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00/01-04

 

Abstract 00/01-04

Summary of Facts Provided

Lawyer serves as inside counsel for Company A and its wholly-owned subsidiary, Company S, which provides technology services to its customers. One of S's most important customers - Company C - also buys technology services from other, unrelated vendors pursuant to written contracts. C's technology purchases from these vendors relate to the services performed for it by S. Although C has its own legal counsel, due to the press of time it sometimes asks Lawyer to provide legal advice with respect to its contracts with those vendors.

Issues and Conclusions

Can Lawyer ethically provide legal services to Company C concerning these third-party vendor transactions?

By advising C about its vendor contracts, an attorney-client relationship is created. People v. Bennett, 810 P.2d 661 (Colo. 1991). Because Lawyer does not regularly represent C, Colo. RPC 1.5(c) requires a written communication to C of the basis or rate of Lawyer's fee. Because Lawyer is an employee of Company A, there is potential concern and confusion about whether Company A and/or Company S are engaging in the unauthorized practice of law contrary to Colo. RCP 5.5(b) and C.R.C.P. 265. See, CBA Formal Op. No. 17. This presents a legal question beyond the purview of the Ethics Committee, but which Lawyer should analyze carefully.

Because Lawyer's salary is paid by Company A, Lawyer's duty of loyalty to C may be compromised. It is not improper for Lawyer's fee to be paid by someone other than the client, but Lawyer should carefully review Colo. RPC 1.7 and 1.8(f) and the Comments thereto. And if after that review Lawyer determines to continue to provide such legal services to C, Colo. RPC 1.5(c) requires that the basis of the fee be communicated to C in writing. It may be prudent also to clarify in writing that Lawyer, and not Company A or Company S, is individually providing the legal services, to specify the fees, if any, to be charged, and the party responsible to pay such fees. In addition, Lawyer should carefully review Colo. RPC 1.6 and 1.7, in that providing legal services at the same time to A, S and C constitutes the representation of multiple clients in a related series of transactions, requiring extreme caution and special care to preserve the clients' confidential information. The potential for future conflicts of interest in the event of a later dispute among A, S and/or C also is present, and requires full prior disclosure and discussion with all three companies. See, CBA Formal Op. Nos. 57 and 68.