Vol. 29, No. 4
From the Courts
Matters Resulting in Diversion
Colorado Supreme Court Office of Regulation Counsel
Editor’s Note: Articles describing diversion agreements as part of the Attorney Regulation System are published on a quarterly basis, starting with the January 2000 issue. These articles are contributed by the Colorado Supreme Court Office of Regulation Counsel.
Diversion as an alternative to discipline can be offered. [See C.R.C.P. 251.13.] Pursuant to the rule, Attorney Regulation Counsel ("Regulation Counsel"), the Attorney Regulation Committee ("ARC"), Presiding Disciplinary Judge ("PDJ"), hearing board, Appellate Discipline Commission, or Colorado Supreme Court may offer diversion as an alternative to discipline, depending on the stage of the proceeding. For example, Regulation Counsel can offer a Diversion Agreement when the complaint is at the central intake level in the Office of Attorney Regulation Counsel. Thereafter, ARC or some other entity must approve the agreement.
From October 1999 through January 2000, at the intake stage, Regulation Counsel entered into 17 Diversion Agreements. From October 1999 through January 2000, ARC approved 34 Diversion Agreements. The PDJ approved 5 Diversion Agreements from October 1999 through January 2000.
Background Information Regarding Diversion Agreements
Before Regulation Counsel decides whether to offer a diversion agreement, Regulation Counsel reviews the following factors to determine if diversion is appropriate: (1) there is little likelihood that the attorney will harm the public during the period of participation; (2) Regulation Counsel can adequately supervise the conditions of diversion; and (3) the attorney is likely to benefit by participation in the program.
Regulation Counsel will consider diversion only if the presumptive range of discipline in the particular matter is likely to result in a public censure or less. However, if the attorney has been publicly disciplined in the last three years, the matter generally will not be diverted under the rule. [See C.R.C.P. 251.13(b).] Other factors Regulation Counsel considers that may preclude Regulation Counsel from agreeing to diversion are set forth in the C.R.C.P. 251.13(b). For example, if the misconduct involves dishonesty, misrepresentations, domestic violence, or is a pattern of misconduct, then the presumption is against diversion.
The purpose of a diversion agreement is to educate and rehabilitate the attorney so that the attorney does not engage in such misconduct in the future. It also is hoped that a diversion agreement will address some of the systemic problems an attorney may be having. For example, if an attorney was engaged in minor misconduct (neglect), and the reasons for such conduct were the result of poor office management, then one of the conditions of diversion may be a law office management audit and/ or practice monitor. The time period for a diversion agreement generally is no less than one year or greater than two years.
Types of Misconduct
The type of misconduct dictates the conditions of the diversion agreement. Although each diversion agreement is factually unique and different from other agreements, many times the requirements are similar. Generally, the attorney is required to attend Ethics School that is organized and taught by attorneys from the Office of Attorney Regulation Counsel. An attorney also may be required to fulfill any of the following conditions: law office audit; practice monitor; financial audit; restitution; payment of costs; evaluation by Colorado Lawyer’s Health Program ("CLHP"), including treatment; attend CLE courses; and any other conditions that may be appropriate for the particular type of misconduct.
After the attorney successfully completes the requirements of the diversion agreement, Regulation Counsel will close its file, and the matter will be expunged, pursuant to C.R.C.P. 251.33(d). If Regulation Counsel has reason to believe that the attorney has breached the Diversion Agreement, then Regulation Counsel must follow the steps provided for in C.R.C.P 251.13 before an agreement can be revoked.
The type of misconduct resulting in diversion for the time period described above generally involves the following types of misconduct: attorney’s neglect of a matter and/or failure to communicate, in violation of Colo.RPC 1.3 and Colo.RPC 1.4, where the client is not harmed or restitution is paid to redress the harm; conflicts in violation of Colo.RPC 1.7(b) or Colo.RPC 1.9; violating a court order by failing to pay child support, in violation of Colo.RPC 3.4; and threatening criminal or administrative action to gain an advantage in a civil case against the opposing party or attorney, in violation of Colo.RPC 4.5.
Diversion agreements also have addressed misconduct such as failing to supervise non-attorneys, failing to timely pay experts, charging an unreasonable fee, minor co-mingling or failing to hold client property separate from the attorney’s own property that did not involve conversion and did not result in any harm to the clients, and conduct that was prejudicial to the administration of justice.
Many cases resulted from personal problems the attorney was experiencing at the time of the misconduct. In these situations, the diversion agreements include a requirement for an evaluation by CLHP and, if necessary, counseling to address the underlying problems of depression, alcoholism, or other mental illnesses that may be affecting the attorney’s ability to practice law.
Random Samples of Diversion Agreements
Conflict of Interest
— The respondent was retained to act as corporate attorney for a closely held corporation. During certain critical meetings, the respondent appeared to show allegiance to the interests of the majority shareholders, rather than acting as corporate attorney. No ultimate harm resulted from the respondent’s conduct.
— The respondent served as a guardian ad litem ("GAL") for a minor child of a couple on a post-dissolution proceeding. While the respondent was still serving as GAL, even though no matters were currently pending before the court, the respondent hired the mother of the child to perform services for the respondent on a contract basis. The services were in connection with other GAL cases, not in connection with the woman’s own case. In another matter, the respondent neglected a case by failing to file a claim within the applicable statute of limitations. The client filed suit against the respondent for malpractice, and this claim was settled amicably.
— The respondent met with the principal of a debtor corporation to discuss a number of financial matters during which bankruptcy was mentioned. The respondent did not do bankruptcy debtor work. The debtor corporation did not retain the respondent to represent it in any matters, including a subsequently filed bankruptcy. Two creditors of the debtor retained the respondent to represent them in the debtor corporation bankruptcy case. The debtor corporation moved to disqualify, and in an affidavit filed with the bankruptcy court, the respondent negligently told the debtor’s counsel that he had not discussed bankruptcy in any way with the debtor’s principal. Furthermore, the respondent previously had represented an individual on a claim against the debtor corporation. The case had been settled and the agreement between the parties contained a provision that related to possible future bankruptcy filing. The rules implicated were Colo.RPC 1.9 and Colo.RPC 8.4(d). One of the conditions required the respondent to pay attorney fees to the debtor corporation for the hearing on the motion to disqualify.
— The respondent represented a client in a criminal matter. After the respondent’s representation was terminated, the client hired new counsel to represent him in the matter. Thereafter, the respondent filed, in the pending criminal proceedings, a notice of attorney’s lien and a motion to reduce the attorney’s lien to judgment. The judge assigned to the case mistakenly granted the motion and entered judgment. Thereafter, through the efforts of the new attorney, the judgment was set aside. Rules implicated were Colo.RPC 8.4(d) and Colo.RPC 8.4(h).
Failure to Communicate (Colo.RPC 1.4)
— In a domestic matter, the respondent represented a mother not married to the father of her child. The mother wanted to formalize an agreement that the father would not have to pay support as long as the mother and child could live rent free at a place the father owned. The respondent took no action for approximately five months. During that time, the respondent failed to return the mother’s telephone calls.
— The respondent represented a client in a dissolution of marriage action. Permanent orders were held in March 1999. Child support was not pursued at the permanent orders hearing because the child was receiving Social Security benefits. When the child’s Social Security benefits stopped, the client instructed the respondent to file a motion to modify the child support, and paid the respondent a fee for this service. Approximately four months later, the respondent had not filed the motion or communicated with his clients.
— In a tax matter before the IRS, the respondent failed to communicate with his client about the matter, despite repeated requests for information. This failure to communicate took place over a long period of time.
— The respondent drafted a will, power of attorney, and health care power of attorney for a disabled woman, without ever having met or spoken with her. The work was done at the request of the sister and a speech pathologist. The client never signed the documents.
— The respondent was placed on a one-year diversion for failing to communicate adequately with a divorce client, and for neglecting a second divorce matter. After he obtained service on the husband, the respondent did not do anything on the case, and the case was dismissed for failure to prosecute. There was no harm since the case was refiled.
Withdrawal Issues (Colo.RPC 1.16)
— The respondent was retained in June 1996 for modification of a visitation/parenting plan as the result of an issue regarding a school for the minor children. Those issues were resolved in April 1997. Thereafter, the client wanted the respondent to pursue modification of child support, but then changed her mind and decided to pursue the matter on her own. The Department of Human Resources was involved. Because the respondent had not filed a motion to withdraw, the Department of Human Resources would not work with the client. It took the respondent at least three and one-half months to file a motion to withdraw.
Threatening Litigation (Colo.RPC 4.5)
— In a dependency and neglect matter, on behalf of a client, the respondent wrote a letter threatening administrative action against a case worker, unless the case worker assigned to the client’s case was removed from the matter. The respondent stated in the letter that the respondent would seek discovery of certain information that most likely the respondent would not be able to obtain in the dependency and neglect matter.
— The respondent engaged in a heated conversation with an individual that concerned a business transaction. The respondent stated he was terminating conversation and made derogatory statements toward the person. The respondent felt remorseful and called the complainant, leaving a voice message apologizing for the outburst.
— The respondent neglected a legal matter by failing to remove a small claims matter to district court, and by failing to file a breach of contract counter-claim in a timely manner, causing default judgment in the small claims matter. The respondent also failed to return a client file and retainer when requested. Some of the conditions the respondent agreed to included paying restitution in the amount of the retainer and having a practice monitor. [Note: The Office of Attorney Regulation Counsel has filed a verified motion to terminate the diversion agreement because the respondent has not complied with some of the conditions in a timely fashion.]
— The respondent was retained to represent an individual seeking an appeal of his conviction and sentence in a criminal matter. After an unsuccessful appeal at the state court level, the respondent filed with the U.S. District Court for the District of Colorado an application for writ of habeas corpus, pursuant to 28 U.S.C. § 2254. The respondent advised his client that such petitions were rarely granted. After the matter was fully briefed, the U.S. Magistrate made a written recommendation that the petition be dismissed and, if the defendant wanted to proceed, he must file written objections to the proposed findings and recommendations within ten days after service or be barred from seeking appellate review. The recommendations were mailed to the respondent on March 24, 1997; the respondent was away from his office in connection with other cases until April 11, 1997. The respondent had no office staff and had not made arrangements with anyone to review his mail while he was away. By the time he reviewed the magistrate’s recommendations, the deadline established by the magistrate had already passed, and the judge had entered an order accepting and adopting the magistrate’s recommendations. The client was not allowed to appeal the ruling.
— The respondent neglected to file financial affidavits and to prepare a settlement agreement in a divorce case. The respondent promised to prepare the documents by a certain date and failed to do so. The respondent voluntarily refunded the money without any request or requirement by the Office of Attorney Regulation.
— The respondent was retained to assist a client in a wage assignment that had been entered against the client’s wages. The client wanted the wage assignment terminated or released since there had been a change in child custody and support obligations. The respondent was paid a $1,000 retainer, but as of November 1999, the respondent had taken no action to have the wage assignment removed.
— The respondent represented a client on a workers’ compensation case and Social Security benefits case. The workers’ compensation matter was settled. After the settlement, the respondent advised the client to file for additional Social Security benefits. The client did so, and the application was denied by the Social Security Administration. The respondent failed to file an appeal or a motion for reconsideration of the denial of his client’s application.
— The respondent represented the husband in a dissolution proceeding. During those proceedings, the respondent failed to return a signed copy of the temporary orders agreement promptly, failed to provide the husband’s financial affidavit to opposing counsel despite repeated urgings, and failed to prepare a written order for the court after being directed to do so.
Co-mingling/Trust Account Issues
— The respondent was in the process of closing her private practice when she failed to return funds to clients in a timely manner. The mistake was due to poor bookkeeping as opposed to conversion or intentionally withholding the money. All funds were returned. The respondent was required to hire an accountant to review all of her accounts to make sure that all clients received the money they owed when the practice shut down.
— The respondent attempted to deposit into her COLTAF account a check from her mortgage company. There was a problem on the face of the check, and the bank did not deposit it. Before the bank could notify the respondent, the respondent wrote two checks which were returned for insufficient funds. A review of the respondent’s bank records and ledgers for several months showed that the COLTAF account contained no client or third-party funds at the time of these events. Although there was neither co-mingling nor unauthorized use of client funds, the respondent’s improper use of her COLTAF account for business and personal purposes implicated Colo.RPC 1.15(f).
— The respondent was retained to represent the client in a criminal matter on an hourly fee basis. The respondent received fees for services already performed, and although it was not an exact amount for hours worked, the respondent deposited the entire amount into his operating account. Over the next few months, the client paid the respondent two additional payments, which were not deposited into the respondent’s trust account, despite the fact that not all of the fees had been earned at the time they were deposited into the operating account. With respect to each payment, however, the respondent performed sufficient services to earn the advanced fee within approximately thirty to sixty days. The respondent did not send invoices to the client to account for the use of client funds. An accounting was provided after the request for investigation was submitted.
— The respondent charged and attempted to collect an illegal or unreasonable fee, and engaged in conduct prejudicial to the administration of justice by attempting to represent two minor clients when requested by the minors’ father, even though guardians and conservators previously had been appointed for the children. The respondent attempted to collect a contingent fee from the minor children without a fee agreement signed by either of them, or the guardian or conservator. Ultimately, the respondent did not collect any fee. However, the conservators had to expend attorney fees and bring this matter to the court’s attention, when the respondent did not agree voluntarily not to continue with the representation. As one of the conditions, the respondent agreed to pay the conservator’s attorney fees.
Child Support Issues
— The respondent was placed on diversion for failing to make child support payments. His payments were current at the time of the diversion agreement, but previously he had been late with monthly payments. The respondent was in arrears for a short period of time, and self-reported the arrearage.
— The respondent did not pay child support for approximately five months, and then brought the child support current. He then made irregular payments for approximately six months and then brought the payments current. One of the conditions of the diversion agreement is that the respondent is to provide monthly reports for two years, showing compliance with the court order.
— The respondent was two to three months in arrears, and notified the Office of Attorney Registration that he was in arrears due to his unemployment. The respondent has since paid the arrearage in full and is current on his child support obligations. One of the conditions of the diversion agreement is that the respondent is to provide monthly reports for two years, showing compliance with the court order.
Failing to Supervise
— The respondent was retained by a client to research facts and law, and advise a client whether the client had a viable claim against the municipality and a police officer. After conducting initial research, the respondent notified the client by telephone that he believed the client had a viable claim. Thereafter, the respondent sent the governmental immunity notice to the municipality. The respondent had difficulty reaching the client by telephone, and the client had not signed and returned a contingent fee agreement sent to him by the respondent. The respondent then had a law clerk prepare a letter to the client advising the client of the statute of limitations applicable to the case; however, the law clerk gave an incorrect date on which the statute of limitations would run. The respondent never corrected the date, and the respondent did not file suit on behalf of the client within the statute of limitations, because he did not hear from the client again until after the statute had expired. The rules implicated were Colo.RPC 1.3, Colo.RPC 1.4, and Colo.RPC 5.3.
— The respondent represented a wife in a domestic relations case. The parties reached an agreement regarding division of property and support. Part of the agreement included that the family home be sold, and proceeds from that sale were to be deposited into the respondent’s trust account, with the understanding that the funds would not be distributed until a separation agreement was finalized and executed. The respondent’s client encountered financial difficulties and requested the settlement agreement be finalized and the funds be distributed. The respondent distributed the funds to the client without receiving an executed copy of the settlement agreement. There was a delay of approximately forty-five days before the signed settlement agreement was delivered to opposing counsel. The rule implicated was Colo.RPC 8.4(h).
— The respondent represented a corporation in a real estate transaction. The opposing party contacted the respondent concerning certain damages she claimed were incurred as a result of the real estate transaction. The respondent informed the opposing party orally and by letter that he was general counsel for the real estate company and could not represent him. However, the letter failed to advise her to secure her own counsel, and contained legal opinions about the opposing party’s potential claims against his client.
— The respondent was observed by a Boulder police officer driving her vehicle erratically and making improper lane changes. The respondent was pulled over, and the portable breath test measured .165. The respondent pled guilty to DWAI.
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