September 24, 2018

Colorado Supreme Court: Attorney Violated Colo. RPC 1.8(a)(3) by Not Obtaining Informed Consent for Business Transaction

The Colorado Supreme Court issued its opinion in In the Matter of James C. Wollrab on Monday, June 25, 2018.

Colorado Rules of Professional Conduct—Attorney Discipline—Colo. RPC 1.8—Colo. RPC 4.2.

In this attorney discipline proceeding, the supreme court was confronted with questions as to what Colorado Rules of Professional Conduct 1.8 and 4.2 require of an attorney who enters into a business relationship with his client. The court concluded that the attorney in this case violated Rule 1.8(a)(1) when he signed a lease with his client’s company without complying with any of Rule 1.8(a)’s prophylactic requirements. The attorney also violated Rule 1.8(a)(3) when he entered into an option agreement with his client without obtaining his client’s informed, written consent to his role in the deal. However, because the attorney had the implied consent of his client’s independent counsel for the purposes of the option agreement, he did not violate Rule 1.8(a)(1) or (2) or Rule 4.2 in that transaction. The court remanded the case to the hearing board for determination of the appropriate sanction in light of its conclusions.

Summary provided courtesy of Colorado Lawyer.

Colorado Supreme Court: Special Prosecutor Unnecessary for Post-Trial Proceeding

The Colorado Supreme Court issued its opinion in People v. Ehrnstein on Monday, May 21, 2018.

Special Prosecutors—Colo. RPC 3.7—Post-Trial Proceedings.

In this interlocutory appeal, the supreme court reviewed the trial court’s order appointing a special prosecutor for the purpose of litigating defendant’s post-trial motion for a new trial. In his motion, defendant alleged that the prosecution had improperly instructed a witness to evade a defense subpoena. The trial court concluded that the Colorado Rules of Professional Conduct compelled it to appoint a special prosecutor for the purposes of the hearing on this motion because, subject to exceptions not pertinent here, Colo. RPC 3.7 prohibits an attorney from acting as both an advocate and a witness during the same proceeding.

The court concluded that the trial court abused its discretion in appointing a special prosecutor because that court misapplied the law when it found that Colo. RPC 3.7 required the appointment of a special prosecutor in the circumstances present here. Specifically, the rule serves to prevent prejudice that arises from jury confusion in cases in which an attorney serves as both counsel and witness. Because this proceeding arose in the context of a post-trial motion, that concern is not implicated.

The court reversed the trial court’s order and remanded this case for further proceedings.

Summary provided courtesy of Colorado Lawyer.

Rule Change 2018(03) Amends Colorado Rules of Professional Conduct

On Thursday, February 22, 2018, the Colorado Supreme Court issued Rule Change 2018(03), amending the Colorado Rules of Professional Conduct. Rule 5.4, “Professional Independence of a Lawyer,” and Rule 7.3, “Solicitation of Clients,” were amended in this rule change.

Rule 5.4(d) and (e) were amended to add the phrase, “that is authorized to practice law for a profit,” as follows:

(d) A lawyer shall not practice with or in the form of a professional company that is authorized to practice law for a profit, if:

* * *

(e) A lawyer shall not practice with or in the form of a professional company that is authorized to practice law for a profit except in compliance with C.R.C.P. 265.

Rule 7.3(c)(1) was amended to correct a typo, as follows:

(1) no such communication may be made if the lawyer knows or reasonably should know that the person to whom the communication is directed is represented resented by a lawyer in the matter; and

For a redline and clean version of Rule Change 2018(03), click here. For all of the Colorado Supreme Court’s adopted and proposed rule changes, click here.

The Colorado Lawyer Self-Assessment Program

Editor’s Note: This is a guest post by Jonathan White of the Colorado Office of Attorney Regulation Counsel. You can find out more about the lawyer self-assessment survey on the OARC website

By Jonathan P. White, Office of Attorney Regulation Counsel

Colorado has launched its new lawyer self-assessment program designed to help lawyers better serve clients and simplify their professional lives. This program arises out of a multi-year initiative of a subcommittee of the Colorado Supreme Court’s Attorney Regulation Advisory Committee. Over 50 practicing lawyers have participated in the subcommittee. They have drawn from their professional experience to identify practices that promote client service, that lead to more efficient office management, and that allow lawyers to assess their practice’s ethical infrastructure. The subcommittee’s goal is to help lawyers assess their practice and identify points of excellence and areas for improvement.

There are ten individual areas of self-assessment:

  1. Developing a competent practice;
  2. Communicating in an effective, timely, professional manner and maintaining relations;
  3. Ensuring that confidentiality requirements are met;
  4. Avoiding conflicts of interest;
  5. Maintaining appropriate file and records management systems;
  6. Managing the law firm/legal entity and staff appropriately;
  7. Charging appropriate fees and making appropriate disbursements;
  8. Ensuring that reliable trust account practices are in use;
  9. Working to improve the administration of justice and access to legal services; and
  10. Wellness and inclusivity.

Ultimately, these self-assessments should help attorneys avoid grievances and alleviate some of the stress associated with practice, especially for solo and small firm practitioners and those new to practice. The self-assessments are voluntary and confidential. The Office of Attorney Regulation Counsel does not receive any personally-attributable answers. The assessments offer links to the Colorado Rules of Professional Conduct and to a variety of educational resources ranging from template forms to advisory opinions to articles on current professionalism issues.

Lawyers can now view and complete the self-assessments through the Office of Attorney Regulation Counsel’s website: https://www.coloradosupremecourt.com/AboutUs/LawyerSelfAssessmentProgram.asp. Lawyers can choose to take all ten self-assessments through an online survey platform accessible at the top of the previously-referenced webpage. This online platform may be used on a desktop computer, laptop, or mobile device. As an alternative, lawyers may also download the print/PDF survey through the same webpage. After completing either the online self-assessment or the print/PDF version, lawyers may claim up to three general credit hours and three ethics credit hours of continuing legal education. A CLE affidavit is available on the self-assessment program webpage, as well as through the online survey itself.

Rule 8.4 of Colorado Rules of Professional Conduct Amended in Rule Change 2017(09)

On Thursday, September 28, 2017, the Colorado Supreme Court released Rule Change 2017(09), amending Rule 8.4 of the Colorado Rules of Professional Conduct. Rule 8.4 addresses attorney misconduct. The change to the rule only involves subsection (c), which is amended by the addition of a clause to clarify that attorneys may advise, direct, or supervise others in lawful investigatory activities:

(c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation, except that a lawyer may advise, direct, or supervise others, including clients, law enforcement officers, or investigators, who participate in lawful investigative activities;

The rule change is effective immediately. A redline and clean copy of the rule change is available here. All of the Colorado Supreme Court’s adopted and proposed rule changes are available here.

Colorado Supreme Court: Motion to Disqualify Under Colo. RPC 1.9(a) Rarely Raises “Identical” Issue to Other Case

The Colorado Supreme Court issued its opinion in In re Villas at Highland Park Homeowners Association, Inc. v. Villas at Highland Park, LLC on Monday, May 22, 2017.

Issue Preclusion—Attorney Disqualification—Colo. RPC 1.9.

In this original proceeding under C.A.R. 21, the supreme court reviewed a district court’s order applying the doctrine of issue preclusion to deny defendants’ motion to disqualify one of the plaintiff’s attorneys under Colo. RPC 1.9 and to disqualify her law firm by imputation of the attorney’s conflict under Colo. RPC 1.10. The disqualification inquiry under Colo. RPC 1.9(a) asks whether an attorney’s prior representation and current representation are “substantially related.” This inquiry under Colo. RPC 1.9(a) is specific to the particular matter for which disqualification is sought. The supreme court therefore concludes that a motion to disqualify under Colo. RPC 1.9(a) will rarely, if ever, raise an “identical” issue to a disqualification motion in another case for purposes of issue preclusion. Here, the court held that the trial court abused its discretion by relying on the doctrine of issue preclusion to deny the disqualification motion instead of conducting the requisite analysis under Colo. RPC 1.9(a). The court therefore made the rule to show cause absolute, vacated the trial court’s order, and remanded the case for the trial court to address the merits of the motion to disqualify under Colo. RPC 1.9(a).

Summary provided courtesy of The Colorado Lawyer.

Dissemination of Confidential Client Information Discouraged in Formal Ethics Opinion 130

The Colorado Bar Association Ethics Committee recently issued Formal Opinion 130, dated April 3, 2017. Formal Opinion 130 addresses the disclosure of confidential client information, including information that is publicly available, such as when the information has been on the news. The opinion concludes that dissemination of such information is prohibited by the Rules of Professional Conduct, and specifically states that there is no exception for information contained in the public record.

Formal Opinion 130 also addresses the use of information about former clients, concluding that such use may be allowed under the Rules when such information is “generally known.” The opinion advises attorneys to exercise caution when using information about former clients.

The opinion offers redaction and informed consent as reasonable measures to use for the dissemination of confidential client information, but cautions that merely redacting the client’s name is likely insufficient to comply with the Rules.

Finally, the opinion cautions against editing confidential client information in order to mislead or misrepresent positions. This would implicate Rule 8.4(c), which prohibits conduct involving dishonesty, fraud, deceit, or misrepresentation.

The opinion concludes, “In many situations, making information obtained in the course of representing a client public is helpful, either to other lawyers or to educate the public.  But client confidences must be respected.” Lawyers should use caution when disseminating confidential client information.

Formal Opinion 130 by cleincolorado on Scribd

Why Good Lawyers Do Bad Things – Think It Can’t Happen to You?

High-Profile Lawyer Charged with Punching Client in Court,” Above the Law, October 30, 2015.

Storied Plaintiffs Lawyer Disbarred in Kentucky Over Excessive Fees,” National Law Journal, March 21, 2013.

Lawyer Charged with Forging Signatures of 7 Judges on Over 100 Court Documents,” Above the Law, February 24, 2016.

Biglaw Partner and Associate Destroyed Evidence, Suborned Perjury,” Above the Law, June 24, 2015

Headlines like these grab our attention, but they don’t give us much cause for concern. After all, we would NEVER do anything like that. But what about these?

“[Lawyer] agreed to represent a client in his immigration and criminal matters. On [Lawyer]’s advice, his client pleaded guilty to felony sexual assault. The client later regretted his decision to plead guilty, hired other counsel, successfully withdrew his plea, went to trial, and was acquitted.” People v. Romero, 16PDJ057, December 9, 2016.

“[Lawyer] was convicted five times of driving under the influence (DUI) or driving while ability impaired (DWAI). His most recent conviction took place in 2011. Through this conduct, [Lawyer] violated Colo. RPC 8.4(b) (a lawyer shall not commit a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects).” People v. Condon, 16PDJ050, December 23, 2016.

“In October 2015, [Lawyer] sought a $1,000.00 loan from a client to address cash flow problems. The client agreed, so [Lawyer] executed a promissory note in favor of the client, providing for 8% per annum interest and providing that the principal and interest would be due one month hence, in November 2015. The terms of the loan were fair and reasonable. But [Lawyer] did not advise the client in writing of the desirability of seeking independent legal counsel as to the transaction. Nor did he obtain the client’s written, informed consent to [Lawyer]’s role in the transaction, including whether [Lawyer] was representing the client in the transaction. [Lawyer] failed to pay the client by the agreed-upon date, though [Lawyer] did fully repay the client in March 2016. At that time, the client had not yet reported [Lawyer] to disciplinary authorities.” People v. Foster, 17PDJ018, March 15, 2017.

Do these still sound too far-fetched to you? How about these ones?

“Lawyer accepts $5,000 ‘flat fee,’ expecting a complex dispute, but skillfully resolves the matter in one hour. He then keeps the entire fee.”

“While [Lawyer] served as county attorney, he worked on legal issues involving third parties’ management of dirt track racing at El Paso County’s fairgrounds. He was involved with drafting a memorandum of understanding between the County and one of those third parties to address issues that exposed the County to liability. After [Lawyer] left the employ of El Paso County, the County faced ongoing legal issues with that same third party. In 2013, [Lawyer] began representing that party against El Paso County.”

“[Lawyer] is subject to several orders entered in Arapahoe County requiring him to pay child support, various child-related expenses, and child support arrearages. [Lawyer] paid just over half of the child support obligations he owed between June 2015 and November 2016. [Lawyer]’s failure to satisfy these obligations violated Colo. RPC 3.4(c) (a lawyer shall not knowingly disobey an obligation under the rules of a tribunal) and Colo. RPC 8.4(d) (a lawyer shall not engage in conduct prejudicial to the administration of justice).”

“[Lawyer] failed to obey a court order to pay monthly child support and to satisfy child support arrearages. Her failure to honor her court-mandated obligations tarnished the integrity of the legal system and harmed her child. Her conduct violated Colo. RPC 3.4(c) (a lawyer shall not knowingly disobey an obligation under the rules of a tribunal) and Colo. RPC 8.4(d) (a lawyer shall not engage in conduct prejudicial to the administration of justice).”

“[Lawyer] was retained by a client in March 2016 in a paternity case. Because he failed to pay registration fees, [Lawyer] was placed on administrative suspension on May 2, 2016. While suspended, [Lawyer] participated in a telephone conference with the court and set a status conference for June 2016.”

“[Lawyer], a bankruptcy attorney, was retained by a lawyer who had been disbarred for knowing conversion. The lawyer’s disbarment order required him to pay restitution to several former clients, as well as more than $220,000 to a medical lienholder. On the client’s behalf, [Lawyer] filed a Chapter 13 bankruptcy petition. He did so to stall a foreclosure sale on the client’s house in the hopes of protecting from creditors up to $105,000 in equity under the homestead exemption, and to avoid entangling the client’s second property in Crested Butte in a Chapter 7 bankruptcy. The petition showed that the client’s debt was over 99% of the allowable limit for Chapter 13 cases. The petition did not, however, list the $220,000 debt to the lienholder; instead, it characterized the amount of the debt as “unknown,” “unliquidated,” and “disputed.” Had that debt to the lienholder been included in the client’s total debt, the amount would have exceeded the Chapter 13 debt limit.”

Are you starting to feel uncomfortable? These situations and others are published monthly in The Colorado Lawyer. Although many of the disciplinary situations are too egregious to relate to, others could happen to anyone – even good lawyers like you.

If you ask any random group of people to rank how ethical they are on a scale of one to one hundred, responses will average about 75, meaning almost everyone is misjudging how they would react to actual ethical dilemmas. Studies regularly show a gap between an ethical goal (how ethical we aspire to be) and ethical judgment (what we actually do). This has been called “bounded ethicality,” and it examines why individuals fail to recognize that external influence and self-interest impact their ethical thinking.

Ethical decisions can be hard for anyone, but the stakes are higher for lawyers because the Colorado Rules of Professional Conduct dictate lawyers’ ethical responsibility. The preamble to the Rules states, “Virtually all difficult ethical problems arise from conflict between a lawyer’s responsibilities to clients, to the legal system, and to the lawyer’s own interest in remaining an ethical person while earning a satisfactory living. . . . The Rules do not . . . exhaust the moral and ethical considerations that should inform a lawyer, for no worthwhile human activity can be completely defined by legal rules.” There are plenty of shades of grey in determining the ethical path, in other words.

On May 15, 2017, Christopher P. Montville of Wheeler Trigg O’Donnell will present a one hour lunch program, “Why Good Lawyers Do Bad Things (And What to Do About it).” This can’t-miss program will explore the reasons why good people sometimes make bad choices, and how to avoid becoming a disciplinary summary in The Colorado Lawyer. Register today by calling (303) 860-0608 or clicking the links below.

 

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CLE Program: Why Good Lawyers Do Bad Things

This CLE presentation will occur on May 15, 2017, at the CLE Large Classroom (1900 Grant St., 3rd Floor) from noon to 1 p.m. Register for the live program here and the webcast here. You may also call (303) 860-0608 to register.

Can’t make the live program? Order the homestudy here — Video OnDemandMP3 Audio

Rule Change 2016(12) Released, Amending the Colorado Rules of Professional Conduct

On Thursday, December 1, 2016, the Colorado Supreme Court issued Rule Change 2016(12), amending the Comment to Rule 2.1 of the Colorado Rules of Professional Conduct. Comment [2] of Rule 2.1, “Advisor,” was changed by the addition of a sentence regarding allocations of parental responsibilities:

[2] Advice couched in narrow legal terms may be of little value to a client, especially where practical considerations, such as cost or effects on other people, are predominant. Purely technical legal advice, therefore, can sometimes be inadequate. In a matter involving the allocation of parental rights and responsibilities, a lawyer should consider advising the client that parental conflict can have a significant adverse effect on minor children. It is proper for a lawyer to refer to relevant moral and ethical considerations in giving advice. Although a lawyer is not a moral advisor as such, moral and ethical considerations impinge upon most legal questions and may decisively influence how the law will be applied.

For the full text of Rule Change 2016(12), click here. For all of the Colorado Supreme Court’s adopted and proposed rule changes, click here.

Inadvertent Disclosure — Damage Control, Recipient Requirements, and More

EthicsInadvertent disclosure of privileged or confidential information is not a new problem for attorneys. However, email and the electronic age have widened the scope of inadvertent disclosure. What happens when you use your email’s auto-fill feature and accidentally fill opposing counsel’s name instead of your client’s? How about when you hit “Reply All” instead of only replying to one party, or when you reply instead of forwarding? These problems are the stuff of nightmares.

To address the problems created by inadvertent disclosure of privileged or confidential information, the Colorado Bar Association Ethics Committee created Formal Opinion 108, adopted on May 20, 2000. Formal Opinion 108 contemplates that a lawyer who receives documents (“receiving lawyer”) from an adverse party or an adverse party’s lawyer (“sending lawyer”) has an ethical duty to disclose the receipt of the privileged or confidential documents to the sending lawyer. If the receiving lawyer realizes the inadvertence of the disclosure before examining the documents, the receiving lawyer has a duty to not examine the documents and follow the sending lawyer’s directions regarding disposal or return of the documents.

In 2008, the Colorado Supreme Court repealed and reenacted the Colorado Rules of Professional Conduct. Rule 4.4(b) provides that “A lawyer who receives a document relating to the representation of the lawyer’s client and knows or reasonably should know that the document was inadvertently sent shall promptly notify the sender.” Rule 4.4(b) applies to situations in which the sending lawyer accidentally provides privileged or confidential information to the receiving lawyer, such as when someone hits “Reply All” instead of forwarding to the client.

Rule 4.4(c) addresses a far less common scenario, when the sending lawyer realizes the disclosure prior to receipt by the receiving lawyer and contacts the receiving lawyer before the privileged or confidential information is viewed. Rule 4.4(c) requires the receiving lawyer to “abide by the sender’s instructions as to its disposition.” Comments [2] and [3] to Rule 4.4 expand on the receiving lawyer’s duties, including providing that as a matter of professional courtesy the receiving lawyer may inform the sending lawyer of the inadvertent disclosure.

Colorado Rule of Civil Procedure 26(b)(5)(B) also addresses inadvertent disclosure. C.R.C.P. 26(b)(5)(B) imposes on the receiving lawyer a mandatory prohibition on review, use, or disclosure of the information until the privilege claim is resolved, if the sending lawyer informs the receiving lawyer of the inadvertent disclosure. C.R.C.P. 26(b)(5)(B) differs slightly from Fed. R. Civ. P. 26(b)(5)(B); lawyers who practice in both federal and state courts should familiarize themselves with the different rules.

On Monday, November 28, 2016, attorney Cecil E. Morris, Jr., will deliver a lunchtime presentation on inadvertent disclosure, which is available for one general CLE credit and one ethics credit. This program is a great way to learn about what to do in case you inadvertently disclose confidential or privileged information, and also what to do if you receive information inadvertently disclosed. Cecil will discuss the differences between the federal and state rules, and will also address the substantive areas of law most affected by inadvertent disclosure. Register here or by clicking the links below.

 

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CLE Program: Inadvertent Disclosure – Professional Liability Series

This CLE presentation will occur on November 28, 2016, at the CBA-CLE offices (1900 Grant Street, Third Floor), from 12 p.m. to 1 p.m. Register for the live program here or register for the webcast here. You may also call (303) 860-0608 to register.

Can’t make the live program? Order the homestudy here: MP3Video OnDemand.

Colorado Supreme Court: Ethical Prohibition on Paying Witness Contingent Fee Does Not Require Exclusion of Evidence

The Colorado Supreme Court issued its opinion in Murray v. Just In Case Business Lighthouse, LLC on Monday, June 20, 2016.

Contingent Fees for Witnesses—Summary Witness Testimony—Summary Exhibits.

The Supreme Court held that the violation of an ethical rule does not displace the rules of evidence and that trial courts retain the discretion under CRE 403 to exclude the testimony of improperly compensated witnesses. The Court also held that trial courts may allow summary witness testimony if they determine that the evidence is sufficiently complex and voluminous that a summary witness would assist the trier of fact. It further held that in those circumstances, summary witnesses may satisfy CRE 602’s personal knowledge requirement by examining the underlying documentary evidence on which they based their summary testimony. Finally, the Court held that that under CRE 1006, trial courts abuse their discretion when they admit summary charts that characterize evidence in an argumentative fashion rather than simply organize it in a manner helpful to the trier of fact. The Court reversed the Court of Appeals’ holding remanding the case to the trial court, but affirmed on all other issues.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Contract that Violates Rules of Professional Conduct Unenforceable

The Colorado Court of Appeals issued its opinion in Calvert v. Mayberry on Thursday, April 21, 2016.

Disciplinary Proceeding—Oral Contract—Colo. RPC 1.8(a)—Issue Preclusion—Void Agreement—Equitable Lien—Unclean Hands.

In a question of first impression, the Colorado Court of Appeals decided that an attorney who enters into a contract with a client that violates Colo. RPC 1.8(a) cannot later enforce the contract against the client.

The Colorado Supreme Court disbarred the attorney after a hearing board determined he had committed ethical violations, including some against the former client in this case. Specifically, the hearing board found that the attorney had loaned the former client over $100,000 and secured his interest in the loan funds by recording a false deed of trust in the chain of title on her house. The hearing board also found that the attorney had not complied with Colo. RPC 1.8(a) when he made the loans to the former client. The attorney then filed this case to recoup money he had loaned to the former client, claiming that he had an oral agreement with the client for repayment of the loans, and alternatively asserting that the trial court should impose an equitable lien on the former client’s house. The trial court granted summary judgment for the former client and her daughter (to whom she had quitclaimed her interest in the house), finding that because the oral contract between the former client and the attorney violated Colo. RPC 1.8(a), the attorney was ethically prohibited from enforcing that agreement.

The attorney appealed. On appeal, the former client contended that the doctrine of issue preclusion barred the attorney from relitigating factual issues that were litigated during the disciplinary proceeding. The court agreed; therefore, the hearing board’s factual findings bind the attorney in this case, including its finding that the attorney violated Rule 1.8(a) when he entered into the oral contract with the former client, and the oral contract between the attorney and the former client is void and unenforceable. The attorney contended that the trial court erred in applying the doctrine of unclean hands to bar his request for an equitable lien. Based on the attorney’s misconduct, the court disagreed. The attorney also asserted a fraud claim against the former client’s daughter, but his allegations did not support this claim, and it failed as a matter of law. The district court properly entered summary judgment.

The judgment was affirmed and the case was remanded to the trial court to determine whether fees should be awarded to the former client and her daughter.

Summary provided courtesy of The Colorado Lawyer.