June 26, 2019

Colorado Rules of Judicial Discipline Amended in Rule Change 2017(03)

On Wednesday, April 26, 2017, the Colorado State Judicial Branch released Rule Change 2017(03), amending the Colorado Rules of Judicial Discipline. The rules were amended on April 20, 2017, and will become effective on July 1, 2017.

The rule changes were quite extensive. A redline is available here.  Several definitions were added to Rule 2, “Definitions,” and many other rules in Part A were changed, including Rule 4, “Jurisdiction and Powers,” Rule 5, “Grounds for Discipline,” Rule 6.5, “Confidentiality and Privilege,” and more. Part B was amended to change the title of the Part from “Preliminary Proceedings” to “Informal Proceedings,” and the rule changes in Part B were significant. There were minor changes to Part C, “Disability Proceedings.”

For a redline of Rule Change 2017(03), click here. For all of the Colorado Supreme Court’s adopted and proposed rule changes, click here.

Top Ten Programs and Homestudies of 2016: Ethics

The year is drawing to a close, which means that the compliance period is ending for a third of Colorado’s attorneys. Still missing some credits? Don’t worry, CBA-CLE has got you covered.

Today’s Top Ten Programs and Homestudies are all about ethics. In addition to the programs featured below, CBA-CLE has several interesting and informative books about ethics and professional responsibility, and many great programs and homestudies not listed here. Find out more at cle.cobar.org/Practice-Area/Ethics-Professional-Responsibility. And now, your featured presentation.

10. Ethics and Professionalism in the Practice of Law 2016
It’s time for the always popular annual Ethics and Professionalism Program. The Program that brings you CLE through legal “theater” presented by a distinguished panel of experts in an interactive format. This program presents ethical and professional situations through a carefully crafted series of interactive vignettes to give you the tools to improve the professionalism in your law practice. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 4 general credits, including 4 ethics credits.

9. Ethical Duties of Attorneys Serving on Nonprofit Boards
Lawyers are invited to join the boards of nonprofit corporations for a variety of reasons, the best of which relate to the judgment and analytical and communication skills lawyers may bring to bear. Service on nonprofit boards, however, often presents lawyers with irresistible opportunities to exercise their legal training, with potential ethical implications. This seminar will review the most troublesome of those ethical considerations, including issues relating to whether simply serving as a director can create a lawyer-client relationship, present conflicts of interest, or raise concerns regarding competence. Order the Video OnDemand here and the MP3 here. Available for 1 general credit, including 1 ethics credit.

8. Lawyers’ Duty of Candor to the Tribunal and Remedial Measures in Civil Actions and Proceedings
This program will address the prohibition against offering false evidence, the duty to take remedial measures, and the duty to correct false statements by the lawyer set forth in Rule 3.3 of the Colorado Rules of Professional Conduct. The program will address the knowledge and materiality elements of the Rule, the duration of the lawyer’s duties under the Rule, and the steps that the lawyer must take when confronted with this problem of material false evidence. These steps include remonstration with the client, withdrawal from the representation, and if withdrawal from the representation does not undo the effect of the false evidence, then further remedial measures sufficient to undo the effect of the false evidence. Order the Video OnDemand here and the MP3 here. Available for 1 general credit, including 1 ethics credit.

7. Information Security & Ethics for Solo/Small Firm Practitioners
Cybersecurity and data breaches seem to always be in the news. Increasingly, law firms are becoming victims of data breaches and even targets of sophisticated cyberattacks. Attorneys and commentators alike worry that law firms’ IT systems and tools may be a weak point in the protection of their clients’ sensitive and confidential information. This talk will explore attorneys’ ethical obligations to protect confidential client information in the IT context, and discuss the tools and practices solo and small-firm practitioners can leverage to better fulfill those obligations. Specifically, Colorado Rules of Professional Conduct 1.1, 1.4, 1.6 and 5.1 will be discussed. Order the Video OnDemand here and the MP3 here. Available for 1 general credit, including 1 ethics credit.

6. Managing Risks: Preventing Legal Malpractice 2016
Managing risks is an important way to prevent legal malpractice claims. This program will discuss avoiding accidental attorney-client relationships, such as when making conversation at parties or talking to friends and family; tech traps for practitioners; trends in legal malpractice, including rules, cases, and statutes; and the Top Ten Ethics Complaints. Each Homestudy includes a copy of the CBA-CLE book, Lawyers’ Professional Liability in Colorado, 2016 Edition. Please note the book will be provided in PDF. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 4 general credits, including 4 ethics credits.

5. Inadvertent Disclosure: Professional Liability Series
The problem of the inadvertent disclosure of communications or information that is privileged or protected is not new. However, the risk of such disclosures has increased dramatically in recent years as a result of rapid communication such as e-mail, and in the litigation context, with the production of large volumes of documents and information, especially electronically stored information. Consequently, the rules governing inadvertent disclosure have been evolving rapidly to keep up or catch up with the problem. Order the Video OnDemand here and the MP3 here. Available for 1 general credit, including 1 ethics credit.

4. Ethically Inspired Marketing: The Boundaries of Chasing Success / Ethics Lessons From the Trenches
Ethically Inspired Marketing: Every lawyer wants to have a great career, but only a few can transcend modest success and become a “rock-star lawyer.” In this program, Stuart Teicher explains how you can rise to the top by following a new paradigm he calls, “Ethically Inspired Marketing,” a concept based firmly in the rules of professional conduct. Since every push toward greatness has its limitation, Stuart will also educate us about the boundaries of chasing success. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 3 general credits, including 3 ethics credits.

Ethics Lessons From the Trenches: The scariest stories are those tales where responsible lawyers who care about acting in an appropriate manner get into disciplinary trouble. In this program, we learn about the common missteps that are made by otherwise responsible attorneys. After hearing this program you’ll embark upon your career as a safer, stronger attorney. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 3 general credits, including 3 ethics credits.

3. Staying Above the Line: Preventing Legal Malpractice 2016
This half-day program provides practitioners with practical tips to avoid legal malpractice in the litigation practice. Topics covered include intra-firm privilege, trends in legal malpractice cases and statutes, preservation and spoliation of evidence, federal rules update, and more. Each attendee receives a PDF e-Book copy of the CBA-CLE book Lawyers’ Professional Liability in Colorado, 2016 Edition. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 4 general credits, including 4 ethics credits.

2. Ethics 7.0 2016
Practice at your very best. Attend this program and get the latest information on a wide variety of legal ethics issues. Your distinguished faculty will address current, common and challenging ethical issues you routinely encounter, or will encounter at some point in your practice years. At the end of the day, you will know both the conduct that will gain you respect, and the pitfalls that will jeopardize your practice. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits, including 7 ethics credits.

1. Annual Ethics Revue at Lannie’s Clocktower Cabaret
Much anticipated and annual, “The Ethics Revue”, is unlike any other CBA-CLE continuing legal education ethics program. It is produced and performed by members of the famous (or infamous!) Law Club and the Ethics Committee of the Colorado Bar Association. Each year, it is an all new CLE musical extravaganza. Attend a performance and learn ethical conduct in an engaging and memorable way. With a unique combination of wit, song, and commentary, the cast of multi-talented attorneys will heighten your awareness of a variety of ethics issues, which arise in the practice of law. This live-only program occurs each year in November, and is the can’t-miss ethics event of the year. Look for this great event in November 2017.

Ethical Issues for Lawyers Serving on Nonprofit Boards

nonprofitLawyers are invited to join the boards of nonprofit corporations for a variety of reasons, the best of which relate to the judgment and analytical and communication skills lawyers may bring to bear. Service on nonprofit boards, however, often presents lawyers with irresistible opportunities to their exercise their legal training, with potential ethical implications.

One of the primary ethical concerns for attorneys serving on nonprofit boards is whether the attorney is perceived as representing the organization or actually represents the organization. Lawyers serving on nonprofit boards must take care to avoid establishing an accidental attorney-client relationship. If a lawyer does not want to enter into an accidental attorney-client relationship, he or she would be wise to make it clear from the beginning of his or her service, perhaps in writing, that there is no attorney-client relationship. Similarly, attorneys serving on nonprofit boards should emphasize their roles to the other board members.

Conflicts of interest are another ethical pitfall for attorneys serving on nonprofit boards. The lawyer’s independent professional judgment may be compromised by his or her obligation to respect the conduct of the organization regardless of whether that conduct complies with the Colorado Rules of Professional Conduct. There is also the potential for conflict between the organization and the attorney’s law firm.

Although serving on boards of directors for nonprofit organizations presents unique ethical concerns, attorneys provide valuable contributions to boards. Good practices, such as clarifying the lawyer’s role before beginning board service or refraining from voting on issues involving the lawyer’s firm, can help avoid ethical dilemmas.

Ericka Houck Englert, Of Counsel at Davis Graham & Stubbs, will present a one-hour lunch program on December 20, 2016, to discuss ethics for attorneys sitting on nonprofit boards. Register by calling (303) 860-0608, or click the links below.



CLE Program: Ethical Issues for Attorneys Serving on Nonprofit Boards

This CLE presentation will occur on December 20, 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.

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.



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.

Attorney at Work—Mixing Cocktails with Legal Advice: Don’t

Editor’s note: This article originally appeared on Attorney at Work on April 19, 2016. Reprinted with permission.

Mark3By Mark Bassingthwaighte

I can appreciate a well-crafted cocktail. But when I am in a situation where such beverages are being served, I never get involved in a conversation about someone’s legal problems. And I strongly encourage you to do the same.

Here’s a short story that explains why.

An associate at a law firm — not a litigator in any way — attended a social function and had a few more than she should have. She got involved in a conversation with another guest about a personal injury matter. In addition to sharing some generic advice, the associate also let the guest know there was still plenty of time to deal with the matter, saying the statute of limitations in that jurisdiction was two years. Unfortunately, unbeknownst to our heroine, there was an exception to the statute in play and the actual time to file suit was six months. The guest, relying on the advice, did not obtain legal counsel until after the filing deadline had passed.

The young lawyer and her firm were eventually sued for malpractice.

The Accidental Client

We all know drinking and driving can have serious consequences — when your judgment and reflexes are impaired, accidents can happen. Mixing cocktails and legal advice is similarly problematic. It’s too easy for a casual setting, coupled with a few adult beverages, to cloud your thinking. You may then find yourself dealing with an accidental client.

Malpractice claims can easily arise out of these situations, but the risk isn’t limited to cocktail parties. Casual conversations online with extended family members or friends and gatherings with members of your church congregation or other community organizations are all situations where you should proceed with caution.

You can’t overlook the office setting, either.

Should you be concerned about passing along a little casual advice in a conversation with a corporate constituent while representing the entity itself? How about discussing issues with beneficiaries while representing the estate, trying to help a prospective client out during that first meeting when you know you are going to decline the representation? Or what about being a good Samaritan by making a few suggestions on the phone to someone who clearly has a problem but really can’t afford an attorney? How about answering a few questions from an unrepresented third party?

The answer is, of course, yes — these are all situations that can easily lead to an accidental client.

“No Good Deed Goes Unpunished”

Old sayings became old sayings because they have a ring of truth to them.

I am always surprised by what attorneys say when they have to deal with a claim brought by an accidental client. Comments like “I never intended to create an attorney-client relationship,” “There was no signed fee agreement,” and “No money was exchanged so how could this be?” are common.

Guess what: It’s not about you! Typically, it is more about how the individual you interacted with responded to the exchange. If they happened to respond as if they were receiving a little legal advice from an attorney, and that response was reasonable under the circumstances, it can start to get muddy. Worse yet, if it was reasonably foreseeable that this individual would rely or act on your casual advice — and then, in fact, did so to their detriment — you may have a serious problem on your hands.

I share this not with a desire to convince you to keep quiet and never try to help someone. By all means, be helpful. The world could use a few more good Samaritans, and a desire to help others is a good thing as long as you stay the course. I share this because I want you to be cognizant of the risk involved whenever you decide to step into those waters.

Here’s the Bottom Line

Accidental clients are for real and there is no such thing as “legal lite.” So if you are enjoying a wonderful evening at a party, cocktail in hand, and find yourself conversing with another guest who has just learned you are an attorney and wants to “pick your brain,” don’t talk about legal issues you are not well-versed in. If you feel compelled to pass along a little advice, then remember to ask questions so you understand the entire situation. Just know that you may be held to the accuracy of that advice later on, so you might want to jot down a few notes as soon as you can.

Finally, know that it’s okay to say you’re not the right person to be asking, particularly after you’ve had a few.

That said, salute!

Mark Bassingthwaighte, Esq. has been a Risk Manager with ALPS, an attorney’s professional liability insurance carrier, since 1998. In his tenure with the company, Mr. Bassingthwaighte has conducted over 1150 law firm risk management assessment visits, presented numerous continuing legal education seminars throughout the United States, and written extensively on risk management and technology.  Mr. Bassingthwaighte is a member of the ABA and currently sits on the ABA’s Law Practice Division’s Professional Development Board, the Division’s Ethics and Professionalism Committee, and he serves as the Division’s Liaison to the ABA’s Standing Committee on Lawyers Professional Liability. Mr. Bassingthwaighte received his J.D. from Drake University Law School and his undergraduate degree from Gettysburg College.

Contact Information:
Mark Bassingthwaighte, Esq.
ALPS Property & Casualty Insurance Company
Risk Manager
PO Box 9169 | Missoula, Montana 59807
(T) 406.728.3113 | (Toll Free) 800.367.2577 | (F) 406.728.7416
mbass@alpsnet.com | www.alpsnet.com

ALPS offers up to a 10% premium credit for each attorney in a firm who receives 3 CLE credits annually in the areas of ethics, risk management, loss prevention, or office management. ALPS is a lawyers’ malpractice carrier endorsed by the CBA. Learn more at try.alpsnet.com/Colorado

Data Privacy & Information Security: Meeting the Challenges of this Complex and Evolving Area of the Law

The breakneck speed at which technology is advancing presents both extraordinary opportunity and unprecedented risk to you and your clients. As data breaches and cyber attacks increase, so do the costs associated with preventing and dealing with them when — not if — they happen.

This practical seminar provides guidance on the state of the law on data security and privacy, as well as sound practices on how to minimize risk of a breach. Learn about data security and privacy issues with the European Union and Changes to the Safe Harbor Act, as well as the status of negotiations over the General Data Protection Regulations. Learn the reasonable measures to take in case of a breach, as well as best practices for advising your board and executives. Discover the latest challenges in employment law, as well as ethical dilemmas.


CLE Program: Data Privacy & Information Security — Meeting the Challenges of this Complex and Evolving Area of the Law

This CLE presentation will take place Friday, January 22, 2016, in the CLE Large Classroom. Click here to register for the live program and click here to register for the webcast, or call (303) 860-0608.

Can’t make the live program? Order the homestudy here: CDMP3 audioVideo OnDemand.

Comment Period Open for Proposed Amendments to ABA Model Rule of Professional Conduct 8.4

The ABA Standing Committee on Ethics and Professional Responsibility has developed proposed amendments to the Model Rules of Professional Conduct. The Standing Committee has proposed the addition of a subsection (g) to Model Rule 8.4 to address discrimination in the practice of law, and a revision to the comments to explain the purpose of new subsection (g):

Rule 8.4: Misconduct

It is professional misconduct for a lawyer to:


(g) in conduct related to the practice of law, harass or knowingly discriminate against persons on the basis of race, sex, religion, national origin, ethnicity, disability, age, sexual orientation, gender identity, marital status or socioeconomic status.


Comment [3] Paragraph (g) applies to conduct related to a lawyer’s practice of law, including the operation and management of a law firm or law practice. It does not apply to conduct unrelated to the practice of law or conduct protected by the First Amendment. Harassment or discrimination that violates paragraph (g) undermines confidence in the legal profession and our legal system. Paragraph (g) does not prohibit lawyers from referring to any particular status or group when such references are material and relevant to factual or legal issues or arguments in a representation. Although lawyers should be mindful of their professional obligations under Rule 6.1 to provide legal services to those unable to pay, as well as the obligations attendant to accepting a court appointment under Rule 6.2, a lawyer is usually not required to represent any specific person or entity. Paragraph (g) does not alter the circumstances stated in Rule 1.16 under which a lawyer is required or permitted to withdraw from or decline to accept a representation. A lawyer who, in the course of representing a client, knowingly manifests by words or conduct, bias or prejudice based upon race, sex, religion, national origin, disability, age, sexual orientation or socioeconomic status, violates paragraph (d) when such actions are prejudicial to the administration of justice. Legitimate advocacy respecting the foregoing factors does not violate paragraph (d). A trial judge’s finding that peremptory challenges were exercised on a discriminatory basis does not alone establish a violation of this rule.

The Standing Committee also issued a memorandum explaining the origin of the amendments, available here. The memorandum explains that although the comments to the Model Rules have addressed discrimination in the practice of law for many years, the Committee thought it important to add the prohibition to the black letter portion of the Model Rules in order to authoritatively prohibit discrimination. As the ABA Young Lawyers Division eloquently explained, “There is a need for a cultural shift in understanding the inherent integrity of people regardless of their race, color, national origin, religion, age, sex, gender identity, gender expression, sexual orientation, marital status, or disability, to be captured in the rules of professional conduct. This is true because the Model Rules are supposed to ensure the integrity of the legal profession.”

The Standing Committee invites comments on the draft proposal, both in writing and at its public hearing from 3 to 5 p.m. on Sunday, February 7, 2016, at the Marriott Marquis San Diego Marina, 3rd Floor, South Tower, Balboa & Mission Hills Meeting Rooms, San Diego, CA. Persons wishing to speak should register by sending an email to abamodelruleamend@americanbar.org by January 29, 2016. Speakers should be prepared to speak for four to five minutes and then take questions from the Committee, and there may not be time to accommodate all interested speakers. Comments may be submitted in writing as well to the above email address by March 11, 2016. Comments will be made publicly available.

For more information about the proposed Model Rule change, click here.

Tenth Circuit: Sanctions Against Attorney Affirmed Where He Negligently Disregarded Discovery Obligations

The Tenth Circuit Court of Appeals issued its opinion in Sun River Energy, Inc. v. Nelson on Wednesday, September 2, 2015.

Attorneys James E. Pennington and Stephen E. Csajaghy were sanctioned for their refusal to disclose insurance coverage during securities litigation involving Sun River. Pennington was in-house counsel for Sun River and Csajaghy was retained to represent the company in the underlying litigation. During the underlying litigation, a magistrate judge set a discovery deadline of April 6, 2011, by which time Sun River was obligated to disclose any insurance coverage. However, no disclosure was made until nearly 18 months later, after repeated requests from opposing counsel, and by the time the policy was disclosed the coverage period had expired. Opposing counsel moved for sanctions against Sun River under Rule 37(b)(2)(A), requesting that Sun River’s claims against defendants be dismissed and entering default judgment for defendants on their counterclaims.

The magistrate judge held an evidentiary hearing, and ultimately recommended that default judgment be entered against Sun River but not approving dismissal. The magistrate judge noted that there was not intentional misrepresentation by Sun River’s attorneys, but neither attorney actually looked at the policy to see if it provided coverage, instead relying on their mistaken beliefs that the policy would not be relevant. Sun River objected to the magistrate judge’s recommendations, and a district judge addressed the contentions at a pretrial hearing. By that time, Csajaghy had withdrawn from the representation and Pennington appeared as counsel of record. The district court decided counsel were culpable for the misrepresentation and should be held personally responsible. The district court ultimately imposed the sanction of opposing counsel’s attorney fees against Pennington and Csajaghy in the amount of $20,435.

Pennington and Csajaghy moved for reconsideration, arguing Rule 37(c) does not allow imposition of sanctions on counsel, counsel acted with substantial justification, any sanction should have been imposed on Sun River, and due process precluded imposition of a sanction against Csajaghy, who had withdrawn before the sanctions were imposed. In response, defendants argued the sanction was not only justified under Rule 37 but under Rule 26(g)(3) and the district court’s inherent power as well, also noting that counsel’s deliberate indifference demonstrated a lack of substantial justification, sanctioning counsel was appropriate, and that both attorneys had been afforded substantial due process in the matter. The district court issued a thorough written decision, granting in part and denying in part the motion for reconsideration. The district court noted that Rule 37(b)(2)(C) authorizes a monetary sanction for failure to obey a discovery order and expressly allowed the attorney advising the party to be sanctioned, finding that since Csajaghy was Sun River’s attorney of record at the time of the discovery violation the sanction against him was appropriate. As to Pennington, since he was not the attorney of record at the time of the discovery violation, the district court held he was not subject to Rule 37(b)(2)(C) sanctions, but became responsible for timely updating discovery responses under Rule 26 when he became attorney of record, and therefore the sanction was justified under Rule 37(c)(1)(A). The attorneys appealed.

The Tenth Circuit began its analysis by examining the sanction against attorney Pennington. The Tenth Circuit noted that the only case law on the subject held that the sanctions were enforceable against parties only, not attorneys. The district court rejected the holding as unpersuasive, but the Tenth Circuit disagreed with the district court’s analysis as overbroad. The Tenth Circuit noted that there was no express textual reference extending the sanction against attorneys, and found that consideration of the relevant text cut against the district court’s analysis. Under the circumstances of this case, the Tenth Circuit found the sanctions against Pennington unwarranted by Rule 37. Turning to defendants’ argument that the sanctions were allowed by the district court’s inherent power, the Tenth Circuit again disagreed, finding that although his failure to disclose was not substantially justified, it was not vexatious, wanton, oppressive, or done in bad faith. The Tenth Circuit reversed the sanction against Pennington.

Turning to attorney Csajaghy, the Tenth Circuit found there was no question that the district court had authority to impose a personal sanction. Csajaghy objected to the sanction, arguing the sanction was not warranted on the facts, sanctioning counsel was inconsistent with the decision not to sanction Sun River, and the procedure through which he was sanctioned violated due process. The Tenth Circuit found no merit to any of his arguments. The Tenth Circuit admonished that, as counsel of record in the litigation, it was irresponsible for Csajaghy to assume that the in-house counsel, Pennington, had reviewed the policy. Even if had known Pennington reviewed the policy, Csajaghy should have conducted an independent review to satisfy his professional obligations. The Tenth Circuit further chastised Csajaghy for assuming the policy would not provide coverage in lieu of exercising critical judgment. The Tenth Circuit also approved of the district court’s decision to sanction Csajaghy while not sanctioning Sun River, because the company reasonably relied on its counsel to provide relevant disclosures and counsel failed to do so. Finally, the Tenth Circuit addressed Csajaghy’s due process arguments, and although it agreed with the district court that the initial order imposing the sanction was procedurally defective, any defect was cured by the subsequent proceedings on the motion for reconsideration.

The Tenth Circuit reversed the sanction against attorney Pennington and affirmed the sanction against attorney Csajaghy.

Top Ten Ethics Programs and Homestudies

It’s that time again — the end of the compliance period for a third of Colorado’s attorneys. As we approach the end of the year, we have compiled lists of the top programs across several practice areas. Keep reading Legal Connection for updates on the top programs in your practice area. Today, our spotlight is on ethics. The top ten ethics programs and homestudies are:

10. The Use of Technology in Your Practice Without Ethical Violations. In this program, Heather Kelly and John Palmeri discuss social media, cloud computing, smartphones, metadata, and their implications for your practice. Learn about the duty to safeguard client information and how that works with today’s technology. The program also discusses ABA Model Rules and ethics opinions regarding technology. One general credit, including one ethics credit. Available as MP3 audio download or Video OnDemand.

9. New Colorado Rules of Professional Conduct 1.2: Marijuana Law Update. In March 2014, the Colorado Supreme Court adopted a new comment to Colo. RPC 1.2 addressing a lawyer’s representation of clients with marijuana-related issues. Colorado Court of Appeals Judge John Webb, attorney Alec Rothrock, and Attorney Regulation Counsel Jamie Sudler presented this two-hour program regarding what the new comment says—and what it does not say. Two general credits, including two ethics credits. Available as MP3 audio download or Video OnDemand.

8. Settlement and Mediation Best Practices: Avoiding Pitfalls and Malpractice. This helpful one-hour program presented by Heather Kelly and Julie Williamson provides settlement tips applicable to all mediations and settlement discussions, including issues particular to medical damages, legal malpractice claims, and aggregate settlements. One general credit, including one ethics credit. Available as MP3 audio download or Video OnDemand.

7.  Privileges and Confidentiality. This program presented by John Palmeri discussed practical approaches to client secrets, confidentiality, attorney-client privilege, work product doctrine, lawyer disqualification, and lawyers as witnesses. One general credit, including one ethics credit. Available as MP3 audio download or Video OnDemand.

6. Ethical Issues for Attorneys Serving on Nonprofit Boards. Attorneys are frequently invited to serve on boards of directors for nonprofits, but there are potential ethical implications for attorneys who cannot resist the temptation to use their legal skills in their roles as directors. In this program, Ericka Houck Englert reviewed some potential ethical consequences for attorneys serving on nonprofit boards, including conflicts of interest, loss of attorney-client privilege, and competence. One general credit, including one ethics credit. Available as MP3 audio download or Video OnDemand.

5. Ethics and Professionalism in the Practice of Law 2015. This entertaining annual program, dubbed “interactive CLE legal theater” by the Peer Professionalism Assistance Group, provides a distinguished panel of experts who discuss a series of interactive vignettes acted out by the PPAG. Common and difficult problem areas are covered, and the four-hour program ends with perspectives from the bench and from Attorney Regulation Counsel. Four general credits, including four ethics credits. Available as CD homestudy, MP3 audio download, and Video OnDemand. NOTE: This program is repeated annually. Click here for the 2014 program and here for the 2013 program.

4. Preventing Legal Malpractice 2015 — Managing Risks and Client Relations OR A Perspective on Practice Pitfalls. Each year, CLE presents two Preventing Legal Malpractice programs: one directed at transactional attorneys, one directed at litigation attorneys. In addition to the printed materials, each attendee receives a copy of CLE’s book, Lawyers’ Professional Liability in Colorado. For 2015, recent case law was discussed, as well as ten things not to do when responding to regulation counsel, how to make mediation work, the lifecycle of a malpractice case, recurring malpractice and professional responsibility dilemmas, and beginning and ending representation. Four general credits, including four ethics credits. Available as CD homestudy (transactional/litigation), MP3 audio download (transactional/litigation), and Video OnDemand (transactional/litigation). NOTE: These programs are repeated annually. Click here for the 2014 programs (transactional/litigation) and here for the 2013 programs.

3. Ethics 7.0. This annual program provides a full compliance period worth of ethics credit in one day. For 2015, topics discussed included do’s and don’t’s to avoid having grievances filed against you, ethical issues in family law, ethical issues with providing unbundled legal services, dealing with clients with diminished capacity, ethics in juvenile law, use of social media, and the latest developments regarding marijuana use. Seven general credits, including seven ethics credits. Available as CD homestudy, MP3 audio download, and Video OnDemand. NOTE: This program is repeated annually. Click here for the 2014 program and here for the 2013 program.

2. Ethics with the Incomparable Sean Carter — Comedic Professional Education. Sean Carter travels the country providing ethics CLEs in the funniest way possible. He describes himself as a “Humorist At Law,” and his programs never disappoint. Sean Carter is coming to CLE this Friday, December 18, to present a full-day program featuring discussions of same-sex marriage, religious liberty, the Affordable Care Act, dress codes and religious observances, the Fourth Amendment, workplace discrimination, and the limits of political expression. Registration is still open for the live program and webcast — click here to register for the live program and click here for the webcast. Six general credits, including six ethics credits. Available as CD homestudy, MP3 audio download, and Video OnDemand after the program. NOTE: This program also occurred in 2013; click here for the homestudy.

1. Ethics Revue at Lannie’s Clocktower Cabaret. Every year, the Law Club performs a musical-theater-inspired ethics program at Lannie’s Clocktower Cabaret, complete with singing, musical performances, and acting. This year’s theme was 9.1 Shades of Grey, and performances discussed such topics as conversion, misrepresentation, billing and fees, conflicts of interest, and more. The performances are so fun you’ll forget you’re watching a CLE program. Three general credits, including three ethics credits. Available as DVD homestudy, MP3 audio download, and Video OnDemand. NOTE: This program occurs annually; click here for the 2014 program and click here for the 2013 program.

Social Responsibility — Doing Good While Also Making Money And Protecting Owner Interests

BLI_2015Editor’s Note: The following article is excerpted from Herrick Lidstone’s materials for the 2015 Business Law Institute on October 28, 2015. Mr. Lidstone is leading a panel discussion about social responsibility in business. For discussion of the questions he raises below, attend the Business Law Institute. Register here or by clicking the links below.

By Herrick K. Lidstone, Jr.

There are a huge number of issues surrounding corporate/entity social responsibility. Even understanding what “social responsibility” is in this context has a divergent path. For the purposes of this discussion, it can be described as “Doing Good While Also Making Money And Protecting Owner Interests.”[1] This demonstrates the potential conflict – should an investor in a business entity (the owner) look to the entity to “do good” or merely to comply with legal requirements (do not pollute; do not violate the law) while making money for the owners (profit maximization). Should the owner have a say in the business entity’s choices?

Should an entity selling t-shirts worry about the workers in Bangladesh? Should an entity selling coffee worry about how it is grown and harvested? Should an entity selling beef burritos worry about how the cattle are slaughtered?

The legal landscape in which these questions must be considered has changed dramatically in the last five years. Consumer attitudes toward many of these issues have also changed. Some businesses are now extolling their social responsibility, while others apparently continue to consider that to be a secondary consideration, at best. Citizens United v. Federal Election Comm’n, 130 S. Ct. 876 (2010), interprets the Constitution to give business entities the right of free speech in political campaigns in a manner that is not necessarily answerable to the owners.[2] Has Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751 (2014), done similarly for social responsibility and business philanthropy?

The following points are more than can be discussed at one sitting, but hopefully will form a basis for an interesting presentation.

  1. Does Hobby Lobby change the landscape for business enterprises to consider factors other than profit in making their business decisions?
  2. The duties of the Board of Directors after Hobby Lobby – can a for-profit corporation consider social responsibility even if it has the effect of reducing profits?
  3. Where investors are concerned, what is the role of disclosure regarding consideration of alternative constituencies?
  4. Should a for-profit corporation desiring to include a focus on social responsibility at the expense of profit expressly so state in its articles of incorporation or adopt a form such as (in Colorado) a public benefit corporation?
  5. Is there a religious and moral side to profit maximization and corporate social responsibility?
  6. Is there a difference between corporate social responsibility and social entrepreneurship?
  7. Are alternative entities important, and must they be carefully crafted?
  8. Is it a question of marketing?
  9. Where does “blind philanthropy” fit in?
  10. Once you have done it, can you go back?
  11. Is it the Millennials (born 1980-1995) versus the Baby Boomers (born 1945-1960)?
  12. Whither the future?

[1] Of course, the concept of “doing good” has potentially a variety of meanings depending on political, moral, religious, and other deeply held beliefs. This paper will not focus on the potentially contradictory definition of “good.” In the most controversial extreme, consider the “rights of the unborn” versus “freedom of choice” as a justification for abortion. This paper will leave the definition of “good” to others.

[2] In August 2011, the “Committee on Disclosure of Corporate Political Spending” filed a petition for rehearing with the Securities and Exchange Commission (http://www.sec.gov/rules/petitions/2011/petn4-637.pdf) in which the committee asked “that the Commission develop rules to require public companies to disclose to shareholders the use of corporate resources for political activities.” Those rules still do not exist for 1934 Act reporting companies. The SEC does have rules prohibiting investment advisors from making political contributions to encourage political subdivisions to hire them as advisors. See 17 CFR § 275.206(4)-5.

Herrick K. Lidstone, Jr., Esq., is a shareholder of Burns Figa & Will, P.C. in Greenwood Village, Colorado. He practices in the areas of business transactions, including partnership, limited liability company, and corporate law, corporate governance, federal and state securities compliance, mergers & acquisitions, contract law, tax law, real estate law, and natural resources law. Mr. Lidstone’s work includes the preparation of securities disclosure documents for financing transactions, as well as agreements for business transactions, limited liability companies, partnerships, lending transactions, real estate and mineral property acquisitions, mergers, and the exploration and development of mineral and oil and gas properties. He has practiced law in Denver since 1978.


CLE Program: Colorado Business Law Institute

This CLE presentation will take place Wednesday, October 28, 2015 at the Grand Hyatt Denver Downtown. Live program only – click here to register or call (303) 860-0608.

Can’t make the live program? Click here to order the CD homestudy or click here for the MP3 audio homestudy.

Application Period Open for Vacancies on U.S. District Court Committee on Conduct

The U.S. District Court for the District of Colorado announced on Monday, July 13, 2015, that it is seeking applications for three vacancies on its Committee on Conduct. The Committee on Conduct investigates and acts upon complaints against members of the U.S. District Court bar, considers applications for reinstatement or readmission, and addresses matters concerning attorney disability.

Eligible applicants for the committee vacancies must have practiced law for ten years or more and have no disciplinary record; be licensed to practice by the Colorado Supreme Court; have been a member in good standing of the U.S. District Court bar for at least five years with no disciplinary record; and possess experience that makes the applicant especially qualified to investigate matters governed by the U.S. District Court’s disciplinary rules.

Applicants must submit the application packet in PDF format to COC_submissions@cod.uscourts.gov.

Colorado Supreme Court: Attorney Did Not Violate Rule 1.16(d) Where Some of Non-Returned Flat Fee was Earned

The Colorado Supreme Court issued its opinion in In the Matter of Juliet Carol Gilbert on Monday, April 6, 2015.

Attorney Discipline—Quantum Meruit—Colo. RPC 1.16(d).

In this attorney discipline proceeding, the Supreme Court considered whether an attorney violated Colo. RPC 1.16(d) by failing to return all of an advance fee to her clients. Colo. RPC 1.16(d) requires attorneys to refund upon termination by a client any advance payment of fee that “has not been earned.”

In this case, the attorney’s flat fee agreement did not describe what payment, if any, the clients would owe the attorney if the representation ended early. The Hearing Board determined that the attorney had earned part of the advance fee under a quantum meruit theory by performing services for the clients, and that she did not violate the ethical rules by retaining this amount after her discharge.

The Supreme Court affirmed the Hearing Board’s order. Under the facts of this case, the attorney did not violate Colo. RPC 1.16(d) by failing to return the portion of an advance fee to which she was entitled in quantum meruit for services rendered for her clients.

Summary and full case available here, courtesy of The Colorado Lawyer.