96/97-01 – Release of files to and copying of files by/for one of two or more former joint clients

Summary of Facts Provided

Law firm A represented several co-parties in complex litigation which concluded several years ago and generated voluminous files. Certain of the formerly jointly represented clients ( "Former Clients") continued to be represented by Firm A in other litigation related to the concluded litigation. Former Clients then secured new counsel in the other litigation, and the current litigation files were turned over to the new counsel. Former Clients now are threatening litigation against Firm A relating to one of the active matters and to a portion of the concluded litigation. Former Clients have requested that Firm A turn over the inactive files from the concluded litigation. Firm A regards the inactive files as work product and necessary to its representation of potential new clients in other litigation also related to the subject matter of the concluded litigation. Photocopying the files would be expensive.

Issues and Conclusions

A. Is Firm A required to release the inactive files to Former Clients? The authorities agree that, in the absence of a valid attorney's lien, upon request an attorney must deliver to a client original documents provided to the attorney by the client, documents obtained by the attorney for the client, and the finished work product of the representation. E.g. People v. Shunneson, 814 P.2d 800 (Colo. 1991).

The authorities are not in agreement as to whether an attorney must deliver all documents generated in the course of the representation, such as the attorney's own notes and research. Effectively, this is the issue of whether an attorney may assert a work product privilege vis a vis a client or whether fiduciary duty to the client precludes such assertion. Compare, e.g., ABA Informal Ethics Op. 1376 (Feb. 18, 1977) (decided under DR9-102(B)(4)); Neeb v. Superior Court, 214 Cal. App.3d 693, 262 Cal. Rptr. 887 (4th Dist. 1989) (relying on Calif. Code); and Corrigan v. Armstrong, Teasdale, Schlafly, Davis & Dicus, 824 S.W.2d 92 (Mo. App. 1992), with In re Grand Jury Proceedings, 727 F.2d 941 (10th Cir. 1984); Matter of Kaleidoscope, Inc., 15 B.R. 232 (Bkrtcy. D. Ga. 1981), modified on other grounds, 25 B.R. 729 (D. Ga. 1982); Gottlieb v. Wiles, 143 F.R.D. 241 (D. Colo. 1992); and Martin v. Valley Nat. Bank of Arizona, 140 F.R.D. 291 (S.D.N.Y. 1991).

Colorado Rules 1.15(a) ("property of clients" must be held separately from the attorney's own property) and 1.16(d) (upon termination of the representation the attorney must "surrender[] papers and property to which the client is entitled") do not define "papers" or "property". However, the implication from both rules is that the only exception to the requirement that client papers and property must be returned is when an attorney's lien is permitted by substantive law.

B. If release of files is required, is it sufficient if Firm A merely makes them available for inspection and copying by Former Clients at their expense? The issue of originals versus copies is mooted here, for practical purposes, by the fact of joint representation. Each jointly represented client has an undivided interest in files created in the course of the joint representation.. E.g.Kaleidoscope, Inc.,supraGottliebsupra. Former Clients are entitled to full access to the inactive files, but not sole possession of them, because of the other clients' interests. Firm A has a fiduciary obligation to preserve the original files for the benefit of all of the jointly represented clients. Under these circumstances, Firm A's obligation would be met by providing Former Clients a full opportunity to inspect the files and make copies at their own expense.

96/97-02 – Lawyer may not pay a fee to a marketing service for the privilege of writing newsletter articles, addressing business groups, and receiving referrals

Summary of Facts Provided

A marketing service publishes periodic newsletters and arranges meetings attended by members of business groups. An attorney may join the service by paying a flat annual fee and may thereafter include articles in the newsletter under his or her by-line (including his or her address and phone number) and attend the meetings to speak on areas of topical interest. In addition, the service places paid ads in various bar and business related publications and refers those who respond to the ads to its member attorneys.

Issues and Conclusions

Does Colorado Rule 7.2 prohibit an attorney from paying the fee charged by the marketing service?

Because the marketing service is a for-profit organization, payment of the fee by an attorney violates Colorado Rule 7.2(c). That Rule prohibits attorneys from:

"...giving anything of value to a person for recommending [their] services, except that [they] may pay the reasonable cost of advertisements or communications permitted by [Rule 7.2] and may pay the usual charges of a not-for-profit lawyer referral service or other legal service organization."

The comment to the Rule affirms the general prohibition against paying another for "channeling professional work", and recognizes exceptions only when the "other" is a "legal aid agency or prepaid legal services plan" or a "not-for-profit lawyer referral program." The marketing service is not such a plan or program. As discussed in the Ethics Committee's Formal Opinion 83 (19 Colo. Law. 25 (Jan. 1990)); (addendum

22 Colo. Law. 2235 (Oct. 1993)), it is a "group advertising" mechanism which functions as a for-profit referral service. Payment of costs or charges to such a service is prohibited by Colorado Rule 7.2(c). Payment also is prohibited by Colorado Rule 1.5(e) which prohibits attorneys from paying referral fees.

t misappropriation by parents of settlement proceeds paid to juvenile client in personal injury case

96/97-03 – GAL filing a therapist's report with the court not a violation of the rule against ex parte communications with the court

Summary of Facts Provided

An attorney acting as guardian ad litem (GAL) for a child in a dependency and neglect action receives a written report from the child's therapist concerning issues raised in a motion previously filed by GAL. GAL submits the therapist's report to the court to supplement the motion, certifying service to all parties/counsel of record. An attorney representing another party informs GAL that he considers GAL's filing of the report to be ex parte communication with the court, and expresses the intent to file a grievance if GAL takes similar action in the future.

Issues and Conclusions

A. Is filing an expert therapist's report in a dependency and neglect action, where all parties/counsel of record are served, a prohibitedex parte communication?

No. Colorado Rule 3.5(b) prohibits communicating ex parte with a judge "except as permitted by law." Filing a therapist's report with the court, with copies to all parties/counsel, is not a violation. The Colorado Children's Code at C.R.S. 19-1-107(2) permits the filing of reports regarding a child's mental, physical, and social history with the court so long as the author is available as a witness subject to cross-examination. It does not violate the constitutional right to confront witnesses or due process, where the report is made available to all interested parties in sufficient time before a hearing to permit the parties to compel attendance of the author and to subject the author to examination under oath. People in the Interest of A.M.D., 648 P.2d 625 (Colo. 1982).

B. Is GAL required to report the lawyer's threat to file a grievance to the appropriate professional authority?

Yes, if GAL has actual knowledge that the lawyer's threat was made to obtain an advantage in the dependency and neglect proceedings. Colorado Rule 4.5 prohibits a lawyer from threatening disciplinary charges to obtain an advantage in a civil action. Such conduct raises a substantial question as to a lawyer's honesty, trustworthiness or fitness as a lawyer. Thus, Colorado Rule 8.3 requires GAL to report the lawyer's threat, if GAL has actual knowledge that the threat was made to obtain an advantage in the dependency and neglect proceedings. GAL is not required to report unless GAL has such actual knowledge. Committee Comment to Colorado Rule 8.3. Actual knowledge may be inferred from the circumstances. Colorado Rules, Terminology, definition of "knows."

96/97-04 – Lawyer's duty to report to court misappropriation by parents of settlement proceeds paid to juvenile client in personal injury case

Abstract 96/97-04

Summary of Facts Provided

Attorney represents a juvenile in a personal injury case which resulted in an out-of-court settlement. The settlement was approved by the probate court which ordered the proceeds to be placed in a trust account. The juvenile's parent, however, deposited half of the proceeds in the parent's personal account. When the attorney discovered this action, the parent promised the attorney that the parent would place the remaining proceeds in a trust account established for the juvenile within two weeks.

Issues and Conclusions

Is the attorney obligated to notify the probate court of the parent's action?

As an officer of the court, the attorney is obligated to inform the probate court of the parent's actions regarding the proceeds. See Colorado Rule 3.3. Furthermore, the lawyer, as a fiduciary, has an obligation to protect the child's interests. Colorado Rule 1.14 provides that a lawyer has the responsibility to determine the needs and wishes of a client when the client is under a disability. A lawyer representing a juvenile has "additional" responsibilities and may need to take "protective action" on behalf of the juvenile. These fiduciary obligations also require the lawyer to report the parent's misappropriation of the juvenile's funds to the probate court even if the parent may have hired the attorney and paid the attorney's fees. See Colorado Rules 1.2(d) and 3.3(a)(2).

96/97-05 – Lawyer-employee of corporation representing clients of corporation

Abstract 96/97-05

Summary of Facts Provided

Lawyer A is employed by a corporation which also employs accountants and other non-lawyers to provide tax advice to clients. A often learns, in the course of giving tax advice, that a client may need legal representation in related administrative or judicial proceedings.

Issues and Conclusions

A. May A, in the course of her employment, ethically represent clients of the corporation in such proceedings, as long as the clients are billed separately for such representation and the legal fees are not shared with the corporation? No. Colorado Rule 5.4(b) states that a lawyer may not practice law in partnership with a non-lawyer. It makes no difference that the legal fees would be segregated and go only to A; the clients are those of the corporation, and A would be practicing law in partnership with non-lawyers. A's employment by the corporation might compromise her independent professional judgment in her relationship with the clients.

B. May A maintain her employment with the corporation, practice law part time "on the side", and represent clients referred to her by the corporation, as long as she bills the clients on her own letterhead, makes it clear to clients that she will be acting independently of the corporation and that they are free to hire another attorney, and makes no payment to the corporation for such referrals? Yes. Under these circumstances, referrals from the corporation are not per se unethical under Colorado Rules 7.2(c) (a lawyer is prohibited from giving "anything of value" in exchange for the referral of a potential client) and 5.4(a) (a lawyer is prohibited from sharing legal fees with a non-lawyer).

However, A should analyze the situation under Colorado Rules 5.4(c) and 1.7(b) to determine whether, even though she is not undertaking the representation as an agent of the corporation, her professional judgment still may be affected by the employment. As part of this analysis, A must evaluate each referral for potential conflicts of interest which could arise, for example, if A discovers that the corporation had offered the client erroneous or inadequate tax advice. A also would be well advised to consider the point at which giving advice regarding clients' rights and obligations under the tax law may become the practice of law in association with a non-lawyer, thereby aiding the unauthorized practice of law in violation of Colorado Rule 5.5. See Colorado Bar Ethics Opinion 87 (Jul. 14, 1990; rev. Dec. 14, 1991) (21 Colo. Law. 219 (Feb. 1992).

96/97-06 – In-house insurance company counsel designating as arbitrator lawyer with past relationship with company

Abstract 96/97-06

Summary of Facts Provided

Attorney is in-house counsel for an insurance company and, from time to time, defends the company in arbitrations. Attorney also assigns defense of arbitrations to other in-house counsel or external counsel with input from the company's claims department. The claims department also must approve designations of arbitrators made by Attorney and requested that Attorney appoint as arbitrators external counsel who in the past have received defense assignments from Attorney and who, it is implied, will be considered for future defense assignments.

Each arbitrator must sign an oath of complete impartiality and swear that, except as disclosed in writing, he or she has no financial or personal interest in the outcome of the case and no existing or past financial or business relationships with any of the parties or their attorneys, "that will affect my impartiality or create an appearance of partiality or bias."

Issues and Conclusions

A. May Attorney designate as an arbitrator external counsel who will not disclose the past relationship with the insurance company and the possibility of future defense assignments, or proceed with arbitration knowing that the designated arbitrator has not disclosed such relationship? No. Failure of the designated arbitrator to disclose the past and possible future relationship with the insurance company is misconduct, "involving dishonesty, fraud, deceit or misrepresentation" in violation of Colorado Rule 8.4(c) and may be conduct prejudicial to the administration of justice under Colorado Rules 8.4(d). Colorado Rule 8.4(a) prohibits an attorney from knowingly assisting or inducing another to violate the Colorado Rules or violating the Rules through the act of another. If Attorney designates an arbitrator or proceeds with an arbitration under these circumstances, Attorney's conduct would itself violate Colorado Rules 8.4(c) and possibly 8.4(d), as well as 8.4(a).

B. If the designated arbitrator fails to make proper disclosure, is Attorney obligated to report that failure to the Grievance Committee of the Colorado Supreme Court? If the circumstances are such that Attorney has knowledge that the designated arbitrator has committed a violation of the Colorado Rules, "that raises a substantial question as to that lawyer's honesty, trustworthiness, or fitness as a lawyer in other respects," Attorney is obligated to make such a report pursuant to Colorado Rule 8.3(a).

96/97-07 – Rights/duties of a lawyer to seek the appointment of a guardian or take other protective actions with respect to a client of diminished competence

Abstract 96/97-07

Summary of Facts Provided

An elderly couple had established a living trust with a trustee. The trustee became concerned that third person was exercising improper influence on the couple and obtaining large cash gifts from them. The trustee filed a petition for guardianship and conservatorship of the couple. The attorney was asked to represent the couple in the proceedings. The attorney argued that the couple was competent and that the large cash gifts were free of undue influence. The couple were found to be competent and the petition was denied. However, the court admonished the third person to have no further financial involvement with the couple.

Over two years later, the attorney received a typewritten letter apparently bearing the husband's signature. The letter requested that the couple's estate plan be amended to leave their entire residuary to the third person. When the attorney met with the couple, the attorney noted that the clients' physical and mental capacities had declined dramatically. The husband had no recollection of sending the letter and said he would never have suggested such a thing.

Although the attorney believed the couple still to be competent, the attorney concluded that both had become "incredibly vulnerable" to the exercise of undue influence. Moreover, the attorney was provided information which suggested that the third person had continued to have regular contact with the couple after the original court hearing.

The attorney contacted the judge who had admonished the third person regarding further financial involvement with the couple. The judge declined to take any formal action, but suggested that the attorney consider alerting the county department of social services, so it could determine whether court protection was warranted. The attorney believes that the clients would resist a conservatorship or other protective proceeding and would view any such effort by the attorney as contrary to their basic wishes. The attorney is concerned that he may not be adequately protecting the clients if he does nothing.

Issues and Conclusions

Colorado Rule 1.14(b) provides that "a lawyer may seek the appointment of a guardian or take other protective actions with respect to a client only when the lawyer reasonably believes the client cannot act in the client's own interest." To make this determination, an attorney may "seek guidance from an appropriate diagnostician." Although ethics opinions in some states are to the contrary, the preferable view is that Colorado Rule 1.6 impliedly authorizes the attorney to disclose information relating to the representation to the extent necessary to serve the best interests of the client who the attorney reasonably believes to be disabled. See ABA Informal Opinion 69-1530. Thus, an attorney may consult a physician or other appropriate diagnostician. Further, such consultation may be helpful in identifying other voluntary protective arrangements, such as a durable power of attorney, irrevocable trust, or a voluntary court protective proceeding such as limited guardianship, special conservatorship, or an appropriate court trust.

Ordinarily, lawyers who are concerned about the need for a guardianship or conservatorship for an incapacitated client feel they are impliedly authorized to contact interested family members who can then decide on a course of action after consulting with another attorney concerning the available options.

Commentators have warned that an attorney who represents an older person with diminishing capacities is confronted with a host of difficult ethical issues. They suggest that competent representation may require the lawyer to develop knowledge of other fields, such as medicine, gerontology, psychiatry, psychology, or social services. For a compendium of resources, see Hemp and Nyberg, "Elder Law: A Guide to Key Resources," 2 The Elder Law Journal 1-87 (Spring 1995). Assistance for any attorney who is not a specialist in elder law is also available through the CBA Elder Law Committee, Disability Law Committee, and the Real Property, Probate, and Trust Law Section. See also Callahan and Strauss, Estate and Financial Planning for the Aging or Incapacitated Client (Practicing Law Institute, 1986, 1988 et seq.); Schneider, "Planning Options for the Elderly and Disabled," Probate and Property at 8-12 (May-June 1996); Adams and Morgan, "Representing the Client Who is Older in the Law Office and in the Courtroom," 2 The Elder Law Journal 1-38 (Spring, 1994).

96/97-08 – Counseling attorney in lawyer assistance program not required to report ethical violations of client attorney disclosed during counseling

Abstract 96/97-08

Summary of Stated Facts

An attorney (the "Counseling Attorney") has been engaged by a lawyer assistance program for the purpose of providing legal counseling to other attorneys regarding the conduct of the latter. An attorney receiving counseling (the "Lawyer/Client") may disclose to the Counseling Attorney conduct which violates the Colorado Rules.

Issues and Conclusions

Is the Counseling Attorney obligated to advise the Grievance Committee or Disciplinary Counsel of information learned through that counseling that the Lawyer/Client may have violated one of the Colorado Rules?

If an attorney-client relationship exists between the Counseling Attorney and a Lawyer/Client, or if the Counseling Attorney is providing counseling through an approved lawyer assistance program, Colorado Rules 1.6(a) and 8.3(c) relieve the Counseling Attorney of the obligation to report violations of the Colorado Rules by the Lawyer/Client and disclosed by that Lawyer/Client, subject to the exception of Colorado Rule 1.6(b) (information related to the intent to commit a crime and to prevent the crime). People v. Morely, 725 P.2d 510 (Colo. 1986); Committee on Professional Ethics of the Illinois State Bar Association Opinion 90-8, (Jan. 29, 1991) (a lawyer who gains knowledge of another lawyer's misconduct which would, in other circumstances, trigger the reporting requirement is not required to report when the information was gained through confidential communications in the course of representing the lawyer/client); New Jersey Bar Association Opinion 638 (1990) (a lawyer who represents another lawyer and who learns, during the course of representation, that the lawyer/client engaged in conduct that raises a substantial question as to the lawyer/client's honesty, trustworthiness, or fitness to practice has no duty to reveal the information to disciplinary authorities when the attorney-client privilege applies, unless the acts are continuing or unless the lawyer/client is using the representation to carry out the misconduct).

96/97-09 – Lawyer may advise a client how to proceed with a matter in traffic or small claims court

Abstract 96/97-09

Issues and Conclusions

Is it unethical for a lawyer to explain to a client how to proceed pro se with a matter in either traffic court or small claims court? [This informal opinion specifically stated that it did not address the issue of the ethical propriety of an attorney ghostwriting documents for the client to use pro se.]

A lawyer may advise a client how to proceed with a matter in traffic or small claims court and what arguments might best be made to advance the client's cause, except that the lawyer may not advise the client to engage in any conduct that would be improper for the lawyer.

Under Colorado Rule 1.2(c), a lawyer may limit the objectives of representation provided that the client is informed of and consents to such limits. Thus, there is nothing unethical in a lawyer who has the requisite expertise limiting the scope of representation to advising a client about traffic or small claims matters and how to proceed with those cases pro se. Colorado Rule 5.5 and Comments. Such advice may even be beneficial to the tribunal by allowing the hearing to proceed more efficiently because the client understands the procedures in advance. Of course, just as a lawyer under the Colorado Rules is prohibited from engaging in certain conduct, a lawyer is prohibited from encouraging or advising a client with respect to conduct that would be improper conduct if engaged in by the attorney.

96/97-10 – Recommendation of lawyer and guarantee of lawyer's fees by broker; duties of lawyer


Abstract 96/97-10

Summary of Facts Provided

A broker who handles the sale of dental practices proposes to recommend an attorney and then guaranty payment of the attorney's fees and costs if the attorney is chosen by a selling dentist to represent that dentist in connection with the sale of the dental practice.

Issues and Conclusions

May the attorney accept the dentist clients under applicable Colorado Rules?

The mere fact that payment of the attorney's fees is guaranteed by a person other than the client does not violate Colorado Rule 1.8(f), as long as each of the three prerequisites of that Rule are met -- the client must consent to the guaranty after full disclosure and consultation with the attorney; the attorney must remain fully independent notwithstanding the guaranty; and the attorney must fully maintain the client's rights of confidentiality as required by Colorado Rule 1.6. Moreover, the attorney is cautioned to be alert to meeting the further requirements of Colorado Rules 1.7(b), 5.4(a) and (c), 7.1, 7.2(c) and 7.3, which are briefly summarized below.

Colorado Rule 1.7(b) states that an attorney shall not proceed with any representation which is "materially limited" by the interests of the attorney or of some third person. The attorney must carefully consult with the client and should analyze whether the proposed guaranty of fees and costs might adversely impact on the relationship with the client, or on the attorney's independence and professional judgment. After such full consultation and analysis, the attorney must obtain the client's informed consent to the guaranty arrangement.

Similarly, Colorado Rule 5.4(c) prohibits a lawyer from undertaking the representation of any client where another "person who recommends, employs or pays the lawyer" directs or regulates the lawyer's services or judgment. Colorado Rule 5.4(a) generally prohibits an attorney from sharing legal fees with a non-lawyer, except under certain circumstances not present here.

Finally, Colorado Rules 7.1, 7.2(c) and 7.3 prohibit any false communications about a lawyer's services, prohibit the solicitation of clients, and prohibit a lawyer from paying anything of value to a third person in exchange for recommending the lawyer's services to another. The attorney here must take reasonable steps to assure that the broker does not do indirectly anything on behalf of the attorney which the attorney acting alone could not do under the Colorado Rules. See also, Colorado Bar Ethics Opinion 91 (Jan. 16, 1993) (22 Colo. Law. 497 (Mar. 1993).


96/97-11 – Lawyer may not withhold from client notes of interviews conducted by lawyer under promise of confidentiality


Abstract 96/97-11

Summary of Facts Presented

An attorney represents both a corporate employer and an employee accused of sexual harassment. During the course of interviews of corporate employees, the attorney assured the employees that candid statements would not be met with adverse consequences, but did not promise confidentiality. The attorney kept notes of the interviews, but did not share the interview notes with the employee client. The attorney discussed portions of the interviews with the employee client. The employee client now has requested copies of the interview notes.

Issues and Conclusions

1. Is it proper for the attorney to withhold the interview notes from the employee client? No. Colorado Rule 1.4 requires a lawyer to comply promptly with a client's reasonable requests for information. See People v. James, 502 P.2d 1105 (Colo. 1974). The lawyer generally is not permitted to withhold information that affects the legal matter for which the lawyer was retained, if the information is important to the client, even if that information is covered by the attorney work-product privilege.

2. Would the result be the same if the attorney performed under the direction of corporate in-house counsel and the corporate counsel held the interview notes? Not necessarily. Assuming the same joint representation, the result would be the same. The result would differ if the attorney represented only the corporate client; then the work-product privilege would apply on behalf of the corporate client and the accused employee would not be entitled to discover the information.

96/97-12 – Duties of lawyer regarding pleadings prepared by non-lawyer staff of collection agency client


Abstract 96/97-12

Summary of Facts Provided

An attorney represents a collection agency. Accounts are assigned to the agency by its customers. The attorney has no interest in the accounts acquired by the agency. The non-attorney staff of the agency handles negotiations with debtors and other aspects of the collection of claims. Non-attorney staff also prepare pleadings for cases against debtors. The attorney's involvement is limited to signing pleadings, conducting trials and enforcing judgments.

Issues and Conclusions

Is the attorney aiding the collection agency in the unauthorized practice of law?

The attorney may sign pleadings drafted by non-attorneys if the attorney reviews the pleadings before signing them. Colorado Rule 1.1 (requiring competent representation); Colorado Rule 1.3 (requiring reasonable diligence). Under Colorado Rule 5.3, the attorney may not delegate work for which the attorney is responsible to persons who are not under the attorney's control and supervision.

The attorney may be aiding the collection agency in the unauthorized practice of law if the work of the agency's non-attorney staff constitutes the practice of law. Colorado Rule 5.4 requires the attorney to maintain professional independence. See also, CBA Formal Ethics Opinion 25, dated August 25, 1962.

96/97-13 – Lawyer may not accept a fee from investment adviser for referral of clients to investment adviser


Abstract 96/97-13

Summary of Facts Provided

A company is a broker-dealer and registered investment advisor ("Company") licensed under the securities law of the United States and authorized to do business in Colorado. Company is qualified to act as an investment advisor and broker-dealer on a nationwide basis through its network of associated investment advisor representatives ("Advisors"). Through its Advisors, Company proposes to offer a fee-based asset management program to customers, who would include legal clients referred by "participating" attorneys. In return for the referral, the attorney would receive an ongoing fee if an account is opened by the client. The attorney could monitor the client's account, as deemed appropriate, but would have no authority to manage or assist the Advisor in the management of the client's account. The proposed fee would be a split of the investment management fee in an amount agreed upon by the attorney and the Advisor. This arrangement would be subject to the knowledge and written consent of the client.

Issues and Conclusions

May an attorney ethically be paid a fee for referring a client to an investment advisor? No, because Colorado Rule 1.5(e) prohibits allreferral fees. Such an arrangement would create impermissible conflicts of interest (Colorado Rules 1.7 and 1.8), interfere with the professional independent judgment of the attorney (Colorado Rule 2.1) and might constitute splitting fees with a nonlawyer (Colorado Rule 5.4(a)). While counseling and advising clients can include referring them to nonlawyers in appropriate situations, such referrals should be based wholly on the skill, competence and other attributes of the nonlawyer and not at all on the lawyer's expectation of a fee.

96/97-14 – Duty of lawyer to report unethical conduct of another lawyer, knowledge of which was gained while serving as a private hearing officer for a private organization with internal rules of strict confidentiality


Abstract 96/97-14

Summary of Facts Provided

Lawyer A is a private hearing officer who presides over a private organization's arbitrations. Although not required by law, the organization's internal policy provides that Lawyer A will keep confidential the identity of the participants in the hearing. Internal policy also provides that the hearing officer's factual findings and conclusions, but not the identity of the participants, will be discussed with other lawyers who review the factual findings and conclusions before they are formally issued.

Lawyer A presided over a hearing in which Lawyer B disclosed that he had signed his client's name on a medical records release form, had his secretary falsely notarize the signature as if it were the client's signature, and obtained medical records utilizing the release form.

Issues and Conclusions

Lawyer A inquires whether: (1) there is a duty to report Lawyer B's conduct to the Supreme Court Grievance Committee; (2) the organization's internal confidentiality policy changes any reporting responsibility; and (3) the other lawyers who learn of Lawyer B's conduct during their review of Lawyer A's factual findings and conclusions have their own duty to report the conduct.

Colorado Rule 8.3(a) requires that a lawyer having knowledge that another lawyer has committed a rules violation which "raises a substantial question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects shall inform the appropriate professional authority." Lawyer B's conduct as described raises the substantial question noted in Colorado Rule 8.3(a). Thus, Lawyer A has a duty to report the conduct.

Colorado Rule 8.3 provides that the reporting rule does not require disclosure of information protected by Rule 1.6 ("information relating to representation of a client"). However, the information here was not related to representation of any client of Lawyer A. The organization's internal confidentiality policy does not override Lawyer A's reporting duty under Colorado Rule 8.3(a).

Lawyer A has direct, first hand information about the conduct and thus has "knowledge" of the conduct (see the definition of "knows" in the Colorado Rules terminology section), and therefore has a reporting duty. In contrast, the other lawyers who learned the information only from Lawyer A do not have a duty to report. See CBA Formal Ethics Opinion 64 (revised 11/95). While the other lawyers may report the conduct, they have no formal duty to report.

96/97-15 – No requirement for written disclosure/client consent to firm's use of contract attorney


Abstract 96/97-15

Summary of Facts Provided

An attorney performs contract work for various law firms and, at the same time, maintains a solo practice. The attorney is compensated for the contract work on an hourly basis by the various law firms. The attorney's participation is reflected in the law firms' billing statements to their clients, and the attorney is supervised by attorneys in the firms contracting out the work.

Issues and Conclusions

Does Colorado Rule 1.5 (d) require written disclosure to the law firms' clients and consent by those clients to the arrangement between the law firms and the contract attorney?

No. Neither written disclosure nor client consent is required where payment of the hourly rate to the contract attorney is not contingent upon the clients' payment of the law firms' fees, particularly given that the clients are generally aware of the contract attorney's participation and the attorney's work is supervised by attorneys in the firms contracting out the work. SeeIn re Marriage of Ziemann, 574 N.E.2d 767, 770 (Ill. App. 1991); ABA Formal Opinion No. 88-356 (1988).

If the arrangement is akin to a contingent fee arrangement, and the compensation of the attorney performing the contract work is dependent upon the clients' payment of the fee, then the arrangement falls within Colorado Rule 1.5 (d), which requires written disclosure and consent. However, where the compensation of the attorney performing contract work is not contingent upon the collection of the fee, then Colorado Rule 1.5 (d) is not applicable. See, e.g., Formal Opinion No. 1994-138, California State Bar Standing Committee on Professional Responsibility and Conduct, 1994 WL 721969.

This analysis does not express an opinion on the related issues which an attorney performing contract work must consider, such as conflicts of interest, confidentiality of information, and arrangements with placement agencies. This analysis also does not address the ethical considerations which are involved if the attorney is office sharing with one of the law firms for which he or she is performing contract work. See, CBA Ethics Committee Formal Opinion 89 (20 Colo. Law. 2493, Dec. 1991).

96/97-16 – Mixed hourly and contingent fee agreement in case of reinstatement in an employment discrimination case


Abstract 96/97-16

Summary of Facts Provided

A law firm (the "Firm") represents discharged employees in employment discrimination cases. In some of those cases, reinstatement is available as a remedy. The Firm desires to enter into a fee agreement with those clients under which the client agrees to pay "the greater of fifty percent of any cash lump sum award or the attorneys' fees expended by the lawyers [calculated on an hourly basis] if the client accepts a settlement offer which includes reinstatement of employment". The fee arrangement includes both administrative and judicial proceedings.

Issue and Conclusions

Is the proposed fee agreement permitted under applicable provisions of the Colorado Rules?

A mixed hourly and contingency fee agreement is permitted if the agreement as a whole is reasonable within the meaning of Rule 1.5(a) of the Colorado Rules, and if the agreement otherwise complies with Chapter 23.3, C.R.Civ.P. For example, an agreement which obligates the client to pay a fee equal to the greater of (i) a set percentage of his/her recovery, or (ii) the fee actually awarded by the court, would be permitted, provided the agreement as a whole satisfied Rule 1.5(a)'s test of reasonableness. In such a case, the client's obligation to pay is funded by the results of the representation, and is consistent with most clients' expectations of the way in which a contingency fee arrangement will work.

Although the form of the Firm's proposal is permitted under Rule 1.5(a), it may be inconsistent with its clients' expectations, since many of the clients may not have the financial wherewithal to pay fees on an hourly basis at the time they seek representation, and since relief in the form of reinstatement (as opposed to damages or other monetary relief) probably will not appreciably enhance their ability to pay hourly fees. Such circumstances could easily lead to misunderstandings and disputes. Although the client's ability to pay is not a factor expressly identified by Rule 1.5(a), the Committee believes that an attorney is obligated to fully inform the client of the foreseeable consequences of the operation of a fee agreement. See, Colorado Rule 1.4(b).

The Colorado Supreme and Appeals Courts have not addressed the question of whether a contingency fee of 50% is excessive per se,or, if not, the circumstances under which it might be permitted. There appears to be general agreement among primary and secondary authorities outside Colorado that a contingency as high as 50% might be permitted when justified by the particular circumstances of the representation, including its complexity and risk, and the need for highly skilled counsel. However, those authorities make clear that a 50% contingency is the exception, not the rule, and that an agreement providing for a 50% contingency will be deemed excessive and invalid when not supported by relevant circumstances.

The Committee believes that a 50% contingency fee does not constitute a per se violation of Rule 1.5(a), and may, under appropriate circumstances, constitute a reasonable fee. However, as a matter of policy, and because it is ill equipped to address such questions, the Committee declines to express an opinion concerning whether the Firm's proposed 50% contingency would be reasonable.

The Committee did not comment on whether it would it be permissible for an attorney defending a claim brought by a client of the Firm to offer settlement in the form of reinstatement, conditioned upon a requirement that the employee either waive or compromise his/her statutory right to attorneys' fees. However, the subject of fee waivers in the settlement context has engendered substantial discussion.See, e.g., ABA/BNA Lawyer's Manual on Professional Conduct, at 41:1601-1613.

96/97-17 – Lawyer's duties where personal injury client wishes to sell a portion of proceeds to third party in order to obtain living expenses


Abstract 96/97-17

Summary of Facts Provided

An attorney represents a personal injury client who wishes to sell a portion of the proceeds of the client's personal injury claim to a third party in order to obtain living expenses from the third party pending resolution of the claim. The attorney has been requested to acknowledge and agree to the arrangement, and to pay over to the third party the amount of advances and a percentage of the gross recovery upon final disposition of the claim, after deducting attorneys' fees, expenses of litigation, and hospital and medical liens.

Issue and Conclusion

Does the attorney violate the Colorado Rules by consenting to an agreement between the client and third party for advances of living expenses?

If the attorney has no financial interest in the arrangement with the third party, the attorney is not prohibited from acknowledging and honoring the agreement. Although the Colorado Rules do not prohibit the concept of the proposed arrangement, any such agreement must be closely examined in order to confirm that its terms and implementation will not violate individual provisions of the Colorado Rules.

A number of possible effects of the Colorado Rules were considered and determined not to prevent the agreement. Colorado Rule 1.8(e), while prohibiting the attorney from advancing or guaranteeing financial assistance to a client, does not apply to the proposed agreement if the attorney has no financial interest in the agreement. Because Colorado Rule 5.4 requires protection of the attorney's professional independence against interference from third parties, any proposed agreement must be reviewed in order to confirm that this prohibition is not violated. Any limitation upon the attorney's professional independence or judgment under Colorado Rule 1.2, any provision which could result in a breach of confidentiality prohibited under Colorado Rule 1.6, or a conflict of interest prohibited under Colorado Rule 1.7 should be expunged or the problem should be specifically discussed with the client and the client's consent should be obtained, if compliance with the Colorado Rules can be attained through such consent. Examples of provisions which would require particular scrutiny under the Colorado Rules include a requirement to disclose information to the third party; restrictions on the attorney's ability to proceed independently on behalf of the client in the event of a dispute with the third party or a negotiated settlement of the litigation; restrictions on the client's right freely to change attorneys; and definitions of expenses which may be deducted prior to computing the percentage due to the third party.

Because of the involvement of the attorney in the transaction, it may be advisable to have the client consult with other counsel to satisfy the spirit of Colorado Rule 1.8(a)(2).

96/97-18 – Lawyer may notify another lawyer that his/her conduct may violate Colo. RPC


Abstract 96/97-18

Summary of Facts Provided

Attorney A represents defendant, who is involved in a land dispute with plaintiff. Prior to a lawsuit being filed, plaintiff invited defendant to a meeting with plaintiff and plaintiff's attorney. Attorney A believes that plaintiff's attorney knew that attorney A represented defendant in the matter. No agreement was reached at the meeting and plaintiff then filed the lawsuit. At a deposition, some on-the-record negotiations occurred between plaintiff, plaintiff's attorney and defendant. Attorney A stopped the discussions and advised that any negotiations should take place in a different setting. After the deposition had concluded, attorney A discovered plaintiff's attorney negotiating with defendant in the lobby without attorney A's participation. When attorney A asked the attorney to discontinue such discussions, plaintiff's attorney responded that he was "merely continuing the negotiations that had begun during the deposition." Attorney A believes that plaintiff's attorney is unaware of the provisions of Colorado Rule 4.2 which precludes an attorney from communicating with a party about a matter in which the party is represented by an attorney unless the party's attorney has given permission for such communication or such communication is otherwise authorized by law.

Issues and Conclusions

May attorney A notify plaintiff's attorney of the restrictions of Colorado Rule 4.2 and advise that the attorney's communications with attorney A's client are improper?

Attorney A may notify opposing counsel of the restrictions in Colorado Rule 4.2 and of the fact that opposing counsel may be violating the rule, but the inquiring attorney should avoid stating that opposing counsel's actions are in fact a violation of the rule because this is a determination to be made by other authorities. While Colorado Rule 4.5 prohibits threats of disciplinary charges to obtain an advantage in a civil matter, there is a distinction between threatening someone with a grievance and notifying someone that his or her conduct may violate a rule or statute. Many violations can be eliminated, rectified or minimized if a lawyer is notified of a rule the lawyer may be violating and there is a frank dialogue among the participants to the dispute. Because a disciplinary counsel has the charging authority as to whether conduct has violated a disciplinary rule, the opposing attorney should be told only that the attorney's actions may be in violation of the rule.