Abstracts of Responses to Letter Inquiries
The following abstracts of informal CBA Ethics Committee letter opinions are offered as potential sources of guidance to the Bar on matters of ethical concern. Because they abridge the letter opinions and omit facts and circumstances tending to identify the inquiring attorney, the abstracts are not exhaustive, and therefore should serve only as a starting point for, or supplement to, thorough research and analysis. Inquirers are advised, in advance, if the opinion provided to them will be abstracted and published. For a number of reasons, the full letter opinions themselves are not provided to persons other than the original inquirer. The letter opinions and these abstracts are issued for advisory purposes only and are not binding in any way on the Colorado Supreme Court or the Appellate Discipline Commission.
Abstract No. 2007-1
Statement of Facts
An attorney appointed to represent a respondent in protective proceedings is required to file a motion with an attached itemized billing statement with the court when requesting payment of attorney fees from the estate.
Is it ethical for an attorney to circulate to all of the parties to the proceedings an itemized billing statement for services rendered to the respondent?
Conclusion and Analysis
Yes. C.R.P.C. 1.6 governs confidentiality of client information. The application of the rule is problematic here because, although it forbids an attorney from revealing information relating to the representation without the consent of the client, it permits such disclosure when it is impliedly authorized to carry out the representation. CRS § 15-24-417 authorizes an attorney to petition the court for compensation in probate matters. In many instances, particularly protective proceedings, a respondent may be unable to give informed consent to such a disclosure. It is the opinion of the Colorado Bar Association (CBA) Ethics Committee (Committee) that the court order appointing an attorney to represent the respondent in a protective proceeding impliedly authorizes that attorney to disclose client information contained in itemized billing statements to the extent necessary for the court to authorize payment.
The Committee does not express any opinion on legal matters and, therefore, expresses no opinion as to who is an interested party entitled to notice in the probate estate, what disclosure may be permitted when the fees are to be paid by the state, or privilege issues that may be intertwined with the disclosure of itemized billing statements.
Abstract No. 2007-2
Statement of Facts
You have an estate planning practice that includes the preparation of wills and codicils. You previously have prepared such documents for this client and, in the course of preparing replacement documents, you and your client mutually agreed that other counsel should handle the matter. The client has paid your fees in full. You have provided the client with printed or paper copies (hard copies) of all wills, codicils, and other estate planning documents in your possession. Your client now has requested that you also provide copies of all such documents on accessible disk or transmitted by e-mail (electronic format). The apparent reason for accessibility is to save the client money during the revision process.
Does C.R.P.C. 1.16(d) require an attorney to provide the client, on request, property and papers in accessible electronic format, if so maintained?
Under the limited facts presented, the Committee concludes that providing wills, codicils, and related estate planning documents in accessible electronic format is a reasonably practical step that you should take to enable the continued protection of your former client’s interests within the meaning of C.R.P.C 1.16(d).
C.R.P.C. 1.16(d) requires that an attorney take steps to surrender to the client his or her papers and property reasonably practicable to protect the client’s interest. CBA Ethics Opinion 104 (April 17, 1999) contains an exhaustive discussion of an attorney’s obligation to surrender client papers to a client on termination of the representation and what constitutes client papers. It emphasizes the primary ethical obligation of the attorney with respect to surrendering client papers to the client. It does not, however, address client papers maintained in electronic format.
The Committee is of the opinion that the client’s request that the client papers be provided in accessible electronic format is a step "reasonably practicable" to enable the continued protection of the client’s interests. The rule requires the attorney to define the client’s needs liberally and generally favors surrender. The downloading or transmission of accessible electronic format materials is both easy and efficient.
The Committee notes that other ethics committees have reached essentially the same result. See Illinois State Bar Association Advisory Opinion No. 01-01, 2001WL809802 (downloading for attorney leaving a firm with client); State Bar Association of North Dakota Ethics Opinion 01-03 (May 24, 2001) (downloading for attorney leaving a firm with client); Wisconsin Ethics Opinion E-00-03 (although an attorney is not required to surrender papers in both formats, the attorney should provide them in the requested electronic format, if reasonably practical).
As stated in Formal Opinion 104, the Committee believes that the rule does not require the surrender, in any format, of personal attorney work product or documents protected from disclosure based on third party interests.
Abstract No. 2007-3
Statement of Facts
An attorney is employed as an in-house counsel to a municipal corporation under a written employment agreement that requires the municipality to give a notice of termination a stated time prior to the effective date of the termination, and further provides for a severance payment in an amount equal to that which the attorney would have received had he or she been given the requisite notice.
Is it ethical for an attorney to provide full-time in-house legal services to a municipality under a written employment agreement that provides that: (1) the attorney will be paid an annual salary payable in monthly or semi-monthly installments; (2) the agreement may be terminated on notice a specified time prior to the effective date of the termination; and (3) the attorney will be paid severance pay measured by the compensation that he or she would have received during the notice period had the notice been timely.
It is the opinion of the Committee that it is not unethical for an attorney to enter into an employment agreement with a municipality containing a severance pay provision such as that described, so long as it does not limit the municipality’s ability to terminate the attorney’s representation of the municipality contrary to C.R.P.C. 1.16.
C.R.P.C. 1.5 (Fees) requires that an attorney’s fees must be reasonable. This rule does not appear to apply to the salary, or compensation package, payable to an in-house municipal attorney. The general purpose of a severance pay provision is to assist the employee with the inevitable economic adjustments occasioned by the termination of employment. See generally Moore v. Digital Equipment Corporation, 868 P.2d 1170, 1172 (Colo.App. 1994). Under these facts, the municipality becomes liable for severance pay only on its breach of the employment agreement.
C.R.P.C. 1.16 provides that a client has the right to discharge an attorney at any time, with or without cause, subject to the obligation to pay for services rendered. This right to terminate is a matter of public policy and is implied in any employment contract between an attorney and his or her client. See Olson v. Englewood, 889 P.2d 673, 676 (Colo. 1995). It follows that, although the ability of the municipality to terminate the employment of an in-house attorney may be limited by the inclusion of a severance pay provision in the employment agreement, its ability to limit or terminate any representation of the municipality by that attorney cannot be so limited.
1) expresses no opinion on the capacity of municipalities to enter into such an agreement as that presents a legal question beyond the purview of the Committee;
2) limits the scope of this opinion to the specific provisions described in the inquiry; and
3) expresses no opinion as to the appropriateness of such provisions in employment contracts involving other governmental attorneys or private in-house or private general counsel.
Abstract No. 2007-4
Statement of Facts
A consulting company operating online provides business plans and other services to business owners and, in conjunction with that activity, refers clients to attorneys and other professionals. In exchange for an annual fee, an attorney obtains the exclusive rights to referrals by the consulting company to its clients in the attorney’s zip code area and, for an additional fee, other zip codes. When a client of the consulting company types in a zip code, he or she is directed to a website containing the attorney’s picture, biography, and contact information, with links to the attorney’s separate website, if any.
Does the described relationship between the consulting company and the attorney comply with C.R.P.C. 1.5(e) and C.R.P.C. 7.2(c)?
Conclusion and Analysis
No. C.R.P.C. 1.5(e) succinctly states that: "[r]eferral fees are prohibited." This means that an attorney cannot pay or accept such a fee. As described, this is a for-profit referral service wherein an attorney gets the exclusive right to referrals from a defined geographic area in exchange for a fixed annual fee. This Committee previously has concluded that an annual membership fee paid to a for-profit referral service violates C.R.P.C. 1.5(e) and 7.2(c). See CBA Ethics Comm. Abstract, 2nd Inquiry, 26 The Colorado Lawyer 69 (July 1997); see also CBA Formal Opinion 106 (an advertising arrangement may, in fact, be a referral service).
C.R.P.C. 7.2(c) provides that, with exceptions not here pertinent, "a lawyer shall not give anything of value to a person for recommending the lawyer’s services." The Comment to the rule states, again with exceptions not here pertinent, that "[a lawyer] is not permitted to pay another person for channeling professional work."
It is the opinion of the Committee that the annual fee paid by the attorney to the consulting business is a referral fee prohibited by C.R.P.C. 1.5(e), and is the giving of something of value in exchange for a recommendation, in violation of C.R.P.C. 7.2(c).
Abstract No. 2007-5
Statement of Facts
An attorney admitted to practice in Colorado wants to enter into a Colorado limited liability partnership (LLP) with an out-of-state professional corporation (PC) and practice through the LLP.
Is it ethical for an attorney who is admitted in Colorado to become a partner in a LLP with an out-of-state PC?
Conclusion and Analysis
Yes, with the assumptions hereinafter set forth. The Committee assumes the following things, all of which are necessary to its conclusion:
1. The attorney is licensed to practice law in Colorado.
2. Both the LLP and the PC will be organized exclusively for the practice of law. Neither C.R.C.P 265 nor C.R.P.C. 5.4(c) requires that the PC be incorporated under Colorado law. The Committee does not read the requirement in C.R.C.P. 265 II.B. that shareholders, partners, or members of professional companies be "established" in accordance with C.R.C.P. 265 to mean that they must be formed or organized under the rule, as such matters are authorized and regulated by statute.
3. Names of both the LLP and PC comply with C.R.C.P. 265 I.A.1.
4. All practice through the LLP in the state of Colorado will be conducted by persons qualified and licensed to practice law in the state of Colorado.
5. The LLP and PC must be operated in accordance with C.R.C.P. 265.
6. Each attorney practicing law in Colorado as a shareholder, director, officer, or employee of the PC, or as a partner or employee of the LLP shall comply with the standards of conduct as set forth by C.R.C.P. 265 I.B.
7. Each partner in the LLP and each shareholder, director, and officer of the PC shall be individuals duly licensed to practice law in Colorado or in some other state or jurisdiction provided, however, that the PC may have directors or officers who are not licensed to practice law, so long as such persons do not exercise any authority whatsoever over any of the PC’s activities relating to the practice of law.
8. Both the LLP and PC will comply with the C.R.P.C.
Abstract No. 2007-6
Statement of Facts
An attorney has performed legal services for a client who is a partner in a partnership and has not been paid. The attorney holds partnership funds in his or her trust account that were not obtained in connection with the legal services performed for the client.
Is it ethical for the attorney to assert an attorney’s lien on partnership funds in a trust account for the attorney fees owed by a partner individually?
No. An attorney may not claim an attorney’s fee lien on trust funds unless those funds are owned by the defaulting client and were generated by the efforts of the attorney in the matter for which the fees are claimed.
Attorneys can assert a lien for unpaid fees only in certain circumstances provided by statute, and the attorney’s right to claim fees applies only to fees owed by his or her client. See People v. Gray, 35 P.3d 611 (Colo. PDJ 2001); People v. Brown, 840 P.2d 1085 (Colo. 1992); see also C.R.P.C. 1.15 cmt.
Two types of liens are provided for in Colorado statutes: a charging lien, CRS § 12-5-119; and a retaining lien, CRS § 12-5-120. These liens can be asserted only against the client’s property and, if improperly asserted, can lead to disciplinary action. See People v. Brown, 840 P.2d 1085 (Colo. 1992); People v. Smith, 830 P.2d 1003 (Colo. 1992).
A charging lien can be used only for professional services rendered in pursuing, obtaining, and collecting a judgment, but not for unrelated matters. See People v. Mills, 861 P.2d 708 (Colo. 1993); Estate of Benney, 790 P.2d 319 (Colo. 1990); see generally CBA Ethics Opinion 94 and 110.
A retaining lien can extend to secure payment for all services rendered; however, it can be placed only on the papers of the client in the hands of the attorney and on money due to the client that is the possession of the adverse party. See Collins v. Thuringer,; Jenkins v. District Court, 676 P.2d 1201 (Colo. 1984). However, this lien does not extend to funds in the possession of the attorney generated from matters outside scope of the representation for which fees were earned. See People v. Rozatos, 636 P.2d 666 (Colo. 1981); Collins v. Thuringer, 21 P.2d 709 (Colo. 1933).
Abstract No. 2007-7
Statement of Facts
A nonprofit legal services organization provides pro bono representation in civil legal matters to eligible indigent and near-indigent persons. Examples of the representation are: tenant rights, evictions, debts, small claims actions, custody, divorce, civil rights, employment, elder law, and public benefits. The representation is provided to the individuals by the organization’s executive director and staff attorneys. The organization’s board of directors includes several attorneys from the surrounding legal community. When the organization cannot represent an individual because of workload limitations or a conflict of interest, the organization obtains pro bono representation for the individual from an attorney in the legal community. To entice community lawyers to accept matters the organization cannot handle, the organization wants to provide the pro bono lawyers with secondary malpractice insurance, costs of litigation, and legal advice.
1. Is it ethically permissible for attorney members of the organization’s board of directors or their firms, and the organization’s executive director, to represent their respective clients against one another in adversary proceedings or otherwise?
2. Is it ethically permissible for attorney members of the organization’s board of directors or their firms, and the organization’s staff attorneys, to represent their respective clients against one another in adversary proceedings or otherwise?
3. Is it ethically permissible for the organization to refer otherwise qualified individuals whom it cannot represent because of workload limitations or conflicts of interest, to community attorneys for pro bono representation, and assist those attorneys by providing secondary malpractice insurance, costs of litigation, and legal advice?
1. Attorney members of the organization’s board of directors or their firms, and the organization’s executive director, may represent their respective clients against one another in adversary proceedings or otherwise without violating the C.R.C.P., even though the board has authority over the hiring, firing, and salary of the executive director, only if the situation is fully disclosed to each client and the client consents to the representation.
2. Attorney members of the organization’s board of directors or their firms, and the organization’s staff attorneys, may represent their respective clients against one another in adversary proceedings or otherwise without violating the C.R.C.P., only if:
a) the organization’s bylaws vest authority over individual personnel matters principally in the executive director;
b) the attorney board members uniformly and consistently do not discuss or vote on such matters as individual staff attorney salaries, promotions, or evaluations; and
c) the adverse representation is fully disclosed to the respective client and the client consents to continue the representation.
3. It is ethically permissible for the organization to refer individuals it cannot represent based on workload limitations or conflicts of interest to other lawyers in the community. When the referral occurs as the result of workload limitations on the organization’s staff attorneys, the organization may provide counsel with secondary malpractice insurance, costs of litigation, and legal advice. When the referral occurs as the result of an applicant’s conflict of interest with the organization’s staff attorneys, the organization may provide counsel with secondary malpractice insurance and costs of litigation, but may not provide counsel with legal advice on the matter in such a way as to violate the prohibitions articulated in C.R.P.C. 1.6 regarding confidentiality.
Generally, C.R.P.C. 1.10 prohibits lawyers "associated in a firm" from knowingly representing a client when one of them practicing alone would be prohibited from doing so by C.R.P.C. 1.7, 1.8(c), 1.9, or 2.2. This general rule of imputed disqualification presumes that lawyers in a law firm, or other association, have access to each others’ confidential client information and share that information to facilitate the representation of clients. Comment  to C.R.P.C. 1.10 states that the term "firm" includes lawyers in a legal services organization.
Unfortunately, C.R.P.C. 1.10 does not specifically address the questions: (1) whether board members should be automatically disqualified from representing parties adverse to clients of a legal services organization on whose boards they sit; (2) whether the legal services organization’s staff attorney should be automatically disqualified when the client is seeking the organization’s assistance in an adversary proceeding; or (3) when the attorney on the other side is a board member of the organization. Consequently, there has been conflicting authority on this subject. Some authorities have concluded that such representation may be improper. See, e.g., S.D. Ethics Opinion 88-6 (1998); New Jersey Bar Opinion 126, 91 N.J. 257 (1968); Estep v. Johnson, 383 F.Supp. 1323 (D.Conn. 1974). Other authorities suggest that where the board of a legal services organization restricts its activities to the formulation of broad policies and guidelines and refrains from involvement with individual cases, board members may represent such parties, provided requisite consideration is given to the conflict of interest provisions of the applicable ethics rules. See, e.g., N.Y. State Ethics Opinion 688 (1997); Oregon Ethics Opinion 1991-66 (1991); S.C. Ethics Opinion 90-08 (1990); Philadelphia Ethics Opinion 89-29 (1989); American Bar Association (ABA) Informal Opinion 1309 (1975).
The Committee finds that three formal ABA opinions—ABA Formal Ethics Opinion 324 (1970), ABA Formal Ethics Opinion 334 (1974), and ABA Formal Ethics Opinion 345 (1979)—persuasively delineate the role and scope of authority a legal services organization’s governing board may assume in prescribing organizational rules and regulations or operational methods for the organization without its board members and staff attorneys being deemed a "firm" for purposes of the imputed disqualification rule.
To avoid attorney board members and staff attorneys of a legal services organization from being considered a "firm," ABA Opinions 324, 334, and 345 require that:
1) the scope and authority of the board of directors of a legal aid organization be limited to broad goals and policies, such as the establishment of guidelines delineating categories or kinds of clients and cases the staff attorneys may represent;
2) no board member participate in the particular cases handled by staff attorneys;
3) the board members not infringe on the professional independence of the staff attorneys; and
4) there be no disclosure of confidences either by or to the board members with respect to a particular case by staff counsel.
These requirements ensure that the relationship between staff attorneys and the legal services board members is significantly different from the relationship between two lawyers in the same firm; the "critical difference" being "the absence of a general opportunity for shared knowledge by the board member of the affairs of the staff attorney’s client." See ABA Opinion 345. Where the board of directors is effectively screened off from the professional relationship between staff and client, there is no shared knowledge between board members and staff attorneys regarding the affairs of the organization’s clients. Consequently, "clients" of the board member ought not to be imputed to the organization and clients of the organization ought not to be imputed to the board member. If the board’s authority is consistent with the restrictions articulated in the ABA Opinions, C.R.P.C. 1.10 simply does not apply because there is no representation of multiple clients.
The conclusions in the ABA Opinions mirror and support the conclusions contained in C.R.P.C. 6.3, which states:
A lawyer may serve as a director . . . of a legal services organization, apart from the law firm in which the lawyer practices, notwithstanding that lawyers provided by the organization serve persons having interests adverse to a client of the lawyer. The lawyer shall not knowingly participate in a decision or action of the organization:
(a) if participating in the decision or action would be incompatible with the lawyer’s obligations to a client under Rule 1.7; or
(b) where the decision or action could have a material adverse effect on the representation of a client of a lawyer provided by the organization whose interests are adverse to a client of the lawyer.
The Comment to C.R.P.C. 6.3 states:
It may be necessary in appropriate cases to reassure a client of a lawyer provided by the organization that the representation will not be affected by conflicting loyalties of a member of the board. Established, written policies in this respect can enhance the credibility of such assurances.
When a new client comes to a legal services organization, one of whose board members represents a client in an adverse proceeding or otherwise, it cannot reasonably be concluded under C.R.P.C. 1.10 that the board member’s client also is the organization’s "client." Likewise, when a client comes to the board member, it cannot reasonably be concluded that the organization’s client is a "client" of the board member. Strictly speaking, this type of conflict is simply a special instance of a C.R.P.C. 1.7(b) conflict. Therefore, if the organization’s board is structured in such a way that members do not discuss pending cases with the executive director or the staff attorneys, and have no access to the organization’s case files, then ABA Opinions 324, 334, and 345 and C.R.P.C. 6.3 permit an organization’s board member, executive director, and staff attorneys to represent their respective clients against one another where full disclosure of the potential conflict is made to the client and the client consents to the representation.
Disclosure and Client Consent
C.R.P.C. 1.7(b) provides:
A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer’s responsibilities to another client or to a third person, or by the lawyer’s own interests, unless: (1) the lawyer reasonably believes the representation will not be adversely affected; and (2) the client consents after consultation.
What kind of disclosure is required to obtain the informed consent of the client to the representation? Depending on the nature of the case and the circumstances of the clients, the board member or the staff attorney may feel constrained in representing the client in the fullest sense. See ABA Formal Opinion 345. It is one thing to assure a client that no disclosures of confidences will occur. It is quite another to assure a client that the future course of his or her representation by a staff attorney or a board member might not in some subtle way be influenced by the relationship between the lawyers as a result of their association through the organization. See Estep v. Johnson, 383 F.Supp. 1323, 1326 (D.Conn. 1974). These concerns, when appropriate, should be disclosed and discussed with the client. Also, some clients may be submissive and acquiesce in the representation, feeling that they have no choice, but at the same time feeling concerned that they may not be getting independent representation. ABA Formal Ethics Opinion 345. Lawyers must be sensitive to these possibilities. Accordingly, it is important that the organization’s clients be made aware of the board member’s role in the organization, as well as the fact that the board member or a lawyer in his or her firm is representing a client opposing the organization’s client.
The same applies to the client represented by the board member or a lawyer in his or her firm when the adversary counsel is the organization’s executive director or a staff attorney. The board member’s client should be made aware of the board member’s role in the organization and the board member’s relationship with the organization’s executive director or a staff attorney representing the opposing party. Clients and counsel on both sides must feel comfortable that neither client will be deprived of independent and uninhibited representation.
Not all clients may be capable of directly providing informed consent, such as when the client is a minor or is mentally impaired. For instance, in B.A. v. L.A., 761 N.Y.S.2d 805 (N.Y.Fam.Ct. 2003), the court concluded that a disinterested attorney would reasonably believe the professional judgment of a law guardian representing children in a custody matter might be influenced to the detriment of the clients because one parent’s attorney was on the board of directors of the legal aid society that employed the law guardian; however, the clients could not legally consent to the representation because they were minors. Thus, there may be situations where it is appropriate for either the board member or staff attorney to seek consent for the minor or impaired person from a parent, legal guardian, or court. This opinion does not address the situation where one party does not consent.
Preserving the Independent Professional Judgment of the Executive Director and Staff Attorneys
Once the organization has agreed to accept a matter where the opposing client already is represented by a board member or a member of his or her firm and has assigned the matter to the executive director or a staff attorney for representation, the board must take special precautions not to interfere with the attorney’s independent professional judgment. C.R.P.C. 5.4 requires that staff lawyers represent the legal service organization’s clients in accordance with their own professional judgment, without interference from the organization’s board. C.R.P.C. 5.4, Comment  states:
Various types of legal aid offices are administered by boards of directors composed of lawyers and non-lawyers. A lawyer should not accept employment from such an organization unless the board sets only broad polices and there is no interference in the relationship of the lawyer and the individual client the lawyer serves. Where a lawyer is employed by an organization, a written agreement that defines the relationship between the lawyer and the organization and provides for the lawyer’s independence is desirable since it may serve to prevent misunderstanding as to their respective roles. . . . [T]he responsibility of the lawyer to maintain the lawyer’s professional independence remains constant, and the legal profession must insure that changing circumstances do not result in loss of the professional independence of the lawyer. . . . A lawyer . . . should make certain that a relationship with a . . . legal assistance organization in no way interferes with the lawyer’s independent, professional representation of . . . the . . . client.
Consequently, if the organization’s board operates as described in ABA Opinions 324, 334, and 345 and C.R.P.C. 6.3, it would be ethically permissible for a board member, the executive director, and staff attorneys to represent their respective clients against one another without concern that there will be interference with each lawyer’s independent professional representation of the client’s interests. To avoid the appearance of impropriety, if at all possible, the board member should not be the lawyer selected by his or her firm to be adverse to the organization’s client and in such situations the board member should be screened off by his or her law firm from all contact with the matter. See CBA Ethics Committee Formal Opinion 88 (1991). Finally, if during the course of the representation it becomes apparent that independent representation is not being afforded or a client perceives that it is not afforded, no matter what the reality, then the lawyers should assist in change of counsel for one or both clients.
Referrals to Pro Bono Counsel
C.R.P.C. 5.4(c) provides that a lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer’s professional judgment. C.R.P.C. 1.8(f) prohibits a lawyer from accepting compensation for representing a client from one other than the client unless the client consents after consultation, there is no interference with the lawyer’s independent professional judgment or with the client-lawyer relationship, and information relating to representation of a client is protected as required by C.R.P.C. 1.6.
Therefore, it is ethically permissible for the organization to refer individuals it cannot represent based on workload limitations or conflicts of interest to lawyers in the community for pro bono representation, and to provide pro bono counsel with secondary malpractice insurance and costs of litigation, as long as the client provides informed consent to the arrangement, the organization does not interfere with pro bono counsel’s exercise of independent professional judgment on behalf of the client, and pro bono counsel conforms to C.R.P.C. 1.6 concerning confidentiality of information related to the representation. See ABA Informal Ethics Opinion 1334. When the referral is made on the basis of workload limitations, the organization also may provide pro bono counsel with legal advice. When the referral is made on the basis of a conflict of interest, however, the organization may not provide pro bono counsel with legal advice on the matter in such a way as to violate the prohibitions articulated in C.R.P.C. 1.6.
Abstract No. 2007-8
Statement of Facts
Attorney is employed as a full-time in-house municipal attorney with responsibilities that include land use review, annexation, zoning, and subdivision approvals. Attorney is considering an employment opportunity with a local real estate developer.
1. May municipal attorney negotiate a position of employment with the local developer after leaving employment with the municipality?
2. What is the propriety of attorney representing the developer with respect to developments within the municipality?
1. Attorney may negotiate for a position of employment with the developer after he or she leaves the city’s employment.
2. The scope of attorney’s work for the developer is limited by C.R.P.C. 1.11 and any conflict of interest rules adopted by the municipality.
Pursuant to C.R.P.C. 1.11(c)(2), an attorney serving as a public officer or employee shall not
negotiate for private employment with any person who is involved as a party or as an attorney for a party in a matter in which the lawyer is participating personally and substantially.
By its express terms, this prohibition against negotiating for employment applies only to attorneys serving as a public officer or employee. After leaving employment with the municipality, an attorney will no longer be a public officer or employee and, thus, will be free to negotiate and accept a position of employment with a private client, subject to other ethical obligations discussed below.
An attorney may not represent the developer on any matter in which he or she "participated personally and substantially as a public officer or employee" unless the municipality consents after consultation. C.R.P.C. 1.11(a). An attorney may not represent the developer on any matter in which its interests are adverse to any person or entity about whom the attorney obtained confidential information while in the municipality’s employ. C.R.P.C. 1.11(b). Other attorneys working for the developer may represent it on such matters only if the attorney is screened from participation and the municipality is notified. C.R.P.C. 1.11(a). In addition, the municipality may have its own binding rules governing these matters to which the attorney may be bound. However, absent a municipal rule to the contrary, an attorney may represent the developer in matters adverse to the city as long as he or she was not "personally or substantially" involved in the matter and gained no confidential information concerning the subject matter during his or her tenure with the city.
Abstract No. 2007-9
Statement of Facts
An attorney whose practice includes criminal defense work also is a county commissioner. The county is part of a multi-county judicial district so, as a county commissioner, the attorney participates in the budgeting for a portion of the district attorney’s budget and in the entirety of the county sheriff’s department budget.
The following questions are presented:
1. If a conflict or appearance of a conflict exists, is it removed by the attorney not participating in setting the district attorney’s budget?
2. If a conflict or appearance of a conflict does exist and cannot be removed by the attorney abstaining in the budget matters, what effect does that have on his or her and law firm members in the representation of clients in criminal defense matters?
1. Whether the appearance of impropriety standard precludes the attorney’s representation of criminal defendants in the judicial district.
2. Whether the attorney’s representation of criminal defendants in the judicial district violates C.R.P.C. 8.4(e), which states that it is professional misconduct for an attorney to "[s]tate or imply an ability to influence improperly a judge, judicial officer, government agency or official."
3. Whether the attorney’s representation of criminal defendants in the judicial district creates a conflict of interest; and, if so, whether a reasonable attorney would conclude that his or her client could consent to the representation after consultation; and, if not, whether that reasonable attorney would reach a different conclusion if he or she agreed to abstain from consideration of the district attorney’s budget. Further, if the attorney’s responsibilities as a county commissioner preclude such a representation, whether that prohibition extends to any other attorneys in his or her law firm.
1. The appearance of impropriety standard does not apply to Colorado lawyers in private practice.
2. The representation of criminal defendants in the judicial district and the attorney’s status as a county commissioner create a potential for a violation of C.R.P.C. 8.4(e); however, by itself, representation of a criminal defendant in these circumstances does not violate C.R.P.C. 8.4(e).
3. The representation of criminal defendants in cases filed in the judicial district and the attorney’s status as a county commissioner creates a conflict of interest under C.R.P.C. 1.7(b) only to the extent that the attorney’s responsibilities as a county commissioner may materially limit the representation of the client. Such a circumstance may arise when an employee of the sheriff’s department is scheduled to be a witness, and this conflict applies to all attorneys in the firm.
1. The C.R.C.P. do not contain a provision requiring the disqualification of private lawyers to avoid an appearance of impropriety.
2. The C.R.C.P. provide that it is professional misconduct for an attorney to "[s]tate or imply an ability to influence improperly a judge, judicial officer, government agency or official." C.R.P.C. 8.4(e). In CBA Formal Ethics Opinion 46, "Municipal Attorney; Representation of Defendants," adopted February 20, 1971 and revised May 18, 1996, the Committee commented that when a municipal attorney represents criminal defendants there is a "great risk that the lawyer’s conduct implies that the lawyer is able to improperly influence a governmental agency or official." See also CBA Formal Ethics Opinion 97, "Ethical Considerations Where an Attorney or the Attorney’s Partner Serves on the Board of a Public Entity," adopted June 17, 1995 ("[l]awyers who serve on Boards must be mindful of the public’s perception of their ability to influence government," and a "lawyer who serves on a Board has obligations and responsibilities to that board, to his or her Board colleagues, and to the public").
The Committee believes that, without more, an attorney-public official’s representation of criminal defendants does not violate C.R.P.C. 8.4(e). However, the attorney-public official must go out of his or her way to avoid remarks or conduct that may be construed or misconstrued as implying an ability to influence governmental officials for the benefit of private clients.
3. C.R.P.C. 1.7(a) is not implicated in the attorney’s situation because, among other things, he or she is not in an attorney-client relationship with the county. Further, C.R.P.C. 1.7(b) is not implicated as it does not prohibit an attorney from compromising his or her obligations to third parties who are not clients.
The Committee also concludes that an attorney’s responsibilities as county commissioner, particularly his or her budgetary authority over the district attorney’s office, will not materially limit the representation of a criminal defendant prosecuted by that office. Medberry v. People, 107 Colo. 15, 108 P.2d 243 (1940), is distinguishable as it involved a county attorney without budgetary powers.
However, in the Committee’s view, the attorney also must consider whether his or her status as a county commissioner might compromise the representation of a criminal defendant. See CBA Formal Ethics Opinion 46, "Municipal Attorney; Representation of Defendants;" Michigan Ethics Opinion R-15, July 24, 1992. The concern expressed in these opinions is that the relationship between government officials and law enforcement personnel may materially compromise a government official’s representation of a criminal defendant. Such a conflict of interest may arise when an employee of the sheriff’s department is expected to testify as a witness. This conflict applies to all attorneys in the attorney’s law firm. The representation may continue only if the attorney (1) reasonably believes the representation will not be adversely affected, and (2) the criminal defendant consents after consultation.
Statement of Facts
A law firm is considering contracting with a professional employer organization (PEO) to assume and manage human resource and personnel responsibilities. Attorneys would be hired through the PEO and the contract between the attorney and the PEO would be at-will and in writing. Further, the PEO has an employee handbook that governs, among other things, problem resolution, discipline, dismissal, resignation, and paychecks.
The PEO would hire and place the attorney with a law firm where he or she would practice law. The attorney would sign an employment agreement that would provide that he or she is "co-employed" by the PEO and the law firm. The attorney would be paid by, or through, the PEO, which is responsible for making all appropriate deductions. The attorney agrees that his or her employment by the PEO is at-will and that the attorney, the law firm, or the PEO may terminate the agreement at any time.
May a law firm engage a PEO for the purpose of employing attorneys and handling the human resource functions relating to that employment?
Generally, it is ethical for law firms, or sole practitioners, to use a PEO for hiring attorneys, so long as the attorney and the law firm adhere to the C.R.C.P. Neither the attorney nor the law firm is insulated from complying with the C.R.C.P. by virtue of using this arrangement. Specifically, the contract between the law firm and the PEO, the employment agreement between the PEO and the attorney, and the policies of the PEO should be reviewed to assure compliance with the C.R.C.P., particularly those discussed below.
1. Competence and Diligence. The employee attorney has an attorney-client relationship with the clients who are represented by the law firm and for whom the employee attorney provides services, and the duties arising out of that relationship must not be affected by the PEO employment arrangement. Thus, the employee attorney owes duties of competence and diligence to those clients. C.R.P.C. 1.1; C.R.P.C. 1.3. The employee attorney must observe all these ethical duties, and the employing law firm must take reasonable measures to ensure that the employee attorney satisfies these duties.
2. Professional Independence. Attorneys are required to exercise independent professional judgment in representing clients, and may not permit a nonattorney who represents, employs, or pays them to render legal services or to direct or regulate the attorney’s professional judgment. C.R.P.C. 2.1; C.R.P.C. 5.4(c). Therefore, even though the PEO is a "co-employer," it is not permitted to interfere with or regulate in any fashion the independent professional judgment of the attorney. Moreover, the PEO must not be permitted to engage in any activity that would constitute the practice of law. C.R.P.C. 5.5(b).
3. PEO Compensation. The law firm is prohibited from sharing legal fees with nonlawyers. C.R.P.C. 5.4(a). In general, an arrangement would comply if: (1) payment of the fees charged by the PEO is not contingent on payment for the services by clients served by the attorney, and (2) the PEO’s compensation is not a percentage of, or otherwise directly tied with, the amounts paid to the firm by such clients. See CBA Ethics Opinion 105 (1999).
4. Employee Attorney’s Compensation. The employment agreement should provide for the possibility that the law firm can compensate the attorney directly with bonuses, deferred compensation, commissions, or stock options. If the law firm directly compensates the attorney, it must take care to ensure that the requirements of C.R.P.C. 1.5(d), relating to the division of fees between lawyers, are satisfied. Regarding the definition of a "firm," see C.R.P.C. "Terminology" and C.R.P.C. 1.10, cmt. See also CBA Opinion 105 (Division of Fees and Disclosure). If the attorney is not considered to be "in the same firm," the requirements of C.R.P.C. 1.5(d) must be satisfied.
5. Duty of Confidentiality. Both the law firm and the attorney have a duty of confidentiality to clients under C.R.P.C. 1.6. Thus, care must be taken to protect confidential client information. This is especially true where the attorney is engaged on a temporary basis. Further, care must be taken to ensure that no information relating to the representation of clients is communicated or revealed to the PEO, unless permitted by C.R.C.P. 1.6.
6. Conflicts. C.R.P.C. 1.7-1.10, relating to conflicts of interest and imputed disqualification, may be implicated because the PEO is being used to hire the attorney. Given the imputed disqualification provisions of C.R.P.C. 1.10, the determination of whether the attorney is "in the same firm" is critical. See CBA Opinion 105. To avoid the C.R.P.C. 1.10 imputation and disqualification as a result of the attorney being considered as "associated in" the law firm, the attorney should be screened with respect to information relating to other firms in which he or she may have been associated, and the clients he or she may have represented, in relation to the law firm’s clients. Even absent any imputation under C.R.C.P. 1.10, the law firm and the attorney must comply with C.R.P.C. 1.7; C.R.P.C. 1.8; and C.R.P.C. 1.9.
7. Employee Attorney’s Right to Withdraw. An attorney’s right to withdraw from the representation of a client is limited by C.R.P.C. 1.16, and the employment agreement must ensure compliance with the rule.
8. Supervision of Employee Attorney. Partners and supervisory attorneys in the law firm have a duty to make reasonable efforts to ensure that the other attorneys in the firm conform to the Rules. C.R.P.C. 5.1. This duty to supervise includes the duty to select and hire competent attorneys. See CBA Opinion 105. Thus, the law firm cannot delegate to the PEO its nondelegable duties to hire and supervise competent attorneys.
Statement of Facts
An attorney practicing immigration law is considering authoring "nutshells" or pamphlets in Spanish on immigration law and procedures; advertising these publications for sale; and entering into a partnership with a nonlawyer to publish and market these materials.
The inquiry asked whether an attorney practicing immigration law may author, publish, and promote materials on immigration law and procedures and, in conjunction therewith, enter into a partnership with a nonlawyer for the purposes of publishing, advertising, and promoting such materials and thereby share the proceeds or profits.
1. An attorney may ethically author and publish materials on legal issues because this does not constitute the practice of law.
2. An attorney may ethically promote such materials, as long as the promotion does not bring discredit on the profession.
3. An attorney may enter into a partnership for the publication and promotion of legal materials he or she has authored with a nonlawyer, as long as the activities of the partnership do not consist of the practice of law.
1. At the outset, the Committee does not express opinions on what constitutes the "practice of law" because that is a legal, not ethical, question. That said, in Denver Bar Association v. Public Utilities Commission, 154 Colo. 273, 391 P.2d 467 (1964), the definition of the term is limited to representing, counseling, advising, or assisting a person in connection with legal rights and duties. See also Ross v. Indus. Comm’n, 39 Colo. App. 204, 566 P.2d 267 (1977). When authoring a pamphlet, article, or book on legal issues, there is no identifiable client whom an attorney is assisting, nor is an attorney making an appearance in a legal proceeding or assisting an individual in the completion of legal documents. There is no rule governing the publication of articles, books, or pamphlets authored by attorneys. Further, attorneys frequently publish materials on legal issues through private publishing houses and association publications. The C.R.C.P. encourage such activities. See C.R.P.C. Preamble.
2. When promoting materials, an attorney is required to act in such a way as not to bring discredit on the profession. See C.R.P.C. Preamble; C.R.P.C. 7. This includes not advocating actions by others that violate laws or lead the reader to believe it is permissible to take actions that are unlawful or unethical, see C.R.P.C. 7.1(a)(2), and having any advertising of his or her legal services in the publication comply with C.R.P.C. 7.2. Further, the attorney should pay attention to C.R.P.C. 7.4, relating to communication with respect to specialties in particular fields of practice.
3. An attorney may enter into a venture for the publication of writings and may partner and share revenues with a nonlawyer, as long as the venture: (1) does not involve the practice of law, which the publication of materials does not; (2) does not bring discredit on the profession, see C.R.P.C. Preamble; and (3) complies with the requirements of C.R.P.C. 7 concerning advertising. In addition, because publishing legal materials does not involve the practice of law, an attorney also may pay royalties or enter into other such profit sharing arrangements with nonattorneys without violating C.R.C.P. 5.4(a), which prohibits the sharing of legal fees.
Statement of Facts
In the original inquiry, an attorney is considering employment, or affiliation, with a company that describes itself as a full-service tax negotiation firm. The company is owned by two nonattorneys; operates and uses a website and cold calling to find clients; sends its clients to the attorney who represents the clients before the Internal Revenue Service; and bills its clients for services rendered, including those provided by the attorney. The company compensates the attorney in one of three ways: (1) a flat monthly rate; (2) a flat monthly rate plus significant bonuses based on the number of hours billed to the clients; or (3) a flat hourly rate based on the number of hours billed to the clients.
Whether it is ethical for an attorney in private practice of law to be employed by, or affiliated with, the company and provide representation to its clients in the manner described.
Statement of Facts
No. C.R.P.C. 5.4 prohibits an attorney or law firm from sharing legal fees with the nonattorney. The Committee previously explained that "[t]he lawyer-client relationship should be direct and personal without intermediaries, and any compensation paid by the client to the lawyer should be agreed on with, and paid directly to, the lawyer." See CBA Ethics Opinion 87. It also has been determined that it is impermissible for the company to collect a fee from a client, keep a portion, and pay a portion to the lawyer for services rendered. See CBA Ethics Opinion 63. Here, the company receives a fee from the client and pays a portion to the attorney. This arrangement is an impermissible division of fees violating C.R.P.C. 5.4.
C.R.P.C. 5.4 also provides that an attorney shall not permit a person who recommends, employs, or pays the attorney to render legal services for another to direct or regulate the attorney’s professional judgment in rendering such services. Here, the attorney’s independent judgment might well be influenced by economic or other pressures from the company, which is compounded by the fee structure.
C.R.P.C. 7.3 prohibits an attorney from soliciting employment for pecuniary gain by in-person or live telephone contact with a prospective client with whom he or she has no family or prior professional relationship. Attorneys cannot permit nonattorneys such as the company to engage in the same conduct on his or her behalf. See C.R.P.C. 5.3. The employment or affiliation violates the rule because the attorney permitting, or contracting with, the company to engage in the prohibited conduct.
In addition, C.R.P.C. 1.6 requires client information be kept confidential, which the attorney might, depending on the circumstances, violate by sharing information with the company or by failing to follow the appropriate measures to protect the information. Also, clients may incorrectly assume that any information shared with the company will be treated as privileged and confidential.
Further, C.R.P.C. 1.16 governs withdrawal of an attorney from a matter pending before a tribunal. Not having control over the initial fee could put the attorney in an ethically difficult situation if he or she terminates his or her relationship with the company and is not ethically permitted to withdraw from pending matters.
In a follow-up inquiry, the Committee was asked to consider the import, if any, of ABA Informal Opinion 1241 (1973) on its analysis. It was stated in the ABA opinion that attorneys may join tax negotiation firms or form partnerships with enrolled agents so long as: (1) they limit representation to matters before the IRS, and (2) do not hold themselves out as attorneys. The ABA opinion reasoned that attorneys may engage in occupations open to nonattorneys, as long as they do not hold themselves out as attorneys. However, the ABA opinion cautioned that, as a practical matter, it may be impossible for an attorney to walk this fine line.
Therefore, if the attorney is employed by the tax negotiation firm, instead of engaging or continuing to engage in the practice of law as the initial inquiry suggested, neither the attorney nor the firm can hold the attorney out as an attorney. In addition, ethical pitfalls remain if any of the attorney’s activities or those of the firm could be deemed to constitute the practice of law or the sharing of fees by an attorney with a nonattorney, and the firm continues to solicit customers or clients in the manner described. The same infirmities would pertain to a partnership between an attorney and nonattorney. Therefore, the ABA opinion does not substantially impact the analysis or the conclusion reached in response to the initial inquiry.
Abstract No. 2007-12
Abstract No. 2007-11
Abstract No. 2007-10