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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).