leading general commercial litigators, and he has been included in The Best Lawyers in America.  He received his A.B. degree, magna cum laude, from Brown University and his J.D. degree from New York University School of Law, where he was a member of the New York University Law Review.

 

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

The Colorado Lawyer: Conflicts Check—Just Do It

Editor’s Note: This article originally appeared in the January 2015 issue of The Colorado Lawyer. Reprinted with permission.

By J. Randolph Evans, Shari L. Klevens, and Lino S. LipinskyEvans-Klevens-Lipinsky


Authors’ Note
Readers’ comments and feedback on this series of “WhoopsLegal Practice Malpractice Prevention” articles are welcomed and appreciated. References in the articles to “safest courses to proceed,” “safest course,” or “best practices” are not intended to suggest that the Colorado Rules require such actions. Often, best practices and safest courses involve more than just complying with the Rules. In practice, compliance with the Rules can and should avoid a finding of discipline in response to a grievance or a finding of liability in response to a malpractice claim. However, because most claims and grievances are meritless, effective risk management in the modern law practice involves much more. Hence, best practices and safer courses of action do more; they help prevent and more quickly defeat meritless claims and grievances. Other than billing, there is virtually nothing that attorneys dread more than addressing potential conflicts of interest. After all, resolving conflicts issues requires and attorney to focus on why not to take on a new representation rather than how to get the business in the door. However, unidentified or unresolved conflict issues cost lawyers more—in both clients and money—than most attorrneys realize.


Legal publications are replete with articles about motions to disqualify, disciplinary cases, and legal malpractice claims based on an unidentified or unresolved conflict of interest. Even when successfully defended, conflict-based allegations cost lawyers time and money. When lawyers lose, the risks are serious. The attorney could be disqualified from representing the client, face discipline for violating the Rules of Professional Conduct, receive an unfavorable jury verdict, or be forced to pay punitive damages based on a finding of disloyalty. The Office of the Presiding Disciplinary Judge (PDJ) takes conflicts of interest violations very seriously.[1]

In addition, judges and juries may well disregard defenses to claims (such as the protections of independent professional judgment or “trial tactics”) based on a breach of the lawyer’s fundamental fiduciary duty of loyalty to the client. Unfortunately, in today’s fast-paced world, the path of least resistance when a new client walks in the door is to get started on the case without performing even a rudimentary conflicts check. When it comes to conflicts, however, haste really does make waste.

Rule 1: Identify Conflicts Before Representation

Conflicts do not get better with time and cannot simply be undone. Once a conflict-laden representation begins, one cannot simply give back the confidences and secrets and forget it ever happened. When the attorney–client relationship attaches under a cloud of a potential or actual conflict of interest, there is no going back to the way things were before. For this reason, the attorney must identify and resolve conflicts of interest before the attorney–client relationship begins. It is one of those areas where an ounce of prevention really is worth a pound (if not a ton) of cure.

Rule 2: Grant No Exceptions

With conflicts, systems aimed at 100% compliance are critical. Inevitably, it is that one representation that escaped the system that creates the most problems. Typically, the reasons for operating outside the conflicts process for one representation (the client is too important, the case is too complicated, the attorney is too rushed) are the same reasons the conflict analysis was so important for that representation. Hence, the single most important part of conflicts analysis is compliance without exception.

The challenge, then, is to address conflicts as painlessly as possible. The easier and faster the system is, the more likely it will be that every lawyer will “run conflicts” on every representation.

One last point on the “no exceptions” rule bears emphasis. Every new representation—even if it does not involve a new client—should be screened for conflicts. Conflicts screening should be done each time a new party becomes involved as a plaintiff, defendant, lender, buyer, or seller. Also note that, although computers make conflicts screening much easier, they are no substitute in the final conflicts analysis for involving lawyers in the process. Effective conflicts procedures involve both.

Spotting Actual and Potential Conflicts

Attorneys in Colorado must comply with Rules 1.7 and 1.8 of the Colorado Rules of Professional Conduct, which govern conflicts. There are two kinds of conflicts: actual conflicts and potential conflicts. The distinctions between each are worth noting.

Actual Conflicts

An actual conflict means that the conflict cannot be waived by disclosure or consent; the attorney simply cannot accept the representation. One type of actual conflict is direct adversity, which occurs when the needs of one client are directly adverse to the needs of another client. For example, a law firm cannot represent both a plaintiff and a defendant in the same lawsuit (although it has been tried). Effective conflicts systems identify direct adversity conflicts and make it impossible to open a matter when they arise.

Potential Conflicts

A potential conflict means that there is some issue that must be addressed before a lawyer can accept the representation. Typically, the issue is some form of consent or waiver from either the new client, another client, or a former client.

There are two types of potential conflicts: successive representations and multiple representations. Although they are different, the waiver is largely the same—full disclosure and consent. In both situations, the attorney must provide full disclosure to all of their clients and obtain their written consent before taking on the representation.

Successive representation. Successive representation conflict rules involve potential conflicts between a current (or prospective) client and a former client. Under the conflict rules, a lawyer cannot represent a new client in a matter substantially related to the representation of a former client without the former client’s consent after full disclosure.

Although there are many cases defining “substantially related,” the essence is whether the lawyer learned (or could have learned) confidential information from the old client that could be used in the new representation for the new client. If the answer is no—the lawyer did not and could not have learned confidences and secrets that could now be used—then the lawyer should be able to accept the new representation. If the answer is yes (and lawyers should assume the answer is yes when in doubt), then the lawyer should provide full disclosure to the former client and acquire his or her consent in writing before taking on the new representation.

Multiple representation. Multiple representation conflict rules involve potential conflicts arising out of the representation of more than one client. Many lawyers overcomplicate the analysis; it is actually pretty straightforward. If there is more than one client, then the multiple representation rules should be applied.

In most situations, the potential conflict is easy to spot—there is more than one client listed on the new matter form, so the rules have to be applied. However, sometimes the conflict is not so apparent. These situations can arise out of probate litigation (representing the executor, estate, and heirs); securities litigation (representing both the corporation and the directors/officers); domestic litigation (representing the parents and the children); and bankruptcies (representing multiple creditors).

Whenever there is more than one client, the lawyer should ask (1) Are there things I might do differently if I represented only one of the clients? and (2) Could changes down the road create adversity between the clients? If the answer to both questions is no, then there may be no conflict. Depending on the circumstances, the attorney may be able to accept the representation without further investigation. If the answer to either question is yes, then there is a potential conflict that requires a more thorough analysis. This analysis involves determining whether the lawyer can adequately represent the interests of all of the clients. If the answer to this question is no, then there is an actual conflict.

A simple way to establish whether there is an actual conflict is to determine if the clients’ interests are linked in any way. In a contested divorce proceeding, for example, no lawyer could advance one spouse’s interests without impacting the interests of the other spouse. Therefore, the representation of a wife and husband in a contested divorce proceeding is not permissible with or without consent.

Conclusion

Conflicts do not have to be complicated. They just require practice discipline and proper analysis. Before the representation begins, get the names and run the conflicts. Adopt the mantra “Just Do It!”


Note

[1] See People v. Layton, No. 13PDJ036 (PDJ Sept. 25, 2013) (suspending an attorney in part due to violation of Colo. RPC 1.8(e), which prohibits an attorney from providing financial assistance to a client involved in pending litigation).

Randy Evans is an author, litigator, columnist and expert in the areas of professional liability, insurance, commercial litigation, entertainment, ethics, and lawyer’s law. He has authored and co-authored eight books, including: The Lawyer’s Handbook; Georgia Legal Malpractice Law; Climate Change And Insurance; Georgia Property and Liability Insurance Law; Appraisal In Property Damage Insurance Disputes; and California Legal Malpractice Law. He writes newspaper columns (the Atlanta Business Chronicle, the Recorder, and the Daily Report) and lectures around the world. He served as counsel to the Speakers of the 104th – 109th Congresses of the United States. He co-chairs the Georgia Judicial Nominating Commission. He serves on the Board of Governors of the State Bar of Georgia. He handles complex litigation throughout the world. He has been consistently rated as one of the Best Lawyers in America, Super Lawyer (District of Columbia and Georgia), Georgia’s Most Influential Attorneys, and Georgia’s Top Lawyers for Legal Leaders. Along with numerous other awards he has been named the “Complex Litigation Attorney of the Year in Georgia” by Corporate International Magazine, and Lawyer of the Year for Legal Malpractice Defense in Atlanta. He is AV rated by Martindale Hubble.

Shari Klevens is a partner in the Atlanta and Washington, D.C. offices of McKenna Long & Aldridge LLP. Shari represents lawyers and law firms in the defense of legal malpractice claims and advises and counsels lawyers concerning allegations of malpractice, ethical violations, and breaches of duty. In addition, Shari is the Chair of the McKenna’s Law Firm Defense and Risk Management Practice and is a frequent writer and lecturer on issues related to legal malpractice and ethics. Shari co-authored Georgia Legal Malpractice Law and California Legal Malpractice Law, which address the intricacies and nuances of Legal Malpractice law and issues that confront the new millennium lawyer. She also co-authored The Lawyer’s Handbook: Ethics Compliance and Claim Avoidance, which is an easy-to-use desk reference offering practical solutions to real problems in the modern law practice for every attorney throughout the United States.

Lino Lipinsky de Orlov is a litigation partner in the Denver office of McKenna Long & Aldridge, LLP.  He represents clients in all aspects of commercial litigation, mediation, arbitration, and appeals.  He has developed particular experience in complex business cases, particularly those involving creditor’s rights, real estate, trade secrets, and employment disputes.  Mr. Lipinsky also frequently speaks and writes on legal issues relating to technology, employment law, and ethics.   He is a member of the Colorado Bar Association’s Board of Governors and serves on the Board of the Colorado Judicial Institute.  He is a former President of the Faculty of Federal Advocates.  Among his honors, Chambers USA has recognized Mr. Lipinsky as one of Colorado’s leading general commercial litigators, and he has been included in The Best Lawyers in America.  He received his A.B. degree, magna cum laude, from Brown University and his J.D. degree from New York University School of Law, where he was a member of the New York University Law Review.

 

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

The Colorado Lawyer: Screen Clients First—Avoid Problems Later

Editor’s Note: This article originally appeared in the December 2014 issue of The Colorado Lawyer. Reprinted with permission.

By J. Randolph Evans, Shari L. Klevens, and Lino S. LipinskyEvans-Klevens-Lipinsky


Authors’ Note
Readers’ comments and feedback on this series of “WhoopsLegal Practice Malpractice Prevention” articles are welcomed and appreciated. References in the articles to “safest courses to proceed,” “safest course,” or “best practices” are not intended to suggest that the Colorado Rules require such actions. Often, best practices and safest courses involve more than just complying with the Rules. In practice, compliance with the Rules can and should avoid a finding of discipline in response to a grievance or a finding of liability in response to a malpractice claim. However, because most claims and grievances are meritless, effective risk management in the modern law practice involves much more. Hence, best practices and safer courses of action do more; they help prevent and more quickly defeat meritless claims and grievances. Other than billing, there is virtually nothing that attorneys dread more than addressing potential conflicts of interest. After all, resolving conflicts issues requires and attorney to focus on why not to take on a new representation rather than how to get the business in the door. However, unidentified or unresolved conflict issues cost lawyers more—in both clients and money—than most attorneys realize.


For many attorneys in today’s difficult economic world, screening clients seems like a far-fetched concept, akin to telling a starving man to watch what he eats. Many firms are just glad to have clients; screening the few they have appears to be the least of the firm’s worries.

However, according to the data, problem clients are often worse than no clients at all. Clients who pay fees, but who also bring legal malpractice claims, only hurt—not help—the attorney and can result in a large net loss for the firm. The challenge comes in screening out the problem clients during the intake process.

Screening clients has a different meaning depending on the size, type, and location of a law practice. For solo practitioners, it will mean identifying the risk factors for new clients (preferably through use of a checklist) and then balancing the risks against the potential rewards of the representation. For smaller and mid-size firms, screening involves identifying standard practices and procedures suitable for the needs and expertise of the law practice, and ensuring that all of the lawyers in the practice consistently follow those rules. For larger firms, effective screening includes systems to ensure consistent compliance with the firm’s policies.

Every representation, whether for a paying client or for a pro bono client, requires that the attorney exercise good judgment about acceptance of the new client; and because it involves judgment, there is no formula for every decision regarding whether to accept a new client. However, there are some practices and procedures attorneys can implement when creating checklists and developing systems for screening prospective new clients.

Developing a Screening Method

Some indicators for problem clients seem obvious. Others are the product of data about legal malpractice claims and the risks of the modern-day law practice. The most important part of client screening is to adopt and follow a set of standard practices and procedures, including referring to a screening checklist, that apply to every new client and matter.

1. Ask the right questions.

Common sense goes a long way in detecting and avoiding problem clients. For example, one of the most telling questions to ask a new client is: “How many attorneys have previously represented you in this matter?” If the answer to that question is “seven,” the attorney will want to think long and hard about becoming the eighth. Clients who have been unhappy enough to hire and fire seven attorneys are unlikely to be happy with the eighth. Of greater concern is that, if their case or transaction does not go well in their eyes, they just might hire a ninth to sue the eighth for malpractice.

The lawyer should ask prospective clients other common-sense questions. For example: How many times have you been a party to litigation? Potential clients who have been parties to several prior cases should raise red flags. This is especially true for potential clients who have made a career of suing other people. Eventually, these serial plaintiffs make their way to also suing their attorney.

The realities of the proposed representation are also relevant when deciding to take on a new client. In making this assessment, consider when the work must get done. This involves calculating the first deadline for the new matter. Representations often do not end well if they begin on the eve of (1) the expiration of the statute of limitations for a plaintiff’s claim; (2) a scheduled closing for completion of a transaction or deal; or (3) any other imminent deadline. Unrealistic deadlines are red flags for a new representation.

Sometimes, there are good reasons a client reaches out to an attorney to undertake a representation on the eve of a pressing deadline. However, they are sometimes the same reasons an attorney should have second thoughts about accepting the representation. It could be that an earlier attorney fired the client because the client did not pay, or there could be insurmountable problems that have left the client desperate for immediate representation. Whatever the reason, the most significant questions attorneys should ask are: (1) When is the earliest deadline? and (2) Why is the client just now reaching out? The answers to these questions are important in deciding whether to accept the representation.

Another good question to ask is whether the prospective client can afford to pay the attorney fees associated with the representation. If there is no realistic chance of getting paid and the attorney takes the case anyway, the attorney assumes the risks of liability with no opportunity for compensation. This is a lose–lose proposition. Thus, a prospective client’s ability to pay is an important pre-representation topic that attorneys should candidly address.

Other things to consider when screening prospective clients include (1) possible conflicts with other clients; (2) whether the attorney has the expertise required to effectively handle all of the client’s issues; and (3) the role the client expects the attorney to play in the context of the client’s overall situation. These determinations are of particular concern, because they relate to an attorney’s ethical obligations toward the client.

For example, the Colorado Rules of Professional Conduct (Rules or Colo. RPC) require an attorney to avoid conflicts with current and past clients or, alternatively, to take special care when entering into an engagement that could create potential conflicts.[1] The Rules also address attorney competence, requiring that an attorney has the “legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”[2] Additionally, the Rules allow an attorney to limit the scope of representation at the outset of an engagement, if reasonable.[3] Thorough screening may reveal whether limiting the scope of representation from the outset is a prudent option under the circumstances, as opposed to declining the engagement, based on the client’s stated objectives. If the attorney has captured in writing the scope of the mutually agreed representation at the beginning of the engagement, that attorney will be in a far better position should the client later challenge the attorney on this front.

Certain types of engagements may be permitted under the Rules, but not under the Standards of Professional Conduct of the U.S. District Court for the District of Colorado. Attorneys should be aware that the U.S. District Court has declined to adopt the state’s “unbundling” rule, Colo. RPC 1.2(c), which allows the provision of limited representation to pro se parties, as described in Colo. RPC 11(b) and Rule 311(b) of the County Court Rules of Civil Procedure.[4] For example, in state court matters, an attorney may provide assistance to a pro se litigant without entering an appearance. The same attorney, however, is prohibited from “ghost writing” a pro se party’s filings in federal court. The attorney should turn away a potential client who is seeking the type of behind-the-scenes assistance that the U.S. District Court does not permit.

On October 10, 2014, the U.S. District Court promulgated proposed amendments to its local rules that include an opt-out from comment 14 to Colo. RPC 1.2(d). The comment, which the Colorado Supreme Court adopted on March 24, 2014, states that a Colorado attorney may counsel clients “regarding the validity, scope, and meaning” of the medical marijuana and recreational marijuana provisions of the state constitution, and “may assist a client in conduct that the lawyer reasonably believes is permitted by these constitutional provisions” and the laws implementing them, as long as the attorney also “advise[s] the client regarding related federal law and policy.” If the District of Colorado ultimately decides not to adopt comment 14, attorneys admitted to practice in that court would need to carefully consider whether they could accept engagements involving advice regarding the state’s marijuana laws.

In sum, thorough screening provides a double benefit to the prudent attorney. It decreases the attorney’s exposure to malpractice suits and fulfills several ethical obligations.

2. Consider what’s expected.

An attorney should inquire about the prospective client’s expectations—of both the representation and the attorney. Some clients simply expect their attorney to achieve a successful result on their behalf, without consideration as to how that end is achieved. These attorney-client relationships rarely end well. A candid conversation about what is possible, along with a description of what the attorney can and cannot do, is an important part of the screening process. If there are things the prospective client expects that the attorney is unable or unwilling to do, the attorney should decline the representation.

One other thing to watch for is a client who is “too good to be true.” Often, these are the same clients who expect an attorney to bend (or ignore) the rules. Their stories are full of contradictions, and they expect results regardless of means. Avoid the temptation of agreeing to represent them without conducting a thorough investigation; these may turn out to be problem clients, too.

3. Conduct some background research.

The Internet provides attorneys cost-effective tools for conducting fast preliminary background research on prospective clients. The research might turn up little, or it might disclose a prospective client with a history of problems that often extend to anyone and everyone around the client. Credit checks (with the consent of the prospective client) could reflect someone who either cannot or does not pay. A simple litigation search might reflect a prospective client who has sued his or her attorney before. These possible clients require a long look before an attorney would agree to the representation.

4. Create a client-screening system.

Inevitably, the client who creates the most problems is the one who escaped the screening filters. Effective systems make it next to impossible for potential problem clients to slip through the cracks. This means that a file cannot be opened or a matter billed unless the screening questions have been asked and the data collected. Hence, the certainty of the system is as important as the content of the screening itself.

NOTES

[1] See Colo. RPC 1.7 and 1.8. Comment 3 to Rule 1.7, which addresses conflicts with current clients, states, in part, “[a] conflict of interest may exist before representation is undertaken, in which event the representation must be declined, unless the lawyer obtains the informed written consent of each client . . .” under the conditions provided in the rule.

[2] See Colo. RPC 1.1.

[3] Colo. RPC 1.2, cmts. 6 and 7.

[4] See D.C.Colo.L.Atty.R. 2(b)(1).

 

Randy Evans is an author, litigator, columnist and expert in the areas of professional liability, insurance, commercial litigation, entertainment, ethics, and lawyer’s law. He has authored and co-authored eight books, including: The Lawyer’s Handbook; Georgia Legal Malpractice Law; Climate Change And Insurance; Georgia Property and Liability Insurance Law; Appraisal In Property Damage Insurance Disputes; and California Legal Malpractice Law. He writes newspaper columns (the Atlanta Business Chronicle, the Recorder, and the Daily Report) and lectures around the world. He served as counsel to the Speakers of the 104th – 109th Congresses of the United States. He co-chairs the Georgia Judicial Nominating Commission. He serves on the Board of Governors of the State Bar of Georgia. He handles complex litigation throughout the world. He has been consistently rated as one of the Best Lawyers in America, Super Lawyer (District of Columbia and Georgia), Georgia’s Most Influential Attorneys, and Georgia’s Top Lawyers for Legal Leaders. Along with numerous other awards he has been named the “Complex Litigation Attorney of the Year in Georgia” by Corporate International Magazine, and Lawyer of the Year for Legal Malpractice Defense in Atlanta. He is AV rated by Martindale Hubble.

Shari Klevens is a partner in the Atlanta and Washington, D.C. offices of McKenna Long & Aldridge LLP. Shari represents lawyers and law firms in the defense of legal malpractice claims and advises and counsels lawyers concerning allegations of malpractice, ethical violations, and breaches of duty. In addition, Shari is the Chair of the McKenna’s Law Firm Defense and Risk Management Practice and is a frequent writer and lecturer on issues related to legal malpractice and ethics. Shari co-authored Georgia Legal Malpractice Law and California Legal Malpractice Law, which address the intricacies and nuances of Legal Malpractice law and issues that confront the new millennium lawyer. She also co-authored The Lawyer’s Handbook: Ethics Compliance and Claim Avoidance, which is an easy-to-use desk reference offering practical solutions to real problems in the modern law practice for every attorney throughout the United States.

Lino Lipinsky de Orlov is a litigation partner in the Denver office of McKenna Long & Aldridge, LLP.  He represents clients in all aspects of commercial litigation, mediation, arbitration, and appeals.  He has developed particular experience in complex business cases, particularly those involving creditor’s rights, real estate, trade secrets, and employment disputes.  Mr. Lipinsky also frequently speaks and writes on legal issues relating to technology, employment law, and ethics.   He is a member of the Colorado Bar Association’s Board of Governors and serves on the Board of the Colorado Judicial Institute.  He is a former President of the Faculty of Federal Advocates.  Among his honors, Chambers USA has recognized Mr. Lipinsky as one of Colorado’s leading general commercial litigators, and he has been included in The Best Lawyers in America.  He received his A.B. degree, magna cum laude, from Brown University and his J.D. degree from New York University School of Law, where he was a member of the New York University Law Review.

 

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

Law Week: New Federal Ethics Rule Precludes Colorado Attorneys Practicing in U.S. District Court from Assisting Clients in Complying with State Marijuana Laws

Editor’s note: This article originally appeared in Law Week Colorado on November 24, 2014. Reprinted with permission.

LipinskySmithBy Lino S. Lipinsky de Orlov and Mason J. Smith

On November 17, the U.S. District Court for the District of Colorado announced an amendment to its Local Rules that arguably will preclude members of the U.S. District Court bar from representing marijuana-related businesses. The U.S. District Court has opted out of comment 14 to Rule 1.2( d) of the Colorado Rules of Professional Conduct, which allows Colorado attorneys to assist clients with conduct-permitted under the Colorado marijuana laws, but not under federal law.

Under the new amendment to Local Rule D.C.COLO.L.Atty.R. 2(b)(2), which takes effect on December 1, practitioners in the U.S. District Court will be permitted to advise clients regarding the “validity, scope, and meaning” of Colorado’s marijuana laws, but may not “assist a client in conduct that the lawyer reasonably believes is permitted by” such laws. The U.S. District Court’s distinction between advice concerning the interpretation of Colorado’s marijuana laws and assistance with “conduct” creates a significant split in the ethical rules applicable to state and federal practitioners in Colorado.

Rule 1.2(d) of Colorado’s Rules of Professional Conduct prohibits attorneys from “counsel[ing]clients to engage, or assist[ing] a client, in conduct that the lawyer knows is criminal. . . .” Colo. RPC 1.2( d). Because the sale, use, and possession of marijuana remain illegal under the federal Controlled Substances Act, Rule 1.2(d) on its face prohibits Colorado attorneys from counseling or assisting clients who seek to comply with the state’s laws on medical and recreational marijuana. On March 24, 2014, the Colorado Supreme Court adopted comment 14 by a 5-2 vote in an attempt to resolve this issue. Comment 14 expressly allows lawyers to “assist a client in conduct that the lawyer reasonably believes is permitted by [Colorado’s marijuana-related] constitutional provisions” and their implementing statutes and regulations. (Emphasis added.) The lawyer, however, must also “advise the client regarding related federal law and policy.”

As we wrote in our article that appeared in the October 20, 2014 issue of Law Week Colorado, the U.S. District Court typically adopts Colorado’s Rules of Professional Conduct. In some instances, however, the Court opts out of particular sections of rules or comments based upon its own views on attorney ethics. On November 17, 2014, the Court made good on its October 10, 2014 proposal to opt out of comment 14. This comes as no surprise. The federal bench is no doubt uneasy about permitting attorneys to facilitate conduct that, while legal under state law, conflicts with federal law.

The Court’s language taking exception to comment 14 states that the Court will not adopt the comment, “except that a lawyer may advise a client regarding the validity, scope, and meaning of [the medical and recreational marijuana provisions of the Colorado Constitution] and the statutes, regulations, orders, and other state or local provisions implementing them. . . .” (Emphasis added). The exception also mirrors the state requirement that practitioners “also advise the client regarding related federal law and policy.”

The U.S. District Court has therefore drawn a fine line between generally “advising” a client and “assisting a client in conduct.” Presumably, the federal court’s version of Rule 1.2 permits an attorney to explain Colorado’s marijuana laws, but requires the attorney to stop short of facilitating compliance with such laws because—under these circumstances—compliance with state law would, in many cases, result in commission of a federal crime.

The other comments to Rule 1.2 provide limited guidance: “There is a critical distinction between presenting an analysis of legal aspects of questionable conduct and recommending the means by which a crime or fraud might be committed with impunity,” and “the fact that a client uses advice in a course of action that is criminal or fraudulent” is not enough by itself to make a lawyer a party to an illegal course of action. RPC 1.2 cmt. 9 (emphasis added). But this critical barrier between appropriate and sanctionable counseling remains unclear. Another comment to Rule 1.2 states, for example, that “a lawyer must not participate in a transaction to effectuate criminal or fraudulent avoidance of tax liability.” RPC 1.2, cmt. 10 (emphasis added). It seems that, by analogy, an attorney’s participation in lease negotiations regarding a property that will house a marijuana grow operation would be prohibited under the U.S. District Court’s rules, as would an attorney’s review and recommendations regarding a license for marijuana retail sale. Such legal work could, at least in theory, result in disciplinary action against federal litigators.

The U.S. District Court’s decision to opt out of comment 14 gives rise to two major issues. First, it creates a rift between attorneys admitted to practice only before the Colorado state courts and those attorneys admitted to practice in the U.S. District Court. Second, it leaves those attorneys subject to the federal rules guessing about the critical point at which legal advice becomes the facilitation of conduct. In any event, members of both bars should be cognizant of these inconsistent ethical standards as attorneys encounter more and more clients interested in diving into Colorado’s growing marijuana industry.

Until this issue is resolved, federal practitioners should be conservative in rendering any legal advice in connection with marijuana. All attorneys practicing in Colorado should at least advise all clients as to the illegality of marijuana under federal law. Those admitted to the federal bar should also, at the very least, avoid (1) participating directly in conduct that could technically constitute a federal crime or (2) affirmatively advising or encouraging clients to take specific courses of action regarding the growth, use, possession, or sale of marijuana.

Lino Lipinsky de Orlov is a litigation partner in the Denver office of McKenna Long & Aldridge, LLP.  He represents clients in all aspects of commercial litigation, mediation, arbitration, and appeals.  He has developed particular experience in complex business cases, particularly those involving creditor’s rights, real estate, trade secrets, and employment disputes.  Mr. Lipinsky also frequently speaks and writes on legal issues relating to technology, employment law, and ethics.   He is a member of the Colorado Bar Association’s Board of Governors and serves on the Board of the Colorado Judicial Institute.  He is Immediate Past President of the Faculty of Federal Advocates.  Among his honors, Chambers USA has recognized Mr. Lipinsky as one of Colorado’s leading general commercial litigators, and he has been included in The Best Lawyers in America.  He received his A.B. degree, magna cum laude, from Brown University and his J.D. degree from New York University School of Law, where he was a member of the New York University Law Review.

Mason Smith is an in-house attorney at Amazon.  He previously worked as an associate at the Denver office of McKenna Long & Aldridge, LLP and as an extern for the Hon. Judge Christine M. Arguello of the U.S. District Court, District of Colorado.  Mr. Smith is a graduate of The George Washington University Law School, where he was a member of The George Washington University Law Review.

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.